Proposed ATM fee cap is an empty political move

by | Feb 14, 2014 | Editorial

The recent NDP push for a 50-cent limit on ATM fees is sheer politicking.

Canadians are getting gouged when accessing their own cash from certain automated tellers, but imposing a limit on the amount banks can charge won’t really lead to savings. And it’s conceivable the NDP is aware of this.

Putting forward a motion, as the party did on Feb. 3, which has strong public support – all the while fully knowing it will be defeated – is a savvy political move. It’s a matter of toeing the party line, really.

The motion, which was defeated the very next day, appeals to the strong sense of injustice many Canadians share concerning the fees. Therefore, any party taking a firm stance against the banks is likely to be seen as standing up for the little guy – and some did see it this way.

Unfortunately, when examined practically, the motion comes across as rather hackneyed, regardless of the intentions behind it.

Banks have myriad tools at their disposal to recoup losses incurred from having to reduce ATM service charges. For instance, they could merely increase the cost of opening an account, raise monthly fees, or even bump up interest rates on loans.

If this happens, not only will users end up paying the same amount (or more) in the long run, but it will result in even less transparency. Rather than having the amount displayed on a screen at the time of a transaction (however outrageous it may be), the fees would be buried or lumped in as part of larger charges.

This way a bank’s customers would end up subsidizing the cost of running its ATMs for all. Non-clients and clients alike would pay 50 cents per transaction, while the rest of the money would be gathered solely from clients through the previously mentioned methods.

It should also be noted that most ATMs across the country aren’t actually operated by banks. According to the Canadian Bankers Association (CBA), of the about 60,000 machines across the country, only 18,000 of them are owned by banks; independent operators and credit unions account for the others.

This is an important distinction. If the NDP motion had been adopted it wouldn’t have affected the latter – they’re provincially regulated, according to both the CBA and CBC News.

Yet it’s precisely these private “white label” ATMs commonly found in convenience stores that often end up charging users the most.

According to the Financial Consumer Agency of Canada, convenience fees at privately operated ATMs can run as high as $5 per transaction. Meanwhile, someone getting quick cash from a bank that he or she isn’t a customer of, will pay up to $3. If he or she is a customer, the high-end fee sits at $1.

It would seem the NDP’s proposal would be completely ineffective in dealing with the worst offenders and also unable to guarantee there would really be any savings at all.

The NDP would better serve Canadians addressing issues where the stakes are decidedly higher than a couple of bucks. Think the big three: unemployment, the healthcare system, and the environment.

Ultimately, it’s a matter of Thomas Mulcair’s party needing to learn when to pick its battles.