What effect would a ban on surcharges have on competition in the banking industry?
A. By and large, it should help small banks and credit unions compete much more effectively. Rising ATM fees have been – consciously or otherwise – a highly effective tool for large banks to overwhelm small ones. That’s partly because the increases create a vicious circle for consumers and small banks alike: As fees for non-customers go up, consumers have a greater incentive to set up checking and savings accounts (and ultimately do all of their banking business) at the banks with the most ATMs; i.e. the most places where they won’t have to pay fees. The banks with the most ATMs are invariably the ones with the most capital to invest and the largest pre-existing infrastructure. They’re also the ones most capable of adding more ATMs, partly because – by already having the lion s share of ATMs, they get the lion s share of surcharge revenue, which means they have even more money to invest. For example, Wells Fargo and Bank of America have admitted that together, they make $5.5 million ea
