The head of a small independent ATM network says ATM fees are here to stay and the government cannot afford to back a Greens proposal to abolish the $2 fee charged on non-bank ATM transactions.
Tim Scala, managing director of Adelaide-based My ATM, says the government spent more than seven years trying to implement exit fees to encourage ATM providers to go into regional areas.
“After all that hard work it’s hard to see them scrapping it now,” he says.
Scala’s comments come after a new study showed ATM fees are costing Australian consumers more than $750 million per year.
The study, by think tank the Australia Institute and consumer group Choice, found that more than 80% of Australians believed it was unfair to charge such fees, with a quarter of those surveyed saying they had paid a $2 fee in the previous week.
That led the Greens to again call upon the government to back its proposals to abolish the $2 fee charged to consumers who use an ATM not owned by their bank.
Greens MP Adam Bandt said in a statement that the fees are “almost 100% per cent pure profit and can’t be justified”.
But Scala disagrees, saying banks lose money by providing the service to consumers.
“The banks lose heaps of money on ATMs, around $270 million per year,” he says.
“In Europe and Northern American all ATMs are independent. If ATMs continue to lose money for banks the market may move towards an independent model here in Australia too.”
While consumers continue to cry foul over fees to access their money smaller independent, non-bank ATMs are profitable and account for more than half of automatic teller machines in Australia.
My ATM sold around 1000 machines last year and expects that figure to increase.
“The ATM industry has been growing steadily at 4-5% for the last 10 years and there’s still plenty of growth left,” Scala says.
“Population growth and governments looking to boost regional areas will only help see the demand for ATMs continue to rise in coming years.”
That growth has led many investors to start buying ATMs, with machines priced between $14,000-$40,000 and My ATM promising a minimum 20% return to investors.
“Investors either get 20% of their investment per annum or 30 cents from every transaction, whichever is greater” Scala says.
He says that around 70% of investors in ATMs are property investors.
“They are always looking to diversify their portfolio and they like the simplicity of ATMs,” he says.
“They are quite shocked that after getting 3-4% in rent for their property they can come across and get 20% from something so small and simple.”
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
