The Canadian Bankers Association (CBA) is calling today’s proposal by the leader of the New Democratic Party, Jack Layton, to eliminate automated banking machine (ABM) fees anti-consumer and anti-competitive.

Layton’s proposal shows a clear lack of understanding of how a competitive marketplace operates to the benefit of consumers and how these fees are charged, the CBA says.

“This is just typical NDP bank bashing and political rhetoric being made without a full understanding of the facts,” says Raymond Protti, president CEO of the CBA.

The CBA argues that banks make significant investments in their own ABM networks to meet the needs of their customers. They allow non-customers to get cash from their machines, but it is done as a convenience. A fee is charged so that bank’s customers are not subsidizing the use of those machines by customers of other banks.

“It’s like saying to clients of a gym; we’re going to let customers of other gyms in to use the weight room. We’re not going to charge them, and you’ll be subsidizing their use of it,” said Protti.

The CBA says it is important to remember that clients who use their own bank’s machines do not pay a convenience fee at all.

As well, very time clients do a transaction at a
machine not owned by their bank, they are given the option of paying the fee or cancelling the transaction. It is very transparent, the CBA says.

“Mr. Layton talks about regulating these fees for banks but he is focusing on the lowest cost providers,” says Protti. “Banks have 31% of the machines in the market so the other 69%, which are independent operators and have higher fees, would continue to be unregulated.”

“Mr. Layton also said that customers in the United Kingdom are not charged these fees,” says Protti. “However, he should realize that services are not delivered for free: there is a cost to providing banking services. Looking at one service in isolation does not take into account that the costs to provide it are recouped through higher costs for other products in services.”

“In Canada, we have a user pay system that is transparent and fair,” he added. “And U.S. bank customers pay 15% more than Canadians do in convenience fees.”