Machine age

[Dave Birch] I noticed that the ATM at the train station was advertising that it only charges £1.86 per withdrawal, and I was idly wondering why anyone ever used it, when I remembered that I did, because I occasionally turn up at the station with no money and decide to get £20 out in case I need to jump in a taxi or buy a packet of gum during the day. Naturally, being comfortable, I draw out a hundred quid, thus facing at transaction fee of less than 2%. But what about the kid who takes out a twenty, not realising he's paying a tithe? A bit of a rip off. And not the only thing wrong with ATMs.

Eight transactions out of every million ATM withdrawals are found to end with people forgetting their money or their card,

[From Cashpoint cock-ups are hard to comprehend]

I've never once forgotten my card at an ATM but I have, once, forgotten the cash. And one of the bad things about cash is that when you lose it, it's gone. But on the whole ATMs are jolly useful, even if I don't visit them as often as I might have a few years ago. Which, incidentally, appears to be true for everyone else in the UK, where ATM withdrawals are down, despite the increase (in fact, despite the massive increase) in the cash being literally printed by the Bank of England.

Meanwhile, the amount of cash withdrawn from ATMs was £1.6 billion lower than in the second quarter of 2009, a decline of 3.2%.

[From Finextra: Brits continue to turn away from cash and cheques]

This is despite the increase in cash "in circulation". According to the Bank of England, notes and coins "in circulation" grew by 5.1% in the last twelve months. Fair enough, much of the increase was in the form of fifty quid notes that are meant for tax evasion and are never ever used in ATMs, but the numbers do still tell a story. If ATM withdrawals are a reasonable proxy for the use of cash, then clearly more and more is just being stuffed under mattresses. I'm not saying that the British are particularly criminal in evading tax by putting high-value banknotes under the bed instead of in the bank. It's a global phenomenon.

Now that’s one big mattress... China’s households hide as much as 9.3 trillion yuan ($1.4 trillion) of income not reported in official figures -- 80 percent of it by the nation’s wealthiest. This massive pile of stashed cash is equal to about 30 percent of gross domestic product.

[From Beware $1 Trillion Lying Under Chinese Mattress: William Pesek - Bloomberg]

Note to readers under the new full financial disclosure recommendations: the chap is speaking metaphorically, and neither Consult Hyperion nor any of its executive officers actually recommend that you keep savings in your mattress.

A woman in Tel Aviv, Israel, gave her elderly mother a new mattress as a surprise gift, throwing out the old tattered bed her mother had slept on for decades. The gesture ended up bankrupting Annat's mother, who had stuffed her savings of nearly $1 million inside her old bed for decades

[From Tel Aviv search for mattress containing $1M life savings - CNN.com]

See.

Perhaps we should start cutting back on ATM deployment and start charging for withdrawals as a way of signalling that society wants to reduce the use of cash. Or perhaps, as was suggested in the Ireland, we should tax them to pay for the police, courts and jails.

Minister for Justice Dermot Ahern floated the idea of a cash machine tax last week after an armed gang kidnapped the wife of a bank manager, forcing him to hand over EUR300,000 from the AIB branch where he works.

[From Finextra: Irish minister backtracks on ATM charge proposal to discourage use of cash]

Good for him. Why should the rest of us have to cross-subsidise criminals? If we could persuade our elected representatives to take a more informed position on the regulation of cash and electronic payments, we'd all be better off. This might be true in the US as well, where the Senate has been taking a keen interest in the world of electronic payments and enthusiastically regulating.

According to the Omaha World-Herald, Nebraska Senator Ben Nelson admitted: "I've never used an ATM, so I don't know what the fees are."

"It's true, I don't know how to use one. But I could learn how to do it just like I've...I swipe to get my own gas, buy groceries. I know about the holograms [apparently a reference to checkout barcodes on products]."

[From Finextra: US Senator says never used an ATM as fees motion fails]

Meanwhile, back home, a correspondent writes to point out that decentralised innovation to overcome the problem of ATM costs is already yielding results.

I had a quick trip to see my local landlord (an old friend). I saw a child (someone who looks 14 but old enough to drink) purchase a drink with a card. They were charged £10 and given change.

I guess this wouldn't show up in the figures as a cash withdrawal. But what a good idea: publicise a minimum payment and give people change in old-fashioned notes and coins that you don't want to have to take to the bank anyway.

These opinions are my own (I think) and presented solely in my capacity as an interested member of the general public [posted with ecto]

atms and kiosks, cash and cashlessness, payment cards

Comments

[Dave Birch]

Yes, sorry, got mixed up between £10 and £20 between drafts, my mistake.

[Shred the Fred]

Eh, 18.6%? It's a fixed £1.86 fee (I think you'll find it's actually a penny less). For a £20 withdrawal, that's 9.3%, isn't it?

It's still a rip-off, but so is any charge for ATM cash withdrawal.

[Dave Birch]

I think the example I gave, a kid drawing out £20, justifies the emotive term "rip off" because of the 18.6% transaction fee. But as a general point, if we were to decide to charge for ALL withdrawals at ATMs then yes I would be in favour of that.

[David Steed]

You are a glass half full person 999,992 out of a million transactions are successful. As for charging, the alternative is that the machine is not there and people obviously want it to be there or they would not use it. I don't really see how in one breath you can decribe it as a rip off and in the next say we all should pay for every withdrawal. Not sure where the Payments Council gets its stats from on ATM withdrawals, but they are at odds with those published by LINK http://www.link.co.uk/AboutLINK/Statistics/Pages/Statistics.aspx . Volume and value of withdrawals are still increasing, all be it with a few less charging machines.