Bankers today warned politicians of the possible consequences of going ahead with the Green's banking bill.

The Australian Bankers' Association (ABA) said caution is needed before proceeding with the Greens' Bill on banking because it could result in poor outcomes for customers, particularly in rural and regional areas.

The ABA was responding to comments made this morning to the media by a Greens MP and some Independent MPs at a press conference in Canberra.

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

"If the $2 fee is reduced by regulation, ATMs outside the metropolitan areas which see fewer customers may become uncommerical. This could result in fewer ATMs outside of the 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."

The current system of direct charging at ATMs was required by the Reserve Bank as part of its payment systems reforms. The Reserve Bank completed widespread community consultation before the system was introduced one year ago. 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.

Mr Münchenberg said: "Some of the costs which a bank incurs in providing an ATM fleet to customers are hardware, installation, cash delivery, security, information technology, maintenance, card issuing and rents to retailers."

"Bank customers don't have to pay the $2 fee - they can seek out an ATM owned by their bank or in a networked arrangement1 or get cash-out via EFTPOS at the cash register when they are doing some shopping."

"Customers of banks who own an ATM fleet shouldn't have to subsidise the cost of non-customers using their ATMs - this wouldn't be fair. No other business is expected to provide subsidised services to its competitors' customers."

Only 46 per cent of ATMs are owned by banks. Companies which own ATMs include banks, building societies, credit unions and others. The others are independent companies sometimes described as independent deployers or third party deployers. These cash machines are often found in service stations, pubs and clubs and are not owned by financial institutions.

Another proposal in the Greens Bill - all banks have to provide free transaction accounts for all customers - could end up impacting smaller banks and other financial institutions, more than larger banks, ABA said.

"There are real costs in providing transaction services and these costs will be harder for smaller financial institutions to absorb if the provision of free accounts is regulated."

"Banks already provide basic bank accounts that allow customers on low incomes to access basic services at no or low cost. They also offer accounts which are free of exception fees."