Most of us have some experience with how much the big banks charge us for ATM cash withdrawals and debit transactions. But it’s more difficult to find out what it actually costs the banks to provide these services.
The Financial Consumer Agency of Canada has a useful chart of ATM withdrawal fees. They say that cost of withdrawing cash at your own bank’s ATM ranges from $0 to $1.50, and at another bank’s ATM it costs between $1 and $6. In my case, I get charged 60 cents for cash withdrawals at my own bank’s ATM, and the last time I had to use another bank’s ATM I was charged an extra $1.50 for a total of $2.10.
But what does it cost the banks to provide cash withdrawal at ATMs? A partial answer comes from Intrerac’s fees page. They say “A single interchange rate of 75 cents per transaction applies to all Interac Cash transactions.” It’s not clear whether this is just for cash withdrawals between banks or for all ATM cash withdrawals. It’s also not clear to me who maintains ATMs and keeps them stocked with cash. Is this part of the service that costs 75 cents per cash withdrawal or is the maintenance and feeding of ATMs an extra cost?
Moving on to debit transactions, banks charge both customers and merchants. But the only information I have about the bank’s costs are another line from the same Interac page: “the Interac Association member fee charged to participating Members for the Interac Debit service is $0.007019 per transaction.” Less than a penny per transaction is definitely much less than the charges merchants see and the account withdrawal charges customers see.
I’m quite good at doing a sensible analysis when I can get useful numbers, but in this case I have more questions than answers about the basic data. If any readers can point me to useful sources of information, I’m interested.