ATM fees represent bad PR

Like most people, I regularly use ATMs to obtain cash. Yesterday, I used one from TD Bank in Manhattan and was charged $3.00 after withdrawing just 50 bucks. For those of you who aren’t good with numbers, that transaction was a 6 percent cost to me. Quite candidly, it pissed me off. And now, for no other reason than this, I’m annoyed with this specific bank.

ATM fees are nothing new. And, these annoying fees that banks charge to consumers have risen steadily over the last 20 years. But, this issue has been a contentious one forever, as well. I remember when we represented the PLUS banking network in the early 90s (back in my J. Walter Thompson days). The number one issue keeping those banking executives up at night was how to show consumer rights groups, legislators and the constituents they represent that ATMs provide real value. And thus, those nasty fees are entirely fair.

The main problem is that none of the arguments they put forward then worked. Just like the messages that are being emitted now, they continue to fall on deaf ears. And, this creates real legislative and reputational problems every few years when the issue becomes hot again. If you read some of the comments/positions that a few banks take, one can understand why.

I read an article in which a Chase spokesperson (my bank is Chase) said (I’m paraphrasing) that the ATM surcharge fee supports real value that the bank provides through its 11,000 U.S. ATMs to non banking customers. (Chase, like many banks doesn’t charge its own customers these fees.) So, if I read this correctly, would Chase close down these ATMs, or continue not charging its customers for ATM usage if non customers decided to forgo using these services from Chase forever? I highly doubt it. Chase needs to have ATMs available to me and the millions of other customers for convenience. It just knows that everyone else represents a huge money making audience, especially in this tough economy.

Another bank issued a statement early this year that it only charges ATM fees to those who aren’t checking customers. And, this is a real reason why those who aren’t customers should really think about becoming ones. Are you kidding me? Talk about a bizarre, strong armed sales tactic that will not resonate with the average consumer.

My point in all of this is that ATM fees are bad news from a reputational/image standpoint. Most banks have realized this and at least stopped charging their customers for the pleasure of using their machines. I’d like to acknowledge the few (though) who learned that they can’t win this PR war and have stopped charging fees all together, or in only very specific instances. These banks understand that there are millions of people who everyday have the same experience I had yesterday. And, they clearly value their images a great deal.

I realize that ATM surcharges represent a very healthy revenue stream for the banking industry. This is not a simple issue. But, as we’ve seen over the last nine months, the difference between a financial services company having a positive versus negative reputation, now takes on an entirely new reality as to whether that organization can survive (or at least thrive) or become part of a growing banking graveyard.  

Comments

[Steve]

For a business, the point of a good reputation is, when you get down to it, to make money. If a business can make massive profits by doing something that damages its image or reputation, why not? The reputationally damaging action (in this case ATM fees) is already accomplishing what a good reputation or PR is supposed to do: generate revenue.

If the dislikeable action becomes so disliked that it starts driving customers away, then the business needs to re-evaluate matters; the calculus will have changed.

However, bearing in mind that for typical businesses, a good reputation or public perception is not an end in itself, but on a means to an end--profit--if they're already making a good, great, or downright obscene profit by something unpopular, why change?

[ed]

If only life were that simple, Steve.

Unfortunately, the reality is that when issues like this aren't dealt with the right way (over time), they also start to become highly visible with politicians. Politicans like to show how big bad business tramples on their weak, vulnerable constituents. So, politicians then find new ways to either hurt these organizations through legislation or just major pressure.

In the end, many organizations lose serious margins over time because they reactively (or wrongly) let this get out of control. It isn't simply because their cutomers screamed and yelled that they hated their actions.

[Steve]

I dunno though...

Last year, Wall Street and banking had about as bad a press as you could get w/out being filmed drowning puppies, and they received billions of bailout dollars, gave themselves big bonuses, are giving themselves raises (Citi) and the vast majority of the people who got us into this mess are still in power.

The auto industry and its unions were both castigated for being bloated, inefficient, and backwards-looking--and were saved from bankruptcy at the expense of wiping out shareholders and creditors who's only "crime" was investing in Detroit.

Previously, the oil industry took a huge drubbing in the media for profiteering at the expense of average Americans when gas was topping $4 a gallon and oil in the mid-hundreds per barrel--and nothing happened.

Perhaps I'm a cynic, but it seems to me that if companies either employ enough people and/or make enough money, either individually or in the aggregate as an industry, they tend to get at best a slap on the wrist. The donations you can make, the constituents you can mobilize to call their congressmen, and the jobs to can provide after public office for our elected officials all seem to count far more than any amount of bad press in determining what happens to you.

[Dawn Mallory]

Hooray! I agree ... if they didn't have ATMs they would have to pay PEOPLE to deal with all of us pseky customers ... now there is real expense!... Dawn

dawn@autograf.com