Fees and Surcharging in Automatic Teller Machine Networks: Non-Bank ATM Providers Versus Large Banks

41 Pages Posted: 22 Dec 2006 Last revised: 4 Nov 2010

See all articles by Elizabeth W. Croft

Elizabeth W. Croft

University of Northern British Columbia - School of Business

Barbara J. Spencer

University of British Columbia (UBC) - Sauder School of Business; National Bureau of Economic Research (NBER)

Date Written: August 2003

Abstract

This paper develops a spacial model of ATM networks to explore the implications for banks and non-banks of interchange fees, foreign fees and surcharges applied to transactions by customers at other than an own-bank ATM. Surcharging raises the price (foreign fee plus surcharge) paid by customers above the joint profit-maximizing level achieved by setting the interchange fee at marginal cost and not surcharging. Similar size banks would agree not to surcharge, but such an agreement is typically not possible between a bank and a non-bank. A high cost of teller transactions modifies the tendency towards high ATM fees.

Suggested Citation

Croft, Elizabeth W. and Spencer, Barbara J., Fees and Surcharging in Automatic Teller Machine Networks: Non-Bank ATM Providers Versus Large Banks (August 2003). NBER Working Paper No. w9883. Available at SSRN: https://ssrn.com/abstract=430597

Elizabeth W. Croft

University of Northern British Columbia - School of Business ( email )

3333 University Way, Prince George
Prince George, BC, V2N 4Z9
Canada

Barbara J. Spencer (Contact Author)

University of British Columbia (UBC) - Sauder School of Business ( email )

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada
604-822-8479 (Phone)
604-822-8477 (Fax)

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
United States

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