The Australian Bankers' Association (ABA) has criticized the planned initiative by the Greens Party to put a cap on ATM fees that can be charged by banks, which may result to pass on fees to customers if pursued by Parliament.

In a statement, the ABA said a pass on costs to the public will be a possible consequence of Greens MP, Adam Bandt's proposal to cap ATM fees and is due to be voted on in the next Parliamentary sitting.

Steven Münchenberg, Chief Executive of the ABA, said: "The Greens policy proposal to reduce the $2 ATM operator fee is short-sighted and means that bank customers may pay fees where typically none are paid now."

"If you are the customer of a bank, and you use an ATM owned or networked2 by that bank, then the user fee is $0. Banks typically do not charge their customers for using their own ATM and the majority of ATM transactions are free."

"If, on the other hand, a customer chooses to use another provider's ATM3 , then they are likely to incur a fee directly from the provider. For banks, these fees typically range from $1.50 to $2.00. You can't sensibly focus just on one ATM fee without considering the $zero cost."

"The Greens Bill would cap this fee at a notional cost level. If this approach is applied consistently, all customers may need to be charged the cost of their ATM transactions to cover the costs of providing an ATM system. This means those customers who currently enjoy unlimited free ATM transactions may ultimately face ATM fees."

Mr Münchenberg added that if the $2 fee is reduced by regulation, ATMs outside metropolitan areas, which see fewer customers, may become uncommercial. This could result in fewer ATMs outside major non-metropolitan areas of Australia, including in the more remote parts of our States and Territories.

"It would be wise to consider the UK ATM experience. After the same ATM bank fees were removed, more expensive independent cash machines proliferated in areas which were uncommercial for banks. Consumers had to pay more to use these cash machines," Mr Münchenberg concluded.

The current system of direct charging at ATMs was required by the Reserve Bank as part of its payment systems reforms. The aim of the change was to make fees transparent, provide customers the choice of paying a fee or not and to increase the supply of ATMs in Australia.