According to research published by the Reserve Bank last year, the average cost borne by banks for issuing cash from an ATM is 77 cents.
This means that the industry’s standard $2 charge on foreign ATM withdrawals delivers the major banks a profit margin of more than 100 per cent.
Of course, the mark-up on balance inquiries is even greater because the banks incur no cash-handling costs for just furnishing information through ATMs.
Such operating margins are an indictment on an industry that likes to portray itself to regulators and consumers as ‘efficient’ and ‘competitive’.
Profit margins of this magnitude do not occur in industries where genuine price competition flourishes.
Few other Australian industries are permitted by market forces or regulators to wrangle such margins from customers.
It is blatant gouging that hands the banks more than $600 million a year in additional revenue, more than half of which goes directly to bottom-line profits.
The scary part of this story is that independent deployers of ATMs at pubs and pokies venues are known to charge up to $5 for the privilege of making a cash withdrawal from one of their machines.
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