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United States Government Accountability Office: 
GAO: 

Report to Congressional Requesters: 

April 2013: 

Automated Teller Machines: 

Some Consumer Fees Have Increased: 

GAO-13-266: 

GAO Highlights: 

Highlights of GAO-13-266, a report to congressional requesters. 

Why GAO Did This Study: 

Since the 1960s, consumers have increasingly used ATMs to easily 
access their accounts and conduct transactions such as cash 
withdrawals. Consumers may incur fees to use ATMs, such as a “surcharge”
fee, which is paid to the ATM operator for transactions conducted at 
ATMs outside their financial institution’s network. In 2008, GAO 
reported that ATM surcharge fees had increased since 2000. GAO was 
asked to review issues related to continued increases in these fees. 

This report discusses (1) the business models for ATM operators and 
how they set ATM fees, (2) the amounts of fees that consumers incur to 
conduct ATM transactions and how these fees have changed over time, 
and (3) the reported costs of ATM operations for ATM operators and how 
the costs and revenues are expected to change. 

For this work, GAO surveyed a nongeneralizable sample of 30 financial 
institutions and 4 independent ATM operators to collect information on 
their ATM operations and costs in calendar year 2011. In addition, GAO 
analyzed two types of ATM fees data obtained from firms specializing 
in the financial services industry: (1) data on fees charged by 
financial institutions from 2007 to 2012 that are generalizable to all 
financial institutions in the United States, and (2) nongeneralizable 
data on fees charged by independent ATM operators that were procured 
by “mystery shoppers” at 100 judgmentally selected independent ATMs in 
2012. GAO also interviewed industry representatives and federal 
regulators to understand ATM operations and requirements. 

What GAO Found: 

Automated teller machine (ATM) operators include financial 
institutions-—banks and credit unions-—as well as independent firms. 
Industry representatives GAO spoke with estimate there are 
approximately 420,000 ATMs in the United States. They estimate that 
financial institutions operate and set the fees for about half of the 
market, and independent operators work together with merchants to 
operate the remainder and to determine the fees incurred by consumers. 
ATM operators have differing business models that affect the way they 
set ATM fees for consumers. Financial institutions operate ATMs as a 
convenience to their own account holders, who generally do not pay 
fees to use these ATMs, while non-account-holding customers do. At 
independent ATMs, most consumers incur a surcharge fee, although there 
are some exceptions, such as when the ATM is part of a surcharge-free 
ATM network. 

GAO estimates that the prevalence and amount of ATM surcharge fees 
charged by financial institutions have increased since 2007, and that 
the estimated average surcharge fee for financial institutions that 
charged a fee increased from $1.75 in 2007 to $2.10 in 2012, in 2012 
dollars. In 2012, surcharge fees charged by financial institutions 
ranged from $0.45 to $5.00. GAO’s analysis of a nongeneralizable 
sample of 100 ATMs run by independent operators found that the average 
surcharge fee was $2.24 and ranged from $1.50 to $3.00 in 2012. 
However, some independent ATMs may have surcharge fees that are higher 
or lower than those in GAO’s sample. In contrast, GAO estimates that 
the foreign fee—the fee assessed by financial institutions for using 
an ATM outside the institution’s network—generally stayed constant in 
dollar amount over this period. Consumers have many ways to obtain 
cash without incurring fees, such as using ATMs within their financial 
institution’s network. Additionally, some financial institutions 
participate in surcharge-free networks that allow their customers free 
access to ATMs outside their institution’s ATM network. These networks 
can greatly expand the number and location of ATMs available to 
consumers free of charge. 

GAO’s analysis of the ATM cost data reported by a nongeneralizable 
sample of financial institutions it surveyed revealed some differences 
in the biggest cost drivers for ATM operations. For example, large banks
’ reported costs for hardware and software investments were higher as 
a percentage of their reported total ATM costs than for the midsize 
banks and credit unions. Key cost drivers reported by the 
nongeneralizable sample of independent ATM operators varied, but 
commonly reported costs were rent, infrastructure, and transaction 
processing. In addition, most of the surveyed ATM operators reported 
that overall per-ATM costs have increased over the past 5 years, while 
per-ATM revenues have declined. Many of the operators GAO contacted 
believe that ATM operation costs will continue to rise in the future 
and that revenues will be flat or decline. 

View [hyperlink, http://www.gao.gov/products/GAO-13-266]. For more 
information, contact Alicia Puente Cackley at (202) 512-8678 or 
CackleyA@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

Business Models for Financial Institutions and Independent ATM 
Operators Impact How Fees Are Set: 

Some ATM Fees Have Increased, but Often Consumers Can Avoid Incurring 
Fees: 

ATM Operators Have Varying Costs, and Many Operators Anticipate Costs 
Will Rise: 

Agency Comments: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: Selected Results from GAO's Survey on ATM Operator Costs 
and Operations: 

Appendix III: Analysis of the Estimated Prevalence and Average Amount 
of ATM fees from 2007 to 2012: 

Appendix IVGAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Fees Paid by Consumers, Financial Institutions, and ATM 
Owners to Process ATM Transactions: 

Table 2: Description of Primary Independent ATM Operator Business 
Models: 

Table 3: Number of Financial Institutions Surveyed by Moebs Services, 
2007-2012: 

Table 4: Financial Institution ATM Operators in GAO Survey: 

Table 5: Independent ATM Operators in GAO Survey: 

Table 6: Number and Types of ATM Transactions Reported by All 
Financial Institutions in GAO Survey, Calendar Year 2011: 

Table 7: Number and Types of ATM Transactions Reported by Large Banks 
in GAO Survey, Calendar Year 2011: 

Table 8: Number and Types of ATM Transactions Reported by Midsize 
Banks in GAO Survey, Calendar Year 2011: 

Table 9: Number and Types of ATM Transactions Reported by Credit 
Unions in GAO Survey, Calendar Year 2011: 

Table 10: Number and Types of ATM Transactions Reported by Independent 
ATM Operators in GAO Survey, Calendar Year 2011: 

Table 11: Per-ATM Costs for Financial Institution ATM Operators in GAO 
Survey, Calendar Year 2011: 

Table 12: Estimated Percentage of Financial Institutions Charging a 
Surcharge Fee, by Type of Financial Institution and Year (2007-2012): 

Table 13: Estimated Percentage of Financial Institutions Charging a 
Foreign Fee, by Type of Financial Institution and Year (2007-2012): 

Table 14: Estimated Average Surcharge Fee, by Type of Financial 
Institution and Year (2007-2012): 

Table 15: Estimated Average Foreign Fee, by Type of Financial 
Institution and Year (2007-2012): 

Table 16: Estimated Percentage of Financial Institutions Charging a 
Surcharge Fee, by Size of Financial Institution and Year (2007-2012): 

Table 17: Estimated Percentage of Financial Institutions Charging a 
Foreign Fee, by Size of Financial Institution and Year (2007-2012): 

Table 18: Estimated Average Surcharge Fee, by Size of Financial 
Institution and Year (2007-2012): 

Table 19: Estimated Average Foreign Fee, by Size of Financial 
Institution and Year (2007-2012): 

Table 20: Estimated Percentage of Financial Institutions Charging a 
Surcharge Fee, by Location of Financial Institution and Year (2007-
2012): 

Table 21: Estimated Percentage of Financial Institutions Charging a 
Foreign Fee, by Location of Financial Institution and Year (2007-2012): 

Table 22: Estimated Average Surcharge Fee, by Location of Financial 
Institution and Year (2007-2012): 

Table 23: Estimated Average Foreign Fee, by Location of Financial 
Institution and Year (2007-2012): 

Table 24: Estimated Percentage of Financial Institutions Charging a 
Surcharge Fee, by Region of Financial Institution and Year (2007-2012): 

Table 25: Estimated Percentage of Financial Institutions Charging a 
Foreign Fee, by Region of Financial Institution and Year (2007-2012): 

Table 26: Estimated Average Surcharge Fee, by Region of Financial 
Institution and Year (2007-2012): 

Table 27: Estimated Average Foreign Fee, by Region of Financial 
Institution and Year (2007-2012): 

Figures: 

Figure 1: ATM Transaction Flow for "Off-Us" Cash Withdrawals: 

Figure 2: Estimated ATM Fees Charged by Banks and Credit Unions, 2007-
2012: 

Figure 3: Estimated Average Surcharge Fee, by Size, Type, Location, 
and Region of Financial Institution, 2012: 

Figure 4: Estimated Average Foreign Fee, by Size, Type, Location, and 
Region of Financial Institution, 2012: 

Figure 5: Top Five Costs Borne by Financial Institution ATM Operators 
in GAO Survey, as a Percentage of Reported Total Costs: 

Abbreviations: 

ABA: American Bankers Association: 

ADA: Americans with Disabilities Act: 

ATM: automated teller machine: 

ATMIA: ATM Industry Association: 

CFPB: Bureau of Consumer Financial Protection: 

EF: Telectronic funds transfer: 

FDIC: Federal Deposit Insurance Corporation: 

ICBA: Independent Community Bankers of America: 

NCUA: National Credit Union Administration: 

OCC: Office of the Comptroller of the Currency: 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

April 11, 2013: 

The Honorable Charles E. Schumer: 
The Honorable Tom Harkin: 
The Honorable Bernard Sanders: 
The Honorable Tom Udall: 
The Honorable Sheldon Whitehouse: 
United States Senate: 

Since the 1960s, consumers have increasingly used automated teller 
machines (ATM) to conveniently and quickly access their bank accounts 
and conduct transactions, including withdrawing cash, making balance 
inquiries, and depositing cash or checks. Consumers sometimes pay fees 
for conducting ATM transactions, which can include both a fee paid to 
the ATM operator ("surcharge" fee) and a fee paid to their own 
financial institution ("foreign" fee) when they use an ATM outside 
that institution's ATM network. According to industry estimates, the 
ATM business has grown substantially since the mid-1990s--from an 
estimated 165,000 ATMs in 1997 to 420,000 in 2012. In 2009, the most 
recent year for which data on ATM transactions are available, U.S. 
consumers made an estimated 6 billion withdrawals from ATMs, totaling 
$646.7 billion.[Footnote 1] We have reported in the past that ATM 
surcharge fees increased between 2000 and 2006.[Footnote 2] 

You asked us to review issues related to surcharge fees and what might 
be driving any increases. This report discusses: (1) the business 
models for ATM operators--financial institutions and independent firms-
-and how they set ATM fees; (2) the amounts of fees that consumers 
incur to conduct ATM transactions and how these fees have changed over 
time; and (3) the reported costs of ATM operations for financial 
institutions and independent ATM operators and how the costs and 
revenues are expected to change. 

To address these objectives, we reviewed prior GAO, regulatory, and 
industry reports on ATM fees and operations, and we interviewed 
relevant officials from the Board of Governors of the Federal Reserve 
System (the Federal Reserve), the Federal Deposit Insurance 
Corporation (FDIC), the Office of the Comptroller of the Currency 
(OCC), the National Credit Union Administration (NCUA), and the Bureau 
of Consumer Financial Protection, commonly known as CFPB. We also 
interviewed representatives from several banks, a credit union, and 
three independent ATM firms; industry associations; three electronic 
funds transfer (EFT) networks; a financial institution that sponsors 
independent ATM operators; and a consumer protection group. 

For the first objective and third objective, we interviewed and 
surveyed financial institution and independent ATM operators to 
collect information on their business operations and models, 
transaction levels for calendar year 2011, and what factors they take 
into account when setting fees. The survey also collected information 
on costs--for calendar year 2011--across 12 categories that we 
developed in consultation with industry representatives and staff from 
the Federal Reserve and CFPB. The survey was deployed to the 10 
largest banks and credit unions (by asset size) and 10 randomly 
selected midsize banks (with assets between $10 billion and $50 
billion). We received responses from 9 out of 10 large banks, 8 out of 
10 midsize banks, and 9 out of 10 credit unions. We designed and 
deployed a separate survey to four independent ATM operators that 
operate 10,000 or more ATMs and received responses from two.[Footnote 
3] We were not able to independently verify the cost information 
submitted by survey respondents. However, we asked the respondents to 
tell us what sources they used in calculating the costs they reported. 
They relied on sources such as internal accounting reports and third-
party bills. Based on the source information provided and follow-up 
calls with survey respondents, we determined the data they reported 
were sufficiently reliable for our purposes. In addition to the 
survey, we interviewed one large and two smaller independent ATM firms 
and held two group interviews with representatives from nine community 
banks, in order to obtain general information on their ATM costs and 
operations.[Footnote 4] None of the costs or operations data we 
collected are generalizable to ATM operators at-large. Due to the 
sensitive and possibly proprietary nature of the information we 
collected with the survey, we aggregate the cost data at a high level 
and present it in a way that prevents individual organizations from 
being identified. 

For the second objective, we analyzed data we purchased from two 
market research firms that specialize in the financial services 
industry. We obtained data on fees charged by banks and credit unions 
from 2007 through 2012 from Moebs Services, Inc. (Moebs). Moebs 
collected the data through telephone surveys with financial 
institutions selected using a stratified random probability sample, 
and therefore, when weighted, the data are generalizable to all 
financial institutions in the United States. We computed weighted 
estimates and 95 percent confidence intervals of the percentage of 
institutions charging surcharge and foreign fees and weighted averages 
and medians of these fees. We also examined the differences between 
the estimated prevalence, or percentage of institutions that charged 
each fee, and average fees for type and size of financial institution, 
as well as geographic region and type of location of the financial 
institution separately. We did not conduct a multivariate analysis 
using all of these factors, control for all factors at once, or 
control for additional factors in our analysis. We adjusted the dollar 
amounts of fees for inflation to remove the effect of changes in 
prices. The inflation-adjusted estimates used a base year of 2012 and 
Consumer Price Index calendar year values as the deflator. We relied 
on past interviews, analysis of the Moebs data, and the methodology 
report provided by Moebs, as well as reasonableness checks we 
conducted on the data we received to identify any missing, erroneous, 
or outlying data. We concluded that the data were sufficiently 
reliable for our purposes. Data on ATM fees charged by independent 
operators are not available, so we engaged the services of another 
research firm--Informa Research Services--to conduct "mystery shops" 
at 100 judgmentally selected independent ATMs in the top 10 
metropolitan statistical areas.[Footnote 5] The mystery shop process 
involved having a shopper go to each selected ATM and use his or her 
own debit card to conduct a transaction and document several aspects 
of the transaction, including the fee that he or she incurred. Our 
sample of independent ATM operators focused on ATMs in grocery stores, 
drug stores, gas stations, and liquor stores. These data indicate what 
independent ATM fees were on a particular day in 2012 at those 100 
ATMs and are not generalizable to the population of independent ATMs 
in the United States. 

We conducted this performance audit from November 2011 to April 2013, 
in accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. See appendix I 
for a more detailed description of our scope and methodology. 

Background: 

ATM transactions involve several different participants, including the 
customer at the terminal (the "consumer"); financial institutions such 
as banks, thrifts, and credit unions; and other entities involved in 
electronically processing transactions. Financial institutions 
typically issue debit cards to account holders that can be used for 
purchases at the point of sale or to conduct ATM transactions. ATM 
owners can be depository institutions, such as banks and credit 
unions, or public or private companies, such as merchants or 
independent operators that specialize in offering ATMs and related 
processing and support services.[Footnote 6] Independent operators may 
own their ATMs as well as provide ATMs under contract to merchants 
(for which the independent operators provide processing and other 
support services). Some independently owned ATMs are "branded" ATMs, 
where an independent firm owns and operates the machine but a 
financial institution pays for the right to display its logo on the 
terminal and to allow its customers to access the machine free of 
charge. Independent ATM operators must have a depository institution 
that sponsors their membership in the EFT networks that process ATM 
transactions. Financial institutions have a relationship with account 
holders outside of ATM transactions, while independent ATM operators' 
sole relationship with the consumer is through use of the ATM. 

The EFT networks provide the infrastructure that allows funds to be 
transferred electronically and provide a means for an ATM card from 
one financial institution to be used at another financial 
institution's or independent operator's ATM. EFT networks route 
transactions between the ATMs and the card-issuing financial 
institutions and act as a clearinghouse to settle those transactions. 
They establish the rules and requirements for any financial 
institution that chooses to participate in the EFT network. These 
networks perform millions of transactions monthly. 

The steps involved in an ATM transaction depend on whether or not a 
consumer uses an ATM owned by his or her financial institution 
(typically referred to as an "on-us" transaction) or an ATM owned by 
another financial institution or firm (typically referred to as an 
"off-us" transaction). On-us transactions are not routed through the 
EFT networks but instead are processed internally by the consumer's 
financial institution.[Footnote 7] In both cases, the ATM transaction 
begins when the consumer inserts the ATM or debit card into an ATM, 
enters the personal identification number, selects the transaction to 
be performed--such as a cash withdrawal from the consumer's checking 
account--and enters the amount of the transaction.[Footnote 8] For off-
us transactions, the terminal sends this information to the sponsoring 
financial institution to identify the card-issuing financial 
institution, which determines the EFT network used to route the 
transaction.[Footnote 9] The EFT network passes the request for 
authorization to the consumer's financial institution, which approves 
or denies the transaction based on the terms and conditions of the 
consumer's account and the availability of funds. The approval or 
denial message is sent back to the ATM terminal, first through the EFT 
network and then through the sponsoring bank. If the transaction is 
authorized, the consumer receives the requested cash, and the 
transaction is posted to the consumer's account, deducting the amount 
of money the consumer received at the ATM plus any fees assessed. 
Using the EFT network, the consumer's financial institution pays the 
ATM owner the withdrawal amount plus any assessed surcharges. Figure 1 
depicts the transaction flow among the parties involved in an off-us 
ATM transaction. 

Figure 1: ATM Transaction Flow for "Off-Us" Cash Withdrawals: 

[Refer to PDF for image: illustration] 

Off-us transaction path: 

Consumer: Uses ATM: 
Cash withdrawal request; 
ATM sponsoring financial institution sends authorization request 
through EFT Networks to Card-issuing financial institution; 
Transaction posted to cardholder account; 
Authorization response sent through EFT Networks to ATM sponsoring 
financial institution; 
ATM dispenses cash (if request approved). 

Source: GAO; Art Explosion (clip art). 

[End of figure] 

Several fees can be paid by the consumer and the other participants in 
order to process an ATM transaction.[Footnote 10] Consumers may be 
charged two types of fees. First, the ATM owner may assess a surcharge 
fee on the consumer for conducting a transaction at the ATM. Federal 
regulations require ATM operators to provide notice that the surcharge 
fee will be imposed and disclose the amount of the fee on the ATM 
screen before the consumer commits to paying the fee.[Footnote 11] 
Surcharge fees also appear on the transaction receipt and again on the 
consumer's account statement--sometimes combined with the cash 
withdrawal amount. Second, a foreign ATM fee is a fee that may be 
assessed by the consumer's financial institution when the consumer 
uses an ATM owned by another ATM operator. The foreign ATM fee is not 
disclosed at the ATM. Rather it is provided to consumers in 
information they receive when they open their account, in fee 
disclosures, and on their periodic statements when they incur the fee. 
[Footnote 12] 

The consumer's financial institution and the ATM operator also pay 
certain fees to process an ATM transaction. Specifically, the 
interchange fee is set by the EFT networks and paid by the consumer's 
financial institution to the ATM owner for the costs of placing and 
maintaining ATMs. The switch fee is assessed by the EFT networks on 
the consumer's financial institution to pay for processing each of its 
network transactions. Finally, the acquiring fee is paid by the ATM 
owner to the EFT networks for use of the networks to conduct the ATM 
transaction. Table 1 provides a summary of the fees paid by consumers, 
financial institutions, and ATM operators during an ATM transaction. 

Table 1: Fees Paid by Consumers, Financial Institutions, and ATM 
Owners to Process ATM Transactions: 

Fee: Surcharge fee; 
Who pays: Consumer; 
Who receives: ATM owner; 
Description: Paid to the ATM owner by the consumer when using an ATM 
not owned by his or her financial institution. 

Fee: Foreign fee; 
Who pays: Consumer; 
Who receives: Consumer's financial institution; 
Description: Paid to the consumer's financial institution by the 
consumer when using an ATM not owned by the card-issuing financial 
institution. 

Fee: Interchange fee; 
Who pays: Consumer's financial institution; 
Who receives: ATM owner; 
Description: Paid to the ATM owner for the costs of operating and 
maintaining the ATM. 

Fee: Switch fee; 
Who pays: Consumer's financial institution; 
Who receives: EFT networks; 
Description: Paid to the EFT networks for routing transaction 
information over the network. 

Fee: Acquiring fee; 
Who pays: ATM owner; 
Who receives: EFT networks; 
Description: Paid to the EFT networks for the use of the network by 
the ATM owner. 

Source: GAO analysis of Federal Reserve and industry documents. 

[End of table] 

Business Models for Financial Institutions and Independent ATM 
Operators Impact How Fees Are Set: 

Financial institutions and independent ATM operators have different 
business models and, as a result, set ATM surcharge fees differently. 
Financial institutions operate ATMs as a convenience to their own 
account holders, who generally do not pay fees to use these ATMs. 
However, financial institutions do assess a surcharge fee when a 
transaction is conducted by nonaccount-holding consumers. Independent 
ATM operators charge surcharge fees to most customers, and in many 
cases operators work with merchants to determine those fees. 

Financial Institutions Operate ATMs Primarily for Their Own Account 
Holders, Often with No Fees: 

According to industry estimates, there are approximately 420,000 ATMs 
currently operating in the United States, and financial institutions 
operate just under half of those machines, either in their own 
facilities or at off-site locations, such as shopping centers, drug 
stores, and grocery stores. Those financial institutions that 
responded to our survey--representing 81,833 ATMs--reported they 
placed 57 percent of their total ATM fleet at bank facilities, while 
43 percent were located off site.[Footnote 13] Financial institutions 
typically own or operate their ATMs. In some cases, financial 
institutions partner with independent firms to operate branded ATMs 
that carry the financial institution's logo and look and function as 
if they belong to the institution but are owned by an independent ATM 
operator. As previously discussed, under these arrangements, the 
account holders for that financial institution are allowed to use the 
branded ATMs without paying a fee. 

Financial institution representatives told us they view access to ATMs 
as a key service they provide to account holders. A representative 
from a large national bank said that its personal banking business is 
driven by customer convenience. Therefore they view access to ATMs as 
an important service to their account holders and have invested in a 
large fleet of ATMs for customer use. Likewise, a community banker we 
interviewed said that they view their ATMs as a way of extending the 
bank's hours for customers to receive cash and make deposits. 
Representatives from two large national banks said that they consider 
where their customer base is located when determining where to place 
an ATM. One large bank representative noted that the bulk of the 
bank's ATM business is its own customers, so it invests in ATMs and 
places them in locations near the greatest numbers of account holders. 
Financial institutions that have smaller fleets of ATMs, such as some 
credit unions and community banks, may offer their account holders 
access to ATMs by participating in a surcharge-free network. When a 
financial institution enrolls in a surcharge-free network, all ATMs in 
that network are available to their account holders surcharge free. 

Financial institutions generally do not charge their own account 
holders for transactions conducted within their own ATM network. When 
establishing surcharge fees charged to nonaccount-holding customers, 
the financial institutions we surveyed most frequently cited three 
factors that they consider, the first being competition--the fees 
being charged by nearby ATMs.[Footnote 14] Likewise, one bank 
representative we interviewed said that they do not want the fee to be 
so high that they turn away potential customers; instead, they want 
account holders from other financial institutions to use their ATMs 
and based on that experience, open accounts at their bank. Similarly, 
one of the community bankers we spoke to said that they try to set 
their fee just below those of other ATMs in the area so that they can 
increase their own transaction volume. In contrast, a few industry 
representatives told us that generally fees are set higher at areas 
where there is more limited ATM competition, such as airports and 
amusement parks. 

The second most cited factor by survey respondents that they consider 
when setting surcharge fees was cost of operating the ATM.[Footnote 
15] However, several of the financial institution officials we 
interviewed noted that the surcharge fees do not cover the costs of 
operating their ATMs, and the institution takes a loss on the ATM to 
provide the service to its account holders. The third most frequently 
cited factor the surveyed financial institutions take into account 
when setting surcharge fees was anticipated usage, or transaction 
levels.[Footnote 16] For example, representatives from two large banks 
noted that surcharge fees help ensure ATM availability for their 
account holders while also making the service available as a 
convenience for nonaccount-holding customers. Furthermore, the 
surcharge revenues at some locations can subsidize expensive or 
unprofitable ATM locations such as airports, colleges, and business 
districts. 

Independent ATM Operators Work with Merchants to Operate Terminals and 
Set Fees: 

Independent ATM firms--those not part of a financial institution--own, 
operate, or service just over half of the nation's ATMs in a variety 
of locations, such as gas stations and convenience stores, bars, 
restaurants, and small businesses, according to industry 
sources.[Footnote 17] The independent ATM industry is very diverse, 
with firms ranging in size from fewer than five ATMs to tens of 
thousands. According to information we have gathered, the two largest 
independent firms operate an estimated 47 percent of the independent 
ATM market. In addition to owning and operating their own ATMs, these 
independent firms offer a wide range of ATM-related services to 
merchants and other entities that own ATMs, such as monitoring and 
maintaining appropriate cash levels in terminals and processing 
transactions. There are four primary business models for independent 
ATM operators, shown in table 2. 

Table 2: Description of Primary Independent ATM Operator Business 
Models: 

Name of business model: Turnkey; 
Independent operator responsibilities: Owns the ATM and is responsible 
for most aspects of its operations, including ATM monitoring, managing 
and loading cash, replacing supplies, and providing maintenance, 
customer-service support, and transaction processing; 
Merchant responsibilities: Provides a place to locate the ATM and an 
electric outlet to power it. 

Name of business model: Merchant-Assisted; 
Independent operator responsibilities: Owns the ATM, provides all 
transaction processing, performs ATM monitoring and related customer-
service support, and, in some cases, performs maintenance for more 
complicated problems; 
Merchant responsibilities: Provides and loads cash as well as performs 
basic maintenance. 

Name of business model: Merchant-Owned & Loaded; 
Independent operator responsibilities: Provides transaction-processing 
services, ATM monitoring, and other services, such as customer-service 
support and arranging for advanced maintenance; 
Merchant responsibilities: Owns the ATM, responsible for the majority 
of the operations, including basic maintenance and managing and 
loading cash. 

Name of business model: Merchant Cash-Assisted; 
Independent operator responsibilities: Provides and loads cash, and 
provides transaction-processing services, ATM monitoring, and other 
services, such as customer service support and arranging for advanced 
maintenance; 
Merchant responsibilities: Owns the ATM, responsible for operations, 
including basic maintenance, but not managing and loading cash. 

Source: GAO analysis of industry reports. 

[End of table] 

According to the ATM Industry Association, approximately 20 percent of 
the independent ATMs in the United States are owned by an independent 
ATM firm. The other 80 percent of independent ATMs are owned by 
merchants and retailers. In these situations, independent ATM firms 
provide varying levels of nonownership services and support to 
merchants, depending on the business model established. We found that 
the independent ATM firms included in our study had similarly 
diversified portfolios, where they both owned and operated ATMs while 
also providing services to merchants who owned the ATMs in their 
stores. We also found that, among the firms in our study, there was 
great variability as to the percentage of ATMs owned by the firm 
versus the merchant. For example, one smaller independent firm we 
spoke with owned 79 percent of the approximately 500 ATMs in its 
fleet, while the remaining 21 percent were merchant owned. In 
contrast, the two independent firms that participated in our survey--
representing approximately 66,000 ATMs--owned 2 percent of their ATMs, 
while merchants owned the other 98 percent. 

Independent ATM operators generally levy a surcharge on consumers, 
although there are exceptions. Unlike financial institutions, which 
have a relationship with consumers who are also account holders 
through which they can gain revenue from other account fees, 
independent ATM operators' only relationship with the consumer is 
through their use of the ATM. Most independent ATM operators charge a 
surcharge fee to consumers for the convenience of accessing their 
account from a machine outside their bank's ATM network. In addition, 
as previously discussed, those consumers may be charged a foreign fee 
by their own bank for using these independent ATMs (or ATMs run by 
financial institutions other than their own). However, some 
transactions at independent ATMs are surcharge free because the ATMs 
may be bank-branded or may be part of one or more surcharge-free 
networks. 

When placing, operating, and servicing ATMs in retail space, 
independent ATM firms establish contracts with the merchants that 
specify which party will set the surcharge fee and how, if at all, 
those and other fee revenues will be shared. For turnkey and merchant-
assisted ATMs, the surcharge fees are generally set by the independent 
ATM firms because they own the machines.[Footnote 18] For ATMs that 
are owned by merchants or retailers in the United States, the fees are 
set by either the merchant or a combination of the merchant and the 
independent ATM firm. A representative from one independent firm said 
that if the ATM is owned by the merchant, the firm is not involved in 
setting the surcharge fee, except to make suggestions to the merchant 
or to refuse to process the transaction if it determines the fee is 
exorbitant. 

Like financial institutions, when setting surcharge fees, independent 
operators typically consider fees at the nearby ATMs, the location, 
and operating costs. A representative from one independent ATM firm 
said that the market dictates the surcharge fee and he can only charge 
what his competitors are charging. The location of the ATM is also 
considered when setting the surcharge fee. Another independent 
operator said he considers the type of location where the ATM will be 
placed and the resulting demographic that will frequent that area. He 
evaluates what fee is competitive for the region or neighborhood and 
the type of location. For example, some ATMs have lower fees because 
they are placed in lower income areas. Another firm representative 
said that the surcharge fee in bars, nightclubs, and casinos is 
typically higher than the surcharge fee in a grocery store. The third 
factor is the cost of running the ATM terminal. An independent ATM 
operator we spoke with said that the firm establishes fees that, when 
combined with other revenues such as interchange fees, will provide 
sufficient revenue to cover the variable cost of processing 
transactions and the fixed cost of installing the ATM. 

Some ATM Fees Have Increased, but Often Consumers Can Avoid Incurring 
Fees: 

Our review found that since 2007, surcharge fees assessed by financial 
institutions have generally increased. We also found that the 
percentage of financial institutions charging foreign fees and the 
amount ATM users pay in foreign fees has remained constant. However, 
consumers can obtain cash without paying ATM fees in a number of ways, 
such as using their own banks' ATMs or requesting cash back at the 
point of sale. 

ATM Surcharge Fees Assessed by Financial Institutions Have Increased, 
While Foreign Fees Remained Constant: 

Our analysis shows that the prevalence and amount of ATM surcharge 
fees levied by financial institutions have generally increased since 
2007, while foreign fees have generally remained constant in 
prevalence and amount, as seen in figure 2.[Footnote 19] We analyzed 
data obtained from a private vendor--based on annual surveys of 
hundreds of banks, thrifts, and credit unions on selected banking 
fees--and found that the percentage of financial institutions charging 
surcharge fees rose from an estimated 87 percent to 96 percent from 
2007 through 2012.[Footnote 20] Of those institutions that charged a 
surcharge fee, the estimated average ATM surcharge fee increased from 
$1.75 in 2007 to $2.10 in 2012.[Footnote 21] The estimated median ATM 
surcharge fee rose from $1.56 in 2007 to $2.00 in 2012. Surcharge fees 
charged by financial institutions in our sample ranged from $0.28 to 
$5.52 in 2007, and the range was $0.45 to $5.00 in 2012. Meanwhile, 
foreign fees did not significantly change in prevalence and amount 
from 2007 to 2012. Our analysis of the data shows that the estimated 
percentage of financial institutions charging their customers a 
foreign fee between 2007 and 2012 has remained fairly constant at 
about 55 percent. In addition, our analysis shows that for 
institutions that charge a foreign fee, the estimated average fee did 
not significantly change between 2007 ($1.36) and 2012 ($1.42). The 
estimated median foreign fee was $1.09 in 2007 and $1.00 in 2012. 
[Footnote 22] Foreign fees charged by financial institutions in the 
sample ranged from $0.28 to $5.52 in 2007, and the range was $0.25 to 
$5.00 in 2012. 

Figure 2: Estimated ATM Fees Charged by Banks and Credit Unions, 2007-
2012: 

[Refer to PDF for image: combined vertical bar and line graph] 

Year: 2007; 
Percent charging foreign fee: 56.0%; 
Percent charging surcharge fee: 87.2%; 
Average foreign fee: $1.36; 
Average surcharge fee: $1.75. 

Year: 2008; 
Percent charging foreign fee: 55.2%; 
Percent charging surcharge fee: 83.1%; 
Average foreign fee: $1.37; 
Average surcharge fee: $1.80. 

Year: 2009; 
Percent charging foreign fee: 48.2%; 
Percent charging surcharge fee: 86.5%; 
Average foreign fee: $1.44; 
Average surcharge fee: $1.95. 

Year: 2010; 
Percent charging foreign fee: 56.0%; 
Percent charging surcharge fee: 93.0%; 
Average foreign fee: $1.43; 
Average surcharge fee: $1.98. 

Year: 2011; 
Percent charging foreign fee: 49.2%; 
Percent charging surcharge fee: 95.7%; 
Average foreign fee: $1.39; 
Average surcharge fee: $2.01. 

Year: 2012; 
Percent charging foreign fee: 53.7%; 
Percent charging surcharge fee: 96.0%; 
Average foreign fee: $1.42; 
Average surcharge fee: $2.10. 

Source: GAO analysis of Moebs Service data. 

Note: Dollar amounts are in 2012 dollars, calculated using the 
Consumer Price Index calendar year values. We computed weighted 
estimates and 95 percent confidence intervals of the percentage of 
institutions charging surcharge and foreign fees and weighted averages 
and medians of these fees. All percentage estimates presented in this 
report have a margin of error of +/-5 percentage points or fewer and 
all average and median estimates have a relative margin of error of 
+/-5 percent or less, unless otherwise noted. 

[End of figure] 

We estimate that there were no statistically significant differences 
in 2012 in the prevalence of the surcharge fee based on the type and 
size of institution, or on geographic region or location--such as 
rural, urban, or suburban--in which the financial institution was 
located.[Footnote 23] The estimated average surcharge fee amount, for 
institutions that charged a fee, differed slightly by size and type of 
financial institution.[Footnote 24] In 2012, the estimated average 
surcharge fee for larger financial institutions was approximately 
$0.24 higher than the estimated average surcharge fee for smaller 
financial institutions, and banks' estimated average surcharge fees 
were also $0.17 higher than the estimated average surcharge fees 
charged by credit unions.[Footnote 25] For example, in 2012, the 
estimated average surcharge fee for using a large financial 
institution's ATM was $2.25, while the estimated average surcharge fee 
at a small financial institution's ATM was $2.01. In contrast, there 
were no statistically significant differences in estimated average ATM 
fees in 2012 based on the type of location and geographic region in 
which the financial institution was located.[Footnote 26] See figure 3 
for information on the estimated average surcharge fee amount based on 
several factors for 2012. 

Figure 3: Estimated Average Surcharge Fee, by Size, Type, Location, 
and Region of Financial Institution, 2012: 

[Refer to PDF for image: vertical bar graph] 

Overall average fee: $2.10. 

Financial institution size: 
Small: $2.01; 
Medium: $2.15; 
Large: $2.25. 

Type of institution: 
Bank: $2.16; 
Credit union: $1.99. 

Location: 
Large city: $2.15; 
Rural: $2.08; 
Small city: $2.09; 
Suburban: $2.18. 

Region: 
East: $2.06; 
Midwest: $2.05; 
South: $2.18; 
West: $2.11. 

Source: GAO analysis of Moebs Service data. 

Note: Dollar amounts are in 2012 dollars, calculated using the 
Consumer Price Index calendar year values. We analyzed the estimated 
average, median, and range of ATM fees for all financial institutions 
from 2007 through 2012, but due to the large sample size, we chose to 
conduct our analysis of variation in fees using the estimated 
averages. We examined the differences between the estimated average 
fees for type, size, location, and geographic region separately. We 
did not conduct a multivariate analysis using all of these factors or 
control for any additional factors in our analysis. Our estimates have 
relative margins of error at the 95 percent confidence level of +/-5 
percent or less, with these exceptions: financial institutions in 
large cities (+/-7.9 percent). 

[End of figure] 

We estimate that a higher percentage of large financial institutions 
charged a foreign fee in 2012 than small financial institutions. 
Specifically, an estimated 73 percent of large financial institutions 
charged a foreign fee in 2012 compared to an estimated 50 percent of 
small financial institutions. For those institutions charging the 
foreign fee, the estimated average fee amount was greater for large 
institutions and for banks. In 2012, large financial institutions had 
an estimated average foreign fee of $1.62, which is $0.26 more than 
the estimated average foreign fee charged by small financial 
institutions, which had an estimated average foreign fee of $1.36. 
Additionally, the average foreign fee was an estimated $0.23 higher at 
banks than credit unions in 2012.[Footnote 27] See figure 4 for more 
information on the estimated average amount of foreign ATM fees based 
on various factors for 2012. 

Figure 4: Estimated Average Foreign Fee, by Size, Type, Location, and 
Region of Financial Institution, 2012: 

[Refer to PDF for image: vertical bar graph] 

Overall average fee: $1.42. 

Financial institution size: 
Small: $1.36; 
Medium: $1.45; 
Large: $1.62. 

Type of institution: 
Bank: $1.52; 
Credit union: $1.29. 

Location: 
Large city: $1.36; 
Rural: $1.40; 
Small city: $1.44; 
Suburban: $1.42. 

Region: 
East: $1.34; 
Midwest: $1.44; 
South: $1.45; 
West: $1.42. 

Source: GAO analysis of Moebs Service data. 

Note: Dollar amounts are in 2012 dollars, calculated using the 
Consumer Price Index calendar year values. We analyzed the estimated 
average, median, and range of ATM fees for all financial institutions 
from 2007 through 2012, but due to the large sample size, we chose to 
conduct our analysis of variation in fees using the mean. We examined 
the differences between the estimated average fees for these factors 
separately. We did not conduct a multivariate analysis using all of 
these factors or control for any additional factors in our analysis. 
Our estimates have relative margins of error at the 95 percent 
confidence level of +/-5 percent or less, with these exceptions: 
financial institutions in large cities (+/-11.8 percent), suburban 
financial institutions (+/-6.7 percent), financial institutions in the 
East (+/-5.6), financial institutions in the South (+/-5.7), and 
financial institutions in the West (+/-6.7). 

[End of figure] 

Historical or trend data for independent ATM operators' fees are not 
available. However, we analyzed data from Informa Research Services on 
the fees charged by a judgmentally selected sample of 100 ATMs run by 
independent ATM operators in 2012.[Footnote 28] These data are not 
generalizable to the independent ATM population at-large.[Footnote 29] 
Our analysis of the Informa data shows that the average surcharge fee 
for the 100 independent ATMs surveyed was $2.24 in 2012.[Footnote 30] 
The median surcharge fee for independent ATMs included in the sample 
was $2.00. The surcharge fee ranged from $1.50 to $3.00. However, some 
independent ATMs may have surcharge fees that are higher or lower than 
those in our sample. While we do not have historical data on 
independent ATM surcharges, representatives from a large independent 
ATM firm told us that their average surcharge fees rose from $1.77 in 
2002 to $2.46 in 2011.[Footnote 31] 

Aggregate data are also not available on the prevalence of surcharge 
fees among independent ATM operators. However, data obtained by 
mystery shoppers from a sample of 100 judgmentally selected 
independent ATMs in the top 10 metropolitan statistical areas, show 
that most of these ATMs charged a surcharge fee to the mystery 
shopper, but some transactions were conducted surcharge free. 
Specifically, in our sample of 100 independent ATMs, six mystery 
shoppers conducted a transaction for free using the selected ATM. In 
four of the six cases, the shoppers were able to conduct a transaction 
surcharge free since both the ATM and the shopper's debit card 
displayed the logo of a surcharge-free network. In the other two cases 
where no surcharge was incurred, we sent a second mystery shopper to 
use the terminal, and the second shopper was charged a fee. We were 
unable to determine why the first mystery shoppers were not charged 
surcharge fees, but we did note that the ATMs had surcharge-free 
network logos on them. 

The independent ATM firms we surveyed reported similar results to the 
mystery shopping data. The two independent firms reported in our 
survey that out of 140,634,638 cash withdrawals at their ATMs in 
calendar year 2011, customers incurred a surcharge fee 97 percent of 
the time.[Footnote 32] However, the percentage of transactions that 
are surcharge free may vary depending on the extent to which the ATM 
operator is involved in surcharge-free networks or branding 
agreements. For example, one large independent ATM operator estimates 
that more than half of the transactions that occur on its ATMs do not 
generate a surcharge fee due to either a surcharge-free network or 
branding agreements.[Footnote 33] 

Consumers Have Many Ways to Obtain Cash without Incurring Fees: 

To obtain cash without incurring fees, consumers can generally 
withdraw cash at a bank branch during banking hours or use ATMs in 
their bank's network. Our analysis indicates that a majority of 
transactions at financial institution ATMs may occur in this way. 
Specifically, according to our survey data, approximately 92 percent 
of the 3.3 billion reported transactions in calendar year 2011 at the 
financial institutions that responded did not incur a surcharge 
fee.[Footnote 34] At midsize and large banks we surveyed, ATM cash 
withdrawals did not incur a surcharge fee about 85 percent of the 
time. Additionally, our survey results showed that cash withdrawals at 
credit unions were surcharge free 95 percent of the time. Further, 
some industry representatives told us that financial institutions' 
ATMs typically have a higher volume of transactions than independent 
ATMs. While our survey results are not generalizable to the total 
population of ATM operators, they did reveal that per-ATM transaction 
levels were much higher at financial institution ATMs than at 
independent ATMs for operators responding to the survey. As previously 
discussed, bank representatives we spoke to said that transactions at 
their ATMs are primarily from their own account holders, who do not 
incur fees for the transaction, and a large EFT network estimated that 
80 percent of ATM transactions are on-us transactions and do not incur 
a fee. Consumers also avoid paying foreign fees in on-us transactions, 
because they are using machines within their financial institution's 
ATM network.[Footnote 35] However, all consumers may not have 
convenient access to their own financial institution's ATMs to obtain 
cash. Some account holders may live in areas with limited access to a 
financial institution facility, or need cash at a time when they are 
unable to go to their own financial institution--for example when 
attending a sporting event or while raveling. 

Additionally, some financial institutions participate in surcharge-
free networks that allow their customers free access to ATMs outside 
their bank's network of ATMs. In this way, a financial institution can 
expand the number and location of ATMs available to its customers. 
Three of the largest surcharge-free networks in the United States each 
offered more than 20,000 ATMs, and some customers whose financial 
institutions have enrolled in those networks can use those ATMs 
without incurring a surcharge fee.[Footnote 36] Four banks and eight 
credit unions in our survey reported that they participated in at 
least one surcharge-free network, expanding the number of surcharge-
free ATMs available to their customers. For example, one credit union 
in the survey owned and operated 251 ATMs and enrolled in a surcharge-
free network that gave its customers access to an additional 30,000 
ATMs free of charge. However, ATMs in surcharge-free networks may not 
be available to all customers. One of the largest surcharge-free 
networks in the country states that 80 percent of the ATMs in its 
network are in metropolitan areas. 

Also, many financial institutions use branding agreements to expand 
their network of ATMs, which allows their consumers to withdraw funds 
from these ATMs without incurring fees. For example, the number of 
branded ATMs with financial institution logos increased from 11,900 in 
2010 to 15,400 in 2011 for one large independent ATM operator, 
according to the operator's annual reports. Among our surveyed 
financial institutions, branded ATMs accounted for approximately 16 
percent of the total number of reported ATMs.[Footnote 37] One small 
independent ATM operator estimated that 55 percent of customers who 
use its ATMs pay a fee, and that percentage has decreased over the 
past 5 years due to an increase in financial institution branding and 
access to surcharge-free networks. 

Some financial institutions offer to refund ATM fees to account 
holders when they use an ATM. One community banker we spoke to said 
the bank gives consumers rebates on ATM fees up to $20 each month and 
that this approach is more cost effective than owning and maintaining 
a fleet of ATMs. Finally, industry participants we spoke with said 
that consumers are increasingly obtaining cash when making debit card 
purchases, which also allows them to avoid fees. One community banker 
we spoke to said that the bank educates customers and encourages them 
to obtain cash at the point of sale so that they do not incur ATM fees 
and the bank can have a smaller ATM fleet. However, as previously 
discussed, these options may not be available to all consumers, and we 
do not know the extent to which consumers obtain cash at the point of 
sale or receive ATM fee refunds. 

ATM Operators Have Varying Costs, and Many Operators Anticipate Costs 
Will Rise: 

ATM operators incur a variety of costs--including rent to place the 
machines in retail locations and security costs to keep the machines 
safe, among others--and the amount of these costs varies widely among 
operators. ATM operators report taking a number of steps to respond to 
changing operating costs, such as increasing surcharge fees and 
investing less money in ATMs. However, operators also anticipate that 
many of these costs will rise in the future. 

Financial Institution and Independent ATM Operators Have a Variety of 
Disparate Costs: 

ATM operators incur a wide variety of costs in providing ATM services. 
Our survey of a judgmental sample of the 10 largest banks and credit 
unions, 10 randomly selected midsize banks ("financial institution" 
operators), and 4 large independent ATM firms ("independent" 
operators) collected information on the following cost categories, all 
of which--except bank sponsorship--are typically borne by both 
financial institution and independent ATM operators.[Footnote 38] 

* Rent. Financial institution operators pay rent for ATM facilities at 
locations not in an institution facility, and independent operators 
pay rent for retail or other locations, such as grocery stores or gas 
stations.[Footnote 39] 

* Hardware and software investments. Operators purchase, install, and 
upgrade ATM software and equipment, including the ATM terminals and 
physical security equipment, such as bolting devices which secure the 
machines to walls or the floor. 

* Cash services. Operators must take steps to ensure that ATMs are 
adequately stocked with cash and, therefore, spend time and resources 
monitoring transaction levels in order to accurately forecast future 
cash needs. Cash is delivered to the ATM via armored carrier. 
Independent operators also need to pay to access a supply of cash from 
a bank vault. 

* Maintenance and repairs. Maintenance includes cleaning the 
machinery, making routine repairs, and restocking of supplies (such as 
receipt paper), as well as more significant repairs, which can incur 
higher costs for tools, parts, and labor. 

* Physical security and insurance. Physical security costs are those 
incurred to keep the ATM and the surrounding lobby or area safe and 
include items such as lighting and cameras. Insurance costs include 
those policies that cover the cash in the machines. 

* Infrastructure and processing. Operators need to install and 
maintain the telecommunications infrastructure necessary for ATM 
operations and transaction processing. Processing costs include fees 
associated with transaction processing (switch fees) and costs 
associated with interbank settlement and account posting. 

* Network fees. ATM operators pay membership or license fees to the 
EFT networks in order to route transactions on the networks.[Footnote 
40] Network fees also include any fees the ATM operator pays for 
membership in one or more surcharge-free networks. 

* Taxes and licenses. In addition to property and sales taxes, ATM 
operators are sometimes required to pay for state and local licenses, 
on either a one-time or recurring basis. 

* Regulatory and compliance costs. Regulatory and compliance costs 
include paying for the required ATM signage alerting customers to any 
fees, as well as the costs of regulatory inspections and reviews. 
[Footnote 41] 

* Fraud prevention and fraud losses. Fraud prevention costs are those 
related to activities aimed at detecting and preventing ATM fraud. 
Fraud losses are those incurred by the ATM operator when fraud occurs, 
including cash theft and ATM robberies.[Footnote 42] 

* Bank sponsorship. Bank sponsorship is a cost borne only by 
independent ATM operators, which, as previously discussed, must have a 
financial institution that sponsors their membership in the EFT 
networks. 

Key Operating Costs Varied across Different ATM Operators: 

ATM operators we surveyed and spoke with indicated that key drivers of 
operating costs varied. For example, in our survey, large banks 
reported much higher costs for some categories, as a percentage of 
total costs, than did midsize banks and credit unions. Likewise, in 
some cost categories there was a wide range of reported per-ATM costs, 
while in other categories, the per-ATM costs were fairly consistent. 
None of the data we collected on costs are generalizable to either the 
financial institution or independent ATM operator populations at-
large, although some costs, such as hardware and software investments, 
were mentioned as key drivers by many of the operators included in our 
work. 

Financial Institution ATM Operators: 

Our analysis of the data collected from a sample of 30 institutions 
from three financial institution types--large bank, medium bank, and 
credit union--revealed some key differences in the biggest cost 
drivers for these ATM operators.[Footnote 43] The large banks' costs 
for hardware and software investments were much higher as a percentage 
of their total costs than for midsize banks and credit unions in our 
survey. As shown in figure 5, the majority (63 percent) of the larger 
banks' costs were for hardware and software investments and upgrades. 
The second most prominent cost for the large banks was rent (15 
percent of overall costs), followed by maintenance and repair (9 
percent of overall costs) and cash services (6 percent of overall 
costs). In contrast, the hardware and software investments were a much 
smaller percentage of reported total costs for the midsize banks (18 
percent) and credit unions (23 percent) in our survey.[Footnote 44] In 
addition, midsize banks and credit unions that participated in our 
survey had much more even proportions of spending across the various 
cost categories. Midsize banks and credit unions also reported that a 
greater percentage of total costs were dedicated to infrastructure and 
processing (17 and 23 percent respectively), compared to the large 
banks (2 percent).[Footnote 45] 

Figure 5: Top Five Costs Borne by Financial Institution ATM Operators 
in GAO Survey, as a Percentage of Reported Total Costs: 

[Refer to PDF for image: illustrated table] 

ATM cost category: ATM hardware and software[A]; 
Percentage of total costs by type of institution: 
Large banks: 63.80%; 
Midsize banks: 18.17%; 
Credit unions: 23.27%. 

ATM cost category: Rent; 
Percentage of total costs by type of institution: 
Large banks: 15.32%; 
Midsize banks: 10.41%; 
Credit unions: 8.02%. 

ATM cost category: Maintenance and repair; 
Percentage of total costs by type of institution: 
Large banks: 9.18%; 
Midsize banks: 17.64%; 
Credit unions: 18.27%. 

ATM cost category: Cash services; 
Percentage of total costs by type of institution: 
Large banks: 5.89%; 
Midsize banks: 18.79%; 
Credit unions: 21.47%. 

ATM cost category: Net fraud loss; 
Percentage of total costs by type of institution: 
Large banks: 2.63%; 
Midsize banks: 2.42%; 
Credit unions: 0.56%. 

ATM cost category: Infrastructure and processing; 
Percentage of total costs by type of institution: 
Large banks: 1.71%; 
Midsize banks: 16.60%; 
Credit unions: 23.01%. 

ATM cost category: Taxes and licenses; 
Percentage of total costs by type of institution: 
Large banks: 0.63%; 
Midsize banks: 2.26%; 
Credit unions: 1.62%. 

ATM cost category: Fraud prevention; 
Percentage of total costs by type of institution: 
Large banks: 0.53%; 
Midsize banks: 0.97%; 
Credit unions: 0.46%. 

ATM cost category: Network fees; 
Percentage of total costs by type of institution: 
Large banks: 0.50%; 
Midsize banks: 1.17%; 
Credit unions: 0.38%. 

ATM cost category: Physical security and insurance; 
Percentage of total costs by type of institution: 
Large banks: 0.41%; 
Midsize banks: 4.28%; 
Credit unions: 2.64%. 

ATM cost category: Regulation and compliance; 
Percentage of total costs by type of institution: 
Large banks: 0.41%; 
Midsize banks: 7.29%; 
Credit unions: 0.30%. 

Source: GAO analysis. 

[A] This category includes capitalized and noncapitalized costs. 

[End of figure] 

In some cost categories institutions reported a wide range of per-ATM 
costs across the three financial institution types, while in other 
categories, the per-ATM costs were fairly consistent. For example, the 
financial institutions we surveyed reported that per-ATM costs in 
calendar year 2011 for rent and hardware and software were much higher 
for the large banks than for the credit unions and midsize banks. The 
average rent cost, on a per-ATM basis, was $27,173 for large banks, 
$4,935 for midsize banks, and $4,032 for credit unions.[Footnote 46] 
We saw similar results for hardware and software investments, with 
large banks reporting, on average, $28,607 in costs per ATM, while 
midsize banks' and credit unions' average costs were, respectively, 
$3,642 and $7,422.[Footnote 47] These hardware and software costs 
include both capitalized and noncapitalized items, although not all 
institutions reported noncapitalized costs.[Footnote 48] In contrast, 
the costs for maintenance and repairs were much closer in range for 
the three financial institution types. The average maintenance and 
repair cost, on a per-ATM basis, was $5,444 for large banks, $3,485 
for midsize banks, and $5,827 for credit unions.[Footnote 49] 

In some cost categories credit unions reported higher costs than their 
bank counterparts--cash services, and infrastructure and processing. 
The average cost for cash services, on a per-ATM basis, was $6,847 for 
credit unions, $3,765 for midsize banks, and $3,495 for large banks. 
[Footnote 50] Similarly, the average cost for infrastructure and 
processing, on a per-ATM basis, was $7,958 for credit unions, $3,494 
for midsize banks, and $1,191 for large banks.[Footnote 51] In 
contrast, credit unions' costs for network fees were significantly 
lower than those of the banks, with an average cost, on a per-ATM 
basis, of $150 for credit unions, $331 for large banks, and $340 for 
midsize banks.[Footnote 52] For more information on average per-ATM 
costs across the three types of operators in all cost categories, see 
appendix II. 

Community bankers we interviewed reported that their leading costs 
were investments in hardware and software, largely to upgrade older 
machines for compliance with Americans with Disabilities Act (ADA) 
requirements, or to purchase new machines all together.[Footnote 53] 
Specifically, one representative told us his bank spent more than 
$52,000 to upgrade the software in the bank's 26 ATMs, a cost of 
approximately $2,000 per machine. The community bankers noted that 
while the newer machines are more expensive, they offer the customer 
more functionality and value due to their enhanced capabilities, such 
as being able to scan and deposit checks. The other prevalent costs 
for the community bankers were fraud (prevention efforts and losses), 
repairs, processing, and network fees. 

Independent ATM Operators: 

Cost data are more limited for independent ATM operators, making 
identifying key costs difficult. One large independent ATM firm that 
we surveyed reported that its top five calendar year 2011 per-ATM 
costs (as a percentage of all costs) were (1) rent, (2) infrastructure 
and processing, (3) cash services, (4) hardware and software 
investments, and (5) bank sponsorship costs. Meanwhile the smaller 
firm that we surveyed reported that its top five calendar year 2011 
costs (as a percentage of total costs) were (1) hardware and software 
investments, (2) maintenance and repairs, (3) cash services, (4) 
infrastructure and processing, and (5) rent.[Footnote 54] In addition 
to the cost information gathered through the survey, we interviewed 
two small independent ATM firms, and--like the two firms that 
participated in the survey--they told us their key costs included cash 
services and processing, among others. In addition, we interviewed 
officials from another large independent firm who provided us with 
cost data that indicated that the firm's top costs for calendar year 
2011 were rent, cash services, and maintenance and repair.[Footnote 55] 

Increasing Costs and Declining Revenues Are Prompting Some Changes in 
ATM Operations: 

Most operators included in our study--financial institutions and 
independent firms--reported that overall ATM costs have increased over 
the past 5 years and they expect that they will continue to do so. Ten 
financial institutions we surveyed reported that per-ATM costs had 
significantly increased in the past 5 years, ten reported costs had 
slightly increased, and five reported costs remained about the same. 
[Footnote 56] The cost drivers most frequently cited by survey 
respondents were upgrading to more versatile ATMs--with functions such 
as check-imaging--complying with ADA requirements, and upgrading 
software.[Footnote 57] Other cost drivers the financial institution 
representatives reported were increasing fraud prevention efforts, 
adding ATMs to their fleets, and paying more in network fees.[Footnote 
58] As previously discussed, the community bankers we interviewed also 
indicated that ATM upgrades to comply with ADA requirements were a 
leading cost driver in calendar year 2011, and some said network costs 
had increased as well over the past 5 years. The two independent 
operators in our survey reported their costs had increased slightly 
over the past 5 years. One operator noted higher manufacturing costs 
as a driver and the other reported an increase in fuel prices (which 
increases the costs to transport cash to the terminals via armored 
carrier). The two independent operators we interviewed also said their 
overall costs have risen in the past 5 years, for armored carrier 
services and network fees. They also reported increased rent costs, 
among others. Some of the operators noted that the costs associated 
with certain actions could yield future savings. For example, while 
the cost of purchasing the newer machines has increased, those ATMs 
have improved technology, so service costs have declined. Similarly, 
one operator reported that with the expanded function of deposit-
imaging, the newer ATMs have reduced paper costs. 

Many of the operators told us that during that same 5-year period, 
where costs have increased, ATM revenues have decreased. As previously 
discussed, ATM operators collect revenues from fees charged during 
some ATM transactions. In our survey, 14 financial institution 
operators reported that their per-ATM revenues had decreased--6 said 
they had done so significantly, and 8 said slightly. In contrast, 6 
operators reported that revenues remained about the same, and 4 
reported a slight increase during that same period.[Footnote 59] The 
most frequently cited reason the operators gave for the decreased 
revenues was declining transaction volumes--both overall and among non-
account holders, who typically would generate income for the ATM 
operator through surcharge fees. Some financial institution operators 
stated that transaction levels are down due to the greater 
availability of surcharge-free networks and consumers obtaining cash 
at point-of-sale transactions, among other things. Several of the 
community bankers we spoke with expressed similar views that ATM 
revenues, along with transaction levels, have decreased generally over 
the past 5 years. The two independent operators in our survey reported 
their revenues had significantly decreased over the past 5 years, but 
cited reductions in their interchange fee revenues as a primary 
factor. The two smaller independent firms we interviewed reported 
similar issues with reduced interchange revenues. 

Looking forward, many of the operators indicated they expect that 
costs would continue to rise and that revenues would remain flat or 
decline in the future. For example, our survey results showed that 18 
out of 25 financial institution operators anticipate ATM costs will 
increase in the future. The main drivers cited for these future 
increases are further investments in new and enhanced ATM terminals or 
upgrades that will be needed in order to comply with new or enhanced 
industry wide data security standards.[Footnote 60] The community 
bankers and one independent firm we interviewed expressed similar 
views that ATM costs will continue to rise. Similarly, of the ten 
financial operators that addressed future revenue trends in our 
survey, seven indicated they anticipate a decline, due primarily to 
fewer transactions. Likewise, one of the two independent firms that 
participated in our survey also said it anticipates future revenues 
will be flat. 

ATM operators reported taking various steps to adapt to the rise in 
costs and decline in revenues. For example, two credit unions reported 
in our survey that they recently raised their surcharge fee amounts in 
response to rising costs. Another credit union reported it was being 
more prudent in placing ATMs in new locations by first performing 
extensive evaluation of traffic flows, surrounding competition, and 
associated costs before committing to a new location. One of the large 
banks noted that because average revenues per ATM will likely continue 
to decline as consumers continue to avoid incurring surcharges, the 
bank would focus more on serving its own customers with ATM 
placements. Finally, some of the community bankers we interviewed said 
that as ATM transaction levels decline, so will their investments in 
ATMs. The owner of one independent ATM firm we interviewed told us 
that independent operators need to seek opportunities to diversify 
their portfolio of ATM services, such as establishing or expanding 
branding partnerships in order to increase revenues. He also noted 
that maximizing the number of transactions on a per-ATM basis will be 
important. One large independent firm reported in the survey that as 
interchange fees and resulting revenues decrease, merchants--in those 
cases where they set fees--will increase the surcharge amounts to make 
up the difference. However, as we previously discussed, there are many 
factors taken into account when setting fees, and several of the 
operators told us that setting fees too high, above neighboring 
competitors, could discourage consumers from using their ATMs. 

Agency Comments: 

We provided a draft of this report to CFPB, FDIC, the Federal Reserve, 
NCUA, and OCC for their review and comment. CFPB, the Federal Reserve, 
NCUA, and OCC submitted technical comments which were incorporated 
where appropriate. 

We are sending copies of this report to CFPB, FDIC, the Federal 
Reserve, NCUA, and OCC, interested congressional committees, members, 
and others. In addition, this report will be available at no charge on 
our website at [hyperlink, http://www.gao.gov]. 

Should you or your staff have questions concerning this report, please 
contact me at (202) 512-8678 or cackleya@gao.gov. Contact points for 
our Offices of Congressional Relations and Public Affairs may be found 
on the last page of this report. Key contributors to this report are 
listed in appendix IV. 

Signed by: 

Alicia Puente Cackley: 
Director: 
Financial Markets and Community Investment: 

[End of section] 

Appendix I: Objectives, Scope, and Methodology: 

This report reviews the fees paid by consumers when conducting 
automated teller machine (ATM) transactions, as well as the costs 
borne by ATM operators in providing those services. Specifically, the 
objectives of this report are to discuss (1) the business models for 
ATM operators--financial institution and independent firms--and how 
they set ATM fees, (2) the amounts of fees that consumers incur to 
conduct ATM transactions and how these fees changed over time, and (3) 
the reported costs of ATM operations for financial institution and 
independent ATM operators and how costs and revenues are expected to 
change. 

To understand the history of ATMs, how ATM transactions are processed, 
and requirements for ATM operators, we reviewed prior GAO, regulatory, 
and industry reports on ATM fees and operations, and we interviewed 
relevant officials from the Board of Governors of the Federal Reserve 
System (the Federal Reserve), the Federal Deposit Insurance 
Corporation (FDIC), the Office of the Comptroller of the Currency 
(OCC), the National Credit Union Administration (NCUA), and the Bureau 
of Consumer Financial Protection, commonly known as CFPB. In addition, 
we interviewed officials from five associations: American Bankers 
Association (ABA) and the Independent Community Bankers of America 
(ICBA), which represent various sectors of the banking industry; the 
National ATM Council and the ATM Industry Association (ATMIA), which 
represent independent ATM operators; and U.S. PIRG, a federation of 
independent, state-based, citizen-funded organizations that advocate 
for consumer interests. We also interviewed representatives from two 
national banks, a credit union, one large independent ATM firm, three 
electronic funds transfer (EFT) networks, and a financial institution 
that sponsors independent ATM operators. 

In order to gather information on ATM costs and operations for smaller 
financial institutions and independent ATM firms, we conducted two 
group interviews with representatives from nine community banks and 
two interviews with smaller independent ATM firms. We identified these 
firms with assistance from ABA, ICBA, and ATMIA. In addition, we 
relied on information provided to us by ATMIA that described the 
composition of the independent operator market--specifically, the 
percentage of ATMs owned by operators versus those operated by 
merchants. This information could not be corroborated because no 
comparable data were available, either publicly or from the financial 
regulators and other industry sources we asked. However, we determined 
that our use of the information from ATMIA was appropriate because it 
is used to describe the independent ATM market and provide context. 

To discuss the operations and costs for ATM operators, in addition to 
the interviews discussed above, we surveyed a nonprobability sample of 
financial institutions and independent firms that operate ATMs to 
collect information on: 

* ATM operations and business models, 

* ATM transaction levels for calendar year 2011, 

* ATM costs for calendar year 2011 in 12 specific cost categories, 

* overall ATM cost and revenue trends for the past 5 years and in the 
future, and: 

* factors ATM operators consider when setting ATM fees. 

In order to gain cost and operational information from ATM operators 
of various sizes, we deployed a survey to the 10 largest banks and 10 
largest credit unions (by asset size), 10 randomly selected midsize 
banks (with assets between $10 billion and $50 billion), and 4 large 
independent ATM firms (with 10,000 or more ATMs in their portfolios). 
To select the banks, we used data from SNL Financial--a private 
financial database that contains publicly filed regulatory and 
financial reports.[Footnote 61] We eliminated those that did not offer 
personal checking account services, as well as any online banks, since 
they generally do not maintain substantial numbers of ATMs. To select 
the credit unions, we obtained a list of the largest credit unions, by 
asset size, from NCUA. Because none of the regulators and business 
associations we spoke with were able to provide data on the total 
population of independent ATM operators, and no data are publicly 
available, we relied on estimates provided to us by one of the largest 
independent operators as to the size and geographic locations of the 
independent firms in the industry. We used that list to select the 
firms and were able to verify the information provided only in the 
cases where the firm responded to the survey. 

For the survey questionnaire, we developed 12 categories (11 applied 
to all operators, and 1 was a cost incurred only by independent ATM 
operators) in order to capture information on a broad range of ATM 
operational costs. After we drafted our initial cost categories, we 
asked for comments from knowledgeable officials at the Federal 
Reserve, CFPB, ABA, and a consulting firm that works extensively with 
the independent ATM industry. We conducted six pretests to verify that 
(1) the questions were clear and unambiguous, (2) terminology was used 
correctly, (3) the questionnaire did not place an undue burden on 
respondents, (4) the information could feasibly be obtained, and (5) 
the survey was comprehensive and unbiased. We chose the six pretest 
institutions to include various sizes of ATM operators: two large 
banks, one large credit union, one midsize bank, and one large and one 
small independent ATM firm. We conducted the pretests over the 
telephone. We made changes to the content and format of the 
questionnaire after each of the six pretests, based on the feedback we 
received. For additional quality control, an independent evaluator 
within GAO also reviewed a draft of the questionnaire prior to its 
administration. Furthermore, we determined--based on the pretest with 
the smaller independent ATM firm--that the questionnaire would be 
overly burdensome for smaller firms to complete, potentially leading 
to minimal participation. For this reason, we limited our independent 
ATM firm sample population to firms with 10,000 or more ATMs. 

We sent the questionnaire by e-mail in an attached PDF form that 
respondents could return electronically after marking check-boxes or 
entering responses into open answer boxes. Alternatively, respondents 
could return the questionnaire by mail after printing the completed 
form. Through e-mails and phone calls in advance of the questionnaire, 
we determined the best contact at each financial institution or 
independent firm. We e-mailed the questionnaire with a cover letter to 
financial institutions between July 31 and August 1, 2012, and 
independent ATM firms between September 5 and September 11, 2012. 
Three weeks later, we sent a reminder e-mail to everyone who had not 
responded. We telephoned all respondents who had not returned the 
questionnaire after 4 weeks and asked them to participate. Completed 
questionnaires were accepted until September 28, 2012, for financial 
institutions and October 31, 2012, for the independent ATM firms. 
[Footnote 62] 

Questionnaires were completed by 9 out of 10 large banks, 9 out of 10 
credit unions, 8 out of 10 midsize banks, and 2 out of 4 independent 
ATM firms. However, the number of respondents varied by question. 
Specifically, three large banks and one credit union completed 
sections of the questionnaire on ATM transaction levels and overall 
cost and revenue trends, but did not submit dollar amounts for the 
cost categories. As previously discussed, we made multiple contacts by 
telephone and e-mail to nonresponding institutions, but one large 
bank, one credit union, two midsize banks, and two of the independent 
ATM firms declined to participate. 

The practical difficulties of conducting any survey may introduce 
errors, commonly referred to as nonsampling errors. For example, 
difficulties in interpreting a particular question, sources of 
information available to respondents, or data analysis can introduce 
unwanted variability into the survey results. We took steps in 
developing the questionnaire, and in collecting and analyzing the 
data, to minimize such nonsampling error. Almost all responses from 
the PDF forms were directly read into a data file, and two analysts 
independently verified that all information provided in the forms was 
read in correctly. For the two forms that could not be read into the 
file, one analyst keypunched the responses and another verified the 
entries. All data analysis programs were independently verified for 
accuracy. 

We were not able to independently verify the cost information 
submitted by survey respondents. However, during the pretests and in 
the survey questionnaires we asked the respondents to tell us what 
sources they would or did use in calculating the costs they reported. 
Commonly cited data sources for the costs included internal accounting 
reports and billing statements from external third-parties, such as 
processors. Based on the information provided on the cost data sources 
and follow-up calls with survey respondents, we determined the data 
they reported were sufficiently reliable for our purposes. 

Using the data provided by the survey respondents, we calculated the 
number and type of ATM transactions in calendar year 2011, the 
percentage of total costs represented by each cost category, and the 
average per-ATM costs for each category. Due to the sensitive and 
possibly proprietary nature of the information we collected with the 
survey, we aggregated the cost data at a high level and presented it 
in a way that prevents individual organizations from being identified. 
For the four questions that asked about past and future cost and 
revenue trends, as well as the factors the operators take into account 
when setting fees, we performed a content analysis. Specifically, we 
analyzed the responses for each question and then grouped them into 
like categories. A second evaluator reviewed the categories to ensure 
that we were consistent in our coding. In any instance where the 
second reviewer disagreed with a categorization, team members met to 
discuss the categories and reached consensus on the final category 
assignment for each response. The numbers of responses in each content 
category were then summarized and tallied. For more detailed 
information on the survey results, see appendix II. 

To report on the amounts of fees that consumers pay to conduct 
transactions at financial institution ATMs, and how these fees changed 
over time, we purchased and analyzed data on surcharge and foreign ATM 
fees charged by banks and credit unions from 2007 through 2012 from 
Moebs Services, Inc. (Moebs), a market research firm that specializes 
in the financial services industry. Moebs collected its data through 
telephone surveys with financial service personnel at each sampled 
institution. In the surveys, callers used a "mystery shopping" 
approach and requested rates and fees while posing as potential 
customers. The statistical design of the survey for each year 
consisted of a stratified random sample by (1) institution type, (2) 
institution size, and (3) regions of the country defined by 
metropolitan statistical area and state.[Footnote 63] 

The surveys were completed in June for each of the years we requested, 
except for 2010, when the survey was completed in July. Table 3 shows 
the number of financial institutions for which we obtained data. 

Table 3: Number of Financial Institutions Surveyed by Moebs Services, 
2007-2012: 

Number of institutions surveyed[A]: 
2007: 2,030; 
2008: 2,041; 
2009: 2,041; 
2010: 2,243; 
2011: 2,532; 
2012: 2,776. 

Source: GAO analysis of Moebs Services data. 

[A] The number of institutions sampled each year varied because of 
changes to the number of cities and states surveyed, changes in the 
overall number of financial institutions, and refining the accuracy 
and precision of the sample selection. 

[End of table] 

Using the Moebs data, we computed weighted estimates and 95 percent 
confidence intervals of the percentage of institutions charging 
surcharge and foreign fees and weighted averages and medians of these 
fees. All percentage estimates presented in this report have a margin 
of error of +/-5 percentage points or fewer, and all average and 
median estimates have a relative margin of error of +/-5 percent or 
less, unless otherwise noted. All differences between estimated values 
identified in this report are statistically significant at the 95 
percent confidence level (p-value <= 0.05), unless otherwise noted. We 
also examined the differences between the estimated prevalence and 
average fees for type and size of financial institution, as well as 
geographic region and type of location of the financial institution 
separately. We did not conduct a multivariate analysis using all of 
these factors, control for all factors at once, or control for 
additional factors in our analysis. To evaluate trends in ATM fees, we 
adjusted the numbers for inflation to remove the effect of changes in 
prices. The inflation-adjusted estimates used a base year of 2012 and 
Consumer Price Index calendar year values as the deflator. We reviewed 
interviews and analysis from our previous work on bank fees to 
understand Moebs' methodology for collecting the data and ensuring its 
integrity. In addition, we conducted reasonableness checks on the data 
we received and identified any missing, erroneous, or outlying data. 
We also worked with Moebs representatives to ensure our analysis of 
their data was correct. We determined that the Moebs data were 
reliable for the purposes of this report. 

Since data on ATM fees charged by independent operators were not 
available, we engaged the services of another market research firm--
Informa Research Services (Informa)--to conduct "mystery shops" at 100 
judgmentally selected independent ATMs. We selected 10 ATMs in each of 
the top 10 metropolitan statistical areas. In order to ensure we 
captured fee information from a wide variety of locations frequented 
by consumers on a regular basis, we directed Informa to choose ATM 
locations that covered the following types of stores: drug stores, 
grocery stores, gas stations/convenience stores, and liquor stores. We 
excluded ATMs at airports or casinos--locations where most consumers 
would not go on a regular basis and for which, according to market 
research, there is typically a higher fee. We also excluded ATMs at 
supermarket chains that were likely to have a bank branch or an ATM 
operated by a bank or credit union on the premises because the focus 
of this part of our study was ATM fees charged by independent 
operators. Prior to making the final selections, Informa contacted the 
locations and verified that the ATMs were nonbank operated and that 
they were in working order. Locations having bank-operated or branded 
ATMs or machines that were not working were replaced with locations 
having independent and functioning ATMs in the same neighborhood, or 
as close as possible. 

The mystery shop process involved having the shoppers go to each 
selected ATM and use their own debit card to conduct a transaction. 
The shopper documented (1) the surcharge fee amount that was posted on 
the ATM, (2) the surcharge fee amount that appeared on the screen 
after the transaction was begun, and (3) the surcharge fee amount 
printed on his or her receipt. The mystery shoppers entered this 
information into an online database. In addition, the shoppers took 
pictures of the ATM, screen, and their receipt, which Informa staff 
used to verify that shoppers correctly recorded the fee information 
and that the correct images were attached to the correct responses. 
Finally, the receipts were double checked against the location 
addresses to ensure that the shoppers visited the correct ATM. We then 
analyzed the data we obtained from Informa and computed the average 
surcharge fees charged to mystery shoppers for ATMs included in the 
sample. These data indicate what independent ATM fees were on a 
particular day in 2012 at those 100 ATMs and are not generalizable to 
the population of independent ATMs in the United States. 

We reviewed documentation submitted by Informa to understand their 
methodology for collecting the data and ensuring their integrity. We 
conducted reasonableness checks on the data we received and identified 
10 mystery shoppers who did not report a fee printed on their ATM 
receipt. We instructed Informa to conduct follow up on these cases, 
which included checking to see if the mystery shopper used a card that 
was part of a surcharge-free network, and in certain cases, to send an 
additional mystery shopper to the ATM. We also worked with Informa 
representatives to ensure our analysis of their data was correct. We 
determined that Informa's data were reliable for the purposes of this 
report. 

We conducted this performance audit from November 2011 to April 2013 
in accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

[End of section] 

Appendix II: Selected Results from GAO's Survey on ATM Operator Costs 
and Operations: 

This appendix presents selected results from GAO's survey on ATM 
operator costs and operations. We surveyed financial institution and 
independent ATM operators to collect information on their business 
operations and models, costs, and transaction levels for calendar year 
2011, and what factors they take into account when setting fees. The 
survey was deployed to the 10 largest banks and credit unions (by 
asset size) and 10 randomly selected midsize banks (with assets 
between $10 billion and $50 billion).[Footnote 64] We designed and 
deployed a separate survey to four independent ATM operators that 
operate 10,000 or more ATMs, and we received responses from 
two.[Footnote 65] We were not able to independently verify the cost 
information submitted by survey respondents. However, we asked the 
respondents to tell us what sources they used in calculating the costs 
they reported. They relied on sources such as internal accounting 
reports and third-party bills. Based on the source information 
provided and follow-up call with survey respondents, we determined the 
data they reported were sufficiently reliable for our purposes. None 
of the costs or operations data we collected are generalizable to ATM 
operators at-large. 

Table 4 summarizes the number and size of financial institution ATM 
operators that participated in our survey, as well as the number of 
ATMs they were operating as of December 31, 2011. 

Table 4: Financial Institution ATM Operators in GAO Survey: 

Type of financial institution[A]: Large banks; 
Number: 9; 
Number of ATMs: (as of December 31, 2011): 
On-site: 44,669; 
Off-site: 19,866; 
Branded: 11,895; 
Total: 76,430. 

Type of financial institution[A]: Midsize banks; 
Number: 8; 
Number of ATMs: (as of December 31, 2011): 
On-site: 1,203; 
Off-site: 863; 
Branded: 6; 
Total: 2,072. 

Type of financial institution[A]: Large credit unions; 
Number: 9; 
Number of ATMs: (as of December 31, 2011): 
On-site: 924; 
Off-site: 1,607; 
Branded: 800; 
Total: 3,331. 

Type of financial institution[A]: Total; 
Number: 26; 
Number of ATMs: (as of December 31, 2011): 
On-site: 46,796; 
Off-site: 22,336; 
Branded: 12,701; 
Total: 81,833. 

Source: GAO analysis. 

[A] We deployed the survey to the 10 largest banks (by asset size), 10 
randomly selected midsize banks (with assets between $10 billion and 
$50 billion), and the 10 largest credit unions (by asset size). 

[End of table] 

We collected similar information from independent ATM operators. In 
addition to owning and operating their own ATMs, independent ATM firms 
offer a wide range of ATM-related services to merchants and other 
entities that own ATMs, such as monitoring and maintaining appropriate 
cash levels in terminals and processing transactions. There are four 
primary business models for independent ATM operators; therefore our 
survey asked for information on the number of ATMs for each model. In 
both the "turnkey" and "merchant-assisted" business models, the 
independent operator owns the ATM. In the turnkey model, the operator 
is responsible for most aspects of the ATM's operations, while the 
merchant is responsible only for providing a place to locate the ATM 
and the electricity to operate it. The merchant-assisted model is 
similar to turnkey, but the merchant provides and loads cash into the 
machines, as well as provides basic maintenance. In the "merchant-
owned and loaded" and "merchant cash-assisted" models, the merchant 
owns the ATM and is responsible for many of the operations. However, 
in the merchant owned-and loaded model, the merchant manages and loads 
cash into the ATM, while in the merchant cash-assisted model, the 
independent operator handles those tasks. Table 5 summarizes the 
number of independent ATM operators that participated in our survey, 
as well as the number of ATMs they were operating under each business 
model as December 31, 2011. 

Table 5: Independent ATM Operators in GAO Survey: 

Independent ATM Operators; 
Number: 2; 
Number of ATMs (as of December 31, 2011): 
Turnkey: 858; 
Merchant-assisted: 346; 
Merchant-owned and loaded: 64,032; 
Merchant cash-assisted: 534; 
Total: 65,770. 

Source: GAO analysis. 

[End of table] 

Tables 6 through 10 summarize the reported number and types of 
calendar year 2011 ATM transactions for the financial institutions and 
independent ATM operators that participated in our survey. 

Table 6: Number and Types of ATM Transactions Reported by All 
Financial Institutions in GAO Survey, Calendar Year 2011: 

Transaction type: Cash withdrawals; 
Number incurring a surcharge: 274,490,626; 
Percentage incurring a surcharge: 14.11%; 
Number not incurring a surcharge: 1,670,724,011; 
Percentage not incurring a surcharge: 85.89%; 
Total: 1,945,214,637. 

Transaction type: Balance inquiries; 
Number incurring a surcharge: 333,064; 
Percentage incurring a surcharge: 0.05%; 
Number not incurring a surcharge: 613,376,064; 
Percentage not incurring a surcharge: 99.95%; 
Total: 613,709,128. 

Transaction type: Deposits; 
Number incurring a surcharge: 2,891; 
Percentage incurring a surcharge: 0.00%; 
Number not incurring a surcharge: 586,040,519; 
Percentage not incurring a surcharge: 100.00%; 
Total: 586,043,410. 

Transaction type: Fund transfers; 
Number incurring a surcharge: 13,827; 
Percentage incurring a surcharge: 0.03%; 
Number not incurring a surcharge: 49,035,169; 
Percentage not incurring a surcharge: 99.97%; 
Total: 49,048,996. 

Transaction type: Denials; 
Number incurring a surcharge: 37,696; 
Percentage incurring a surcharge: 0.06%; 
Number not incurring a surcharge: 63,904,257; 
Percentage not incurring a surcharge: 99.94%; 
Total: 63,941,953. 

Transaction type: All other transactions; 
Number incurring a surcharge: 48; 
Percentage incurring a surcharge: 0.00%; 
Number not incurring a surcharge: 26,667,071; 
Percentage not incurring a surcharge: 100.00%; 
Total: 26,667,119. 

Transaction type: Total transactions; 
Number incurring a surcharge: 274,878,152; 
Percentage incurring a surcharge: 8.37%; 
Number not incurring a surcharge: 3,009,747,091; 
Percentage not incurring a surcharge: 91.63%; 
Total: 3,284,625,243. 

Source: GAO analysis. 

[End of table] 

Table 7: Number and Types of ATM Transactions Reported by Large Banks 
in GAO Survey, Calendar Year 2011: 

Transaction type: Cash withdrawals; 
Number incurring a surcharge: 258,196,539; 
Percentage incurring a surcharge: 14.56%; 
Number not incurring a surcharge: 1,515,068,411; 
Percentage not incurring a surcharge: 85.44%; 
Total: 1,773,264,950. 

Transaction type: Balance inquiries; 
Number incurring a surcharge: 0; 
Percentage incurring a surcharge: 0%; 
Number not incurring a surcharge: 549,647,784; 
Percentage not incurring a surcharge: 100%; 
Total: 549,647,784. 

Transaction type: Deposits; 
Number incurring a surcharge: 0; 
Percentage incurring a surcharge: 0%; 
Number not incurring a surcharge: 566,479,168; 
Percentage not incurring a surcharge: 100%; 
Total: 566,479,168. 

Transaction type: Fund transfers; 
Number incurring a surcharge: 0; 
Percentage incurring a surcharge: 0%; 
Number not incurring a surcharge: 46,078,992; 
Percentage not incurring a surcharge: 100%; 
Total: 46,078,992. 

Transaction type: Denials; 
Number incurring a surcharge: 0; 
Percentage incurring a surcharge: 0%; 
Number not incurring a surcharge: 51,118,549; 
Percentage not incurring a surcharge: 100%; 
Total: 51,118,549. 

Transaction type: All other transactions; 
Number incurring a surcharge: 0; 
Percentage incurring a surcharge: 0%; 
Number not incurring a surcharge: 26,092,976; 
Percentage not incurring a surcharge: 100%; 
Total: 26,092,976. 

Transaction type: Total transactions; 
Number incurring a surcharge: 258,196,539; 
Percentage incurring a surcharge: 8.57%; 
Number not incurring a surcharge: 2,754,485,880; 
Percentage not incurring a surcharge: 91.43%; 
Total: 3,012,682,419. 

Source: GAO analysis. 

[End of table] 

Table 8: Number and Types of ATM Transactions Reported by Midsize 
Banks in GAO Survey, Calendar Year 2011: 

Transaction type: Cash withdrawals; 
Number incurring a surcharge: 11,843,819; 
Percentage incurring a surcharge: 16.06%; 
Number not incurring a surcharge: 61,923,945; 
Percentage not incurring a surcharge: 83.94%; 
Total: 73,767,764. 

Transaction type: Balance inquiries; 
Number incurring a surcharge: 333,064; 
Percentage incurring a surcharge: 0.88%; 
Number not incurring a surcharge: 37,523,364; 
Percentage not incurring a surcharge: 99.12%; 
Total: 37,856,428. 

Transaction type: Deposits; 
Number incurring a surcharge: 0; 
Percentage incurring a surcharge: 0.00%; 
Number not incurring a surcharge: 1,954,749; 
Percentage not incurring a surcharge: 100.00%; 
Total: 1,954,749. 

Transaction type: Fund transfers; 
Number incurring a surcharge: 13,827; 
Percentage incurring a surcharge: 2.63%; 
Number not incurring a surcharge: 511,290; 
Percentage not incurring a surcharge: 97.37%; 
Total: 525,117. 

Transaction type: Denials; 
Number incurring a surcharge: 37,696; 
Percentage incurring a surcharge: 1.54%; 
Number not incurring a surcharge: 2,404,319; 
Percentage not incurring a surcharge: 98.46%; 
Total: 2,442,015. 

Transaction type: All other transactions; 
Number incurring a surcharge: 48; 
Percentage incurring a surcharge: 0.04%; 
Number not incurring a surcharge: 113,050; 
Percentage not incurring a surcharge: 99.96%; 
Total: 113,098. 

Transaction type: Total transactions; 
Number incurring a surcharge: 12,228,454; 
Percentage incurring a surcharge: 10.48%; 
Number not incurring a surcharge: 104,430,717; 
Percentage not incurring a surcharge: 89.52%; 
Total: 116,659,171. 

Source: GAO analysis. 

[End of table] 

Table 9: Number and Types of ATM Transactions Reported by Credit 
Unions in GAO Survey, Calendar Year 2011: 

Transaction type: Cash withdrawals; 
Number incurring a surcharge: 4,450,268; 
Percentage incurring a surcharge: 4.53%; 
Number not incurring a surcharge: 93,731,655; 
Percentage not incurring a surcharge: 95.47%; 
Total: 98,181,923. 

Transaction type: Balance inquiries; 
Number incurring a surcharge: 0; 
Percentage incurring a surcharge: 0.00%; 
Number not incurring a surcharge: 26,204,916; 
Percentage not incurring a surcharge: 100.00%; 
Total: 26,204,916. 

Transaction type: Deposits; 
Number incurring a surcharge: 2,891; 
Percentage incurring a surcharge: 0.02%; 
Number not incurring a surcharge: 17,606,602; 
Percentage not incurring a surcharge: 99.98%; 
Total: 17,609,493. 

Transaction type: Fund transfers; 
Number incurring a surcharge: 0; 
Percentage incurring a surcharge: 0.00%; 
Number not incurring a surcharge: 2,444,887; 
Percentage not incurring a surcharge: 100.00%; 
Total: 2,444,887. 

Transaction type: Denials; 
Number incurring a surcharge: 0; 
Percentage incurring a surcharge: 0.00%; 
Number not incurring a surcharge: 10,381,389; 
Percentage not incurring a surcharge: 100.00%; 
Total: 10,381,389. 

Transaction type: All other transactions; 
Number incurring a surcharge: 0; 
Percentage incurring a surcharge: 0.00%; 
Number not incurring a surcharge: 461,045; 
Percentage not incurring a surcharge: 100.00%; 
Total: 461,045. 

Transaction type: Total transactions; 
Number incurring a surcharge: 4,453,159; 
Percentage incurring a surcharge: 2.87%; 
Number not incurring a surcharge: 150,830,494; 
Percentage not incurring a surcharge: 97.13%; 
Total: 155,283,653. 

Source: GAO analysis. 

[End of table] 

Table 10: Number and Types of ATM Transactions Reported by Independent 
ATM Operators in GAO Survey, Calendar Year 2011: 

Transaction type: Cash withdrawals; 
Number incurring a surcharge: 136,536,331; 
Percentage incurring a surcharge: 97.09%; 
Number not incurring a surcharge: 4,098,307; 
Percentage not incurring a surcharge: 2.91%; 
Total: 140,634,638. 

Transaction type: Balance inquiries; 
Number incurring a surcharge: 0; 
Percentage incurring a surcharge: 0.00%; 
Number not incurring a surcharge: 3,017,497; 
Percentage not incurring a surcharge: 100.00%; 
Total: 3,017,497. 

Transaction type: Deposits; 
Number incurring a surcharge: 0; 
Percentage incurring a surcharge: 0.00%; 
Number not incurring a surcharge: 0; 
Percentage not incurring a surcharge: 0.00%; 
Total: 0. 

Transaction type: Fund transfers; 
Number incurring a surcharge: 0; 
Percentage incurring a surcharge: 0.00%; 
Number not incurring a surcharge: 67,987; 
Percentage not incurring a surcharge: 100.00%; 
Total: 67,987. 

Transaction type: Denials; 
Number incurring a surcharge: 0; 
Percentage incurring a surcharge: 0.00%; 
Number not incurring a surcharge: 2,684,683; 
Percentage not incurring a surcharge: 100.00%; 
Total: 2,684,683. 

Transaction type: All other transactions; 
Number incurring a surcharge: 0; 
Percentage incurring a surcharge: 0.00%; 
Number not incurring a surcharge: 0; 
Percentage not incurring a surcharge: 0.00%; 
Total: 0. 

Transaction type: Total transactions; 
Number incurring a surcharge: 136,536,331; 
Percentage incurring a surcharge: 93.26%; 
Number not incurring a surcharge: 9,868,474; 
Percentage not incurring a surcharge: 6.74%; 
Total: 146,404,805. 

Source: GAO analysis. 

[End of table] 

Table 11 shows the average reported per-ATM cost for financial 
institutions for each of the cost categories in our survey 
questionnaire.[Footnote 66] We are not able to present similar results 
from the independent operator survey since only two out of four firms 
responded to our questionnaire.[Footnote 67] As shown below, among the 
data reported by the financial institutions, there was a high level of 
variability across the financial institution types. For example, there 
are several instances in which the per-ATM average cost for one 
financial institution type is much higher or lower in a given category 
than the average of the other financial institution types.[Footnote 
68] There was also variability in the number of responses for each 
cost category, also shown in table 11.[Footnote 69] Finally, due to 
the small size and nature of the sample, these results are not 
generalizable to the larger population of U.S. financial institutions. 
The descriptions of the cost categories listed below are reproduced 
verbatim from the survey questionnaire, and all data reported are for 
calendar year 2011. 

Table 11: Per-ATM Costs for Financial Institution ATM Operators in GAO 
Survey, Calendar Year 2011: 

Cost category and what it includes: Rent; 
* the amount paid for ATM facilities at off-premise locations (not in 
a bank or branch); 
* the amount of any revenues shared (partially or entirely) with a 
merchant or other party for ATM facilities at that location or 
locations[D]; 

Financial institution type[A]: Large banks; 
Number of respondents[B]: 6 out of 10; 
Number of ATMs represented[C]: 6,850; 
Average cost per ATM: $27,173. 

Financial institution type[A]: Midsize banks; 
Number of respondents[B]: 6 out of 10; 
Number of ATMs represented[C]: 861; 
Average cost per ATM: $4,935. 

Financial institution type[A]: Credit unions; 
Number of respondents[B]: 8 out of 10; 
Number of ATMs represented[C]: 1,561; 
Average cost per ATM: $4,032. 

Cost category and what it includes: Capitalized ATM hardware and 
software costs; 
* costs of the ATM hardware and equipment, both purchase and 
installation, including ATM physical security equipment such as boots 
or bolting devices and fraud-prevention software; 
* costs to upgrade ATM hardware, equipment and software (e.g. 
Americans with Disabilities Act (ADA) upgrades, retrofits, etc.); 

Financial institution type[A]: Large banks; 
Number of respondents[B]: 6 out of 10; 
Number of ATMs represented[C]: 26,667; 
Average cost per ATM: $28,093. 

Financial institution type[A]: Midsize banks; 
Number of respondents[B]: 7 out of 10; 
Number of ATMs represented[C]: 2,037; 
Average cost per ATM: $3,059. 

Financial institution type[A]: Credit unions; 
Number of respondents[B]: 8 out of 10; 
Number of ATMs represented[C]: 2,460; 
Average cost per ATM: $4,564. 

Cost category and what it includes: Noncapitalized ATM hardware and 
software costs; 
* costs of the ATM hardware and equipment, both purchase and 
installation, including ATM physical security equipment such as boots 
or bolting devices and fraud-prevention software; 
* costs to upgrade ATM hardware, equipment and software (e.g. ADA 
upgrades, retrofits, etc.); 

Financial institution type[A]: Large banks; 
Number of respondents[B]: 6 out of 10; 
Number of ATMs represented[C]: 26,667; 
Average cost per ATM: $515. 

Financial institution type[A]: Midsize banks; 
Number of respondents[B]: 7 out of 10; 
Number of ATMs represented[C]: 2,037; 
Average cost per ATM: $583. 

Financial institution type[A]: Credit unions; 
Number of respondents[B]: 8 out of 10; 
Number of ATMs represented[C]: 2,460; 
Average cost per ATM: $2,859. 

Cost category and what it includes: Cash-related costs[E]; 
* costs related to cash provisioning and management for the ATMs, 
getting the cash to the ATM via armored carrier, monitoring the cash 
inventory, and balancing and reconciling cash; 

Financial institution type[A]: Large banks; 
Number of respondents[B]: 5 out of 10; 
Number of ATMs represented[C]: 20,478; 
Average cost per ATM: $3,495. 

Financial institution type[A]: Midsize banks; 
Number of respondents[B]: 7 out of 10; 
Number of ATMs represented[C]: 2,037; 
Average cost per ATM: $3,765. 

Financial institution type[A]: Credit unions; 
Number of respondents[B]: 8 out of 10; 
Number of ATMs represented[C]: 2,460; 
Average cost per ATM: $6,847. 

Cost category and what it includes: Maintenance and repair costs[E]; 
* costs of first-line maintenance--cleaning, routine repairs such as 
basic troubleshooting, and restocking of consumables such as receipt 
paper; 
* costs of second-line maintenance--more significant repairs that 
require tools and/or parts and labor; 

Financial institution type[A]: Large banks; 
Number of respondents[B]: 5 out of 10; 
Number of ATMs represented[C]: 20,478; 
Average cost per ATM: $5,444. 

Financial institution type[A]: Midsize banks; 
Number of respondents[B]: 8 out of 10; 
Number of ATMs represented[C]: 2,066; 
Average cost per ATM: $3,485. 

Financial institution type[A]: Credit unions; 
Number of respondents[B]: 8 out of 10; 
Number of ATMs represented[C]: 2,460; 
Average cost per ATM: $5,827. 

Cost category and what it includes: Physical security and insurance 
costs; 
* insurance policies for cash (not included in courier contracts); 
* all other insurance costs; 
* physical security costs, such as contracted security, inspections, 
false alarms, and security components and materials (e.g. lighting, 
cameras); 

Financial institution type[A]: Large banks; 
Number of respondents[B]: 4 out of 10; 
Number of ATMs represented[C]: 18,211; 
Average cost per ATM: $272. 

Financial institution type[A]: Midsize banks; 
Number of respondents[B]: 5 out of 10; 
Number of ATMs represented[C]: 1,868; 
Average cost per ATM: $935. 

Financial institution type[A]: Credit unions; 
Number of respondents[B]: 6 out of 10; 
Number of ATMs represented[C]: 1,935; 
Average cost per ATM: $1,069. 

Cost category and what it includes: Infrastructure and processing 
costs[E]; 
* telecommunications--costs to install and maintain connections to the 
processor (e.g. local area network (LAN), wireless, frame relay, or 
satellite); 
* data security--costs incurred in securing the data processing and 
communications infrastructure of operations; 
* processing; 
* all fixed and variable cost components of equipment/hardware and 
software associated with authorization, clearance, and settlement of 
ATM transactions; 
* fees associated with transaction processing (e.g., switch fees); 
* transaction monitoring costs that are a part of authorization; 
* costs associated with interbank settlement and account posting; 

Financial institution type[A]: Large banks; 
Number of respondents[B]: 4 out of 10; 
Number of ATMs represented[C]: 17,467; 
Average cost per ATM: $1,191. 

Financial institution type[A]: Midsize banks; 
Number of respondents[B]: 6 out of 10; 
Number of ATMs represented[C]: 1,939; 
Average cost per ATM: $3,494. 

Financial institution type[A]: Credit unions; 
Number of respondents[B]: 7 out of 10; 
Number of ATMs represented[C]: 2,268; 
Average cost per ATM: $7,958. 

Cost category and what it includes: Network fees; 
* fees charged by card networks that are not associated with 
transaction processing, such as membership or license fees; 
* fees paid for membership in surcharge-free networks; 

Financial institution type[A]: Large banks; 
Number of respondents[B]: 4 out of 10; 
Number of ATMs represented[C]: 18,211; 
Average cost per ATM: $331. 

Financial institution type[A]: Midsize banks; 
Number of respondents[B]: 6 out of 10; 
Number of ATMs represented[C]: 1,409; 
Average cost per ATM: $340. 

Financial institution type[A]: Credit unions; 
Number of respondents[B]: 6 out of 10; 
Number of ATMs represented[C]: 1,994; 
Average cost per ATM: $150. 

Cost category and what it includes: Taxes and licenses; 
* property and sales taxes and state and local licenses, both one-time 
and recurring; 

Financial institution type[A]: Large banks; 
Number of respondents[B]: 4 out of 10; 
Number of ATMs represented[C]: 18,597; 
Average cost per ATM: $409. 

Financial institution type[A]: Midsize banks; 
Number of respondents[B]: 4 out of 10; 
Number of ATMs represented[C]: 777; 
Average cost per ATM: $1,188. 

Financial institution type[A]: Credit unions; 
Number of respondents[B]: 4 out of 10; 
Number of ATMs represented[C]: 1,868; 
Average cost per ATM: $681. 

Cost category and what it includes: Regulatory and compliance costs[E]; 
* costs of regulatory signage for compliance with Electronic Funds 
Transfer Act and any state requirements; 
* costs of regulatory inspections and examinations; 
* costs of industry compliance and network audits; 
* costs of any ADA compliance work not reported as part of ATM 
hardware and software costs; 

Financial institution type[A]: Large banks; 
Number of respondents[B]: 4 out of 10; 
Number of ATMs represented[C]: 17,467; 
Average cost per ATM: $282. 

Financial institution type[A]: Midsize banks; 
Number of respondents[B]: 7 out of 10; 
Number of ATMs represented[C]: 1,438; 
Average cost per ATM: $2,070. 

Financial institution type[A]: Credit unions; 
Number of respondents[B]: 6 out of 10; 
Number of ATMs represented[C]: 2,185; 
Average cost per ATM: $109. 

Cost category and what it includes: Fraud prevention[E]; 
* costs related to activities aimed at detecting and preventing ATM 
fraud; 
* costs related to responding to suspected and realized ATM fraud in 
order to prevent or limit losses; 
* research and development costs incurred in the in-house development 
or improvement of fraud prevention techniques; 

Financial institution type[A]: Large banks; 
Number of respondents[B]: 3 out of 10; 
Number of ATMs represented[C]: 17,789; 
Average cost per ATM: $359. 

Financial institution type[A]: Midsize banks; 
Number of respondents[B]: 4 out of 10; 
Number of ATMs represented[C]: 1,232; 
Average cost per ATM: $322. 

Financial institution type[A]: Credit unions; 
Number of respondents[B]: 3 out of 10; 
Number of ATMs represented[C]: 1,407; 
Average cost per ATM: $256. 

Cost category and what it includes: Fraud losses (net); 
* gross losses incurred, including cash theft and ATM robberies, less 
offsets, such as insurance payments, and losses absorbed by other 
parties, such as cardholders; 

Financial institution type[A]: Large banks; 
Number of respondents[B]: 3 out of 10; 
Number of ATMs represented[C]: 16,330; 
Average cost per ATM: $1,956. 

Financial institution type[A]: Midsize banks; 
Number of respondents[B]: 6 out of 10; 
Number of ATMs represented[C]: 1,958; 
Average cost per ATM: $505. 

Financial institution type[A]: Credit unions; 
Number of respondents[B]: 4 out of 10; 
Number of ATMs represented[C]: 378; 
Average cost per ATM: $1,159. 

Source: GAO analysis. 

[A] We surveyed a total of 30 financial institutions--the 10 largest 
banks and 10 largest credit unions (by asset size) and 10 randomly 
selected midsize banks (with assets between $10 million and $50 
million). We are not able to present similar results from the nonbank 
survey since only two out of four firms responded to our questionnaire. 

[B] There were two types of non-responses. First, an institution may 
not have answered the question--providing no cost data for that 
category. Second, an institution may have responded "unable to 
determine" when they were unable to identify a data source for a 
particular category, or were unable to isolate ATM operational costs 
from other costs, such as those pertaining to debit cards. 

[C] For the "Rent" cost category, we only counted off-site ATMs in 
"number of ATMs represented" since we defined rent as the amount paid 
for ATMs located somewhere other than a financial institution facility. 

[D] Because some revenue sharing arrangements can be based, partially 
or entirely, on ATM transaction levels, rent costs rise as the number 
of transactions increases. 

[E] In these categories, respondents were allowed to include the total 
amount of wages or salaries of in-house personnel who spent more than 
half of their time performing tasks related to this cost activity. 

[End of table] 

[End of section] 

Appendix III: Analysis of the Estimated Prevalence and Average Amount 
of ATM fees from 2007 to 2012: 

In addition to the analysis of estimated average ATM fees and their 
prevalence for 2012 that we presented in the report, we also conducted 
this analysis for 2007 through 2011. This appendix shows the estimated 
prevalence and average amounts of ATM fees based on four factors 
discussed in the report: type, size, location, and geographic region 
of the financial institution. We analyzed data from Moebs Services, 
Inc. (Moebs), a market research firm specializing in financial 
services data, to assess ATM fees charged by financial institution ATM 
operators. Moebs provided data gathered through telephone surveys for 
each of the years 2007 through 2012, based on statistically 
representative samples of financial institutions. See appendix I for 
more detailed information on the characteristics of the data. We 
examined the differences between the estimated prevalence and average 
fees for type and size of financial institution, as well as geographic 
region and type of location of the financial institution, separately. 
We did not conduct a multivariate analysis using all of these factors 
or control for any additional factors in our analysis. Dollar amounts 
for ATM surcharge and foreign fees in this appendix are in 2012 
dollars, calculated using the Consumer Price Index calendar year 
values. We analyzed the prevalence of charging a surcharge and foreign 
fee, and then we excluded financial institutions that did not charge a 
fee from our calculation of the average fees. We computed weighted 
estimates and 95 percent confidence intervals of the percentage of 
institutions charging surcharge and foreign fees and weighted averages 
of these fees. 

Estimated Prevalence and Amounts of Surcharge and Foreign Fees by Type 
of Financial Institution: 

We evaluated two types of financial institutions: banks and credit 
unions. Tables 12 through 15 show the variation in estimated 
prevalence of surcharge and foreign fees and estimated average 
surcharge and foreign fees for banks and credit unions from 2007 
through 2012. 

Table 12: Estimated Percentage of Financial Institutions Charging a 
Surcharge Fee, by Type of Financial Institution and Year (2007-2012): 

2007; 
Bank: 
Estimated percentage: 92; 
95 percent confidence interval--(lower bound, upper bound): (88, 95); 
Credit union: 
Estimated percentage: 81; 
95 percent confidence interval--(lower bound, upper bound): (75, 86). 

2008; 
Bank: 
Estimated percentage: 88; 
95 percent confidence interval--(lower bound, upper bound): (81, 93); 
Credit union: 
Estimated percentage: 76; 
95 percent confidence interval--(lower bound, upper bound): (67, 83). 

2009; 
Bank: 
Estimated percentage: 93; 
95 percent confidence interval--(lower bound, upper bound): (87, 96); 
Credit union: 
Estimated percentage: 77; 
95 percent confidence interval--(lower bound, upper bound): (68, 84). 

2010; 
Bank: 
Estimated percentage: 96; 
95 percent confidence interval--(lower bound, upper bound): (93, 98); 
Credit union: 
Estimated percentage: 88; 
95 percent confidence interval--(lower bound, upper bound): (84, 92). 

2011; 
Bank: 
Estimated percentage: 95; 
95 percent confidence interval--(lower bound, upper bound): (90, 98); 
Credit union: 
Estimated percentage: 96; 
95 percent confidence interval--(lower bound, upper bound): (94, 98). 

2012; 
Bank: 
Estimated percentage: 97; 
95 percent confidence interval--(lower bound, upper bound): (95, 98); 
Credit union: 
Estimated percentage: 95; 
95 percent confidence interval--(lower bound, upper bound): (93, 96). 

Source: GAO analysis of Moebs $ data. 

[End of table] 

Table 13: Estimated Percentage of Financial Institutions Charging a 
Foreign Fee, by Type of Financial Institution and Year (2007-2012): 

2007; 
Bank: 
Estimated percentage: 56; 
95 percent: confidence interval--(lower bound, upper bound): (48, 64); 
Credit union: 
Estimated percentage: 56; 
95 percent confidence interval--(lower bound, upper bound): (48, 63). 

2008; 
Bank: 
Estimated percentage: 55; 
95 percent: confidence interval--(lower bound, upper bound): (46, 63); 
Credit union: 
Estimated percentage: 56; 
95 percent confidence interval--(lower bound, upper bound): (49, 62). 

2009; 
Bank: 
Estimated percentage: 55; 
95 percent: confidence interval--(lower bound, upper bound): (47, 63); 
Credit union: 
Estimated percentage: 40; 
95 percent confidence interval--(lower bound, upper bound): (34, 46). 

2010; 
Bank: 
Estimated percentage: 59; 
95 percent: confidence interval--(lower bound, upper bound): (51, 66); 
Credit union: 
Estimated percentage: 52; 
95 percent confidence interval--(lower bound, upper bound): (46, 59). 

2011; 
Bank: 
Estimated percentage: 52; 
95 percent: confidence interval--(lower bound, upper bound): (46, 57); 
Credit union: 
Estimated percentage: 46; 
95 percent confidence interval--(lower bound, upper bound): (41, 51). 

2012; 
Bank: 
Estimated percentage: 54; 
95 percent: confidence interval--(lower bound, upper bound): (51, 58); 
Credit union: 
Estimated percentage: 52; 
95 percent confidence interval--(lower bound, upper bound): (48, 56). 

Source: GAO analysis of Moebs Services data. 

[End of table] 

Table 14: Estimated Average Surcharge Fee, by Type of Financial 
Institution and Year (2007-2012): 

2007; 
Bank: 
Estimated fee: $1.81; 
95 percent confidence interval--(lower bound, upper bound): (1.73, 
1.89); 
Credit union: 
Estimated fee: $1.66; 
95 percent confidence interval--(lower bound, upper bound): (1.57, 
1.76). 

2008; 
Bank: 
Estimated fee: $1.83; 
95 percent confidence interval--(lower bound, upper bound): (1.71, 
1.94); 
Credit union: 
Estimated fee: $1.75; 
95 percent confidence interval--(lower bound, upper bound): (1.63, 
1.87). 

2009; 
Bank: 
Estimated fee: $2.01; 
95 percent confidence interval--(lower bound, upper bound): (1.90, 
2.13); 
Credit union: 
Estimated fee: $1.84; 
95 percent confidence interval--(lower bound, upper bound): (1.72, 
1.95). 

2010; 
Bank: 
Estimated fee: $2.01; 
95 percent confidence interval--(lower bound, upper bound): (1.93, 
2.09); 
Credit union: 
Estimated fee: $1.93; 
95 percent confidence interval--(lower bound, upper bound): (1.84, 
2.03). 

2011; 
Bank: 
Estimated fee: $2.09; 
95 percent confidence interval--(lower bound, upper bound): (2.01, 
2.16); 
Credit union: 
Estimated fee: $1.89; 
95 percent confidence interval--(lower bound, upper bound): (1.81, 
1.98). 

2012; 
Bank: 
Estimated fee: $2.16; 
95 percent confidence interval--(lower bound, upper bound): (2.12, 
2.21); 
Credit union: 
Estimated fee: $1.99; 
95 percent confidence interval--(lower bound, upper bound): (1.93, 
2.05). 

Source: GAO analysis of Moebs Services data. 

Note: Dollar amounts are in 2012 dollars, calculated using the 
Consumer Price Index calendar year values. 

[End of table] 

Table 15: Estimated Average Foreign Fee, by Type of Financial 
Institution and Year (2007-2012): 

2007; 
Bank: 
Estimated fee: $1.45; 
95 percent confidence interval--(lower bound, upper bound): (1.35, 
1.55); 
Credit union: 
Estimated fee: $1.27; 
95 percent confidence interval--(lower bound, upper bound): (1.18, 
1.37). 

2008; 
Bank: 
Estimated fee: $1.48; 
95 percent confidence interval--(lower bound, upper bound): (1.34, 
1.62); 
Credit union: 
Estimated fee: $1.24; 
95 percent confidence interval--(lower bound, upper bound): (1.17, 
1.32). 

2009; 
Bank: 
Estimated fee: $1.55; 
95 percent confidence interval--(lower bound, upper bound): (1.41, 
1.70); 
Credit union: 
Estimated fee: $1.24; 
95 percent confidence interval--(lower bound, upper bound): (1.16, 
1.32). 

2010; 
Bank: 
Estimated fee: $1.49; 
95 percent confidence interval--(lower bound, upper bound): (1.38, 
1.60); 
Credit union: 
Estimated fee: $1.34; 
95 percent confidence interval--(lower bound, upper bound): (1.20, 
1.48). 

2011; 
Bank: 
Estimated fee: $1.49; 
95 percent confidence interval--(lower bound, upper bound): (1.42, 
1.56); 
Credit union: 
Estimated fee: $1.25; 
95 percent confidence interval--(lower bound, upper bound): (1.19, 
1.32). 

2012; 
Bank: 
Estimated fee: $1.52; 
95 percent confidence interval--(lower bound, upper bound): (1.46, 
1.59); 
Credit union: 
Estimated fee: $1.29; 
95 percent confidence interval--(lower bound, upper bound): (1.23, 
1.36). 

Source: GAO analysis of Moebs Services data. 

Note: Dollar amounts are in 2012 dollars, calculated using the 
Consumer Price Index calendar year values. 

[End of table] 

Estimated Prevalence and Amounts of Surcharge and Foreign Fees by Size 
of Financial Institution: 

We evaluated three sizes of financial institutions: small financial 
institutions with assets less than $10 million, medium financial 
institutions with assets between $10 million and $999 million, and 
large financial institutions with assets of $1 billion and more. 
Tables 16 through 19 show the estimated prevalence of surcharge and 
foreign fees and estimated average surcharge and foreign fees for 
small, medium, and large financial institutions from 2007 through 2012. 

Table 16: Estimated Percentage of Financial Institutions Charging a 
Surcharge Fee, by Size of Financial Institution and Year (2007-2012): 

2007; 
Small: 
Estimated percentage: 84; 
95 percent confidence interval--(lower bound, upper bound): (77, 88); 
Medium: 
Estimated percentage: 92; 
95 percent confidence interval--(lower bound, upper bound): (90, 94); 
Large: 
Estimated percentage: 87; 
95 percent confidence interval--(lower bound, upper bound): (80, 92). 

2008; 
Small: 
Estimated percentage: 76; 
95 percent confidence interval--(lower bound, upper bound): (67, 83); 
Medium: 
Estimated percentage: 91; 
95 percent confidence interval--(lower bound, upper bound): (85, 95); 
Large: 
Estimated percentage: 87; 
95 percent confidence interval--(lower bound, upper bound): (80, 92). 

2009; 
Small: 
Estimated percentage: 80; 
95 percent confidence interval--(lower bound, upper bound): (71, 86); 
Medium: 
Estimated percentage: 93; 
95 percent confidence interval--(lower bound, upper bound): (91, 95); 
Large: 
Estimated percentage: 98; 
95 percent confidence interval--(lower bound, upper bound): (94, 99). 

2010; 
Small: 
Estimated percentage: 92; 
95 percent confidence interval--(lower bound, upper bound): (87, 95); 
Medium: 
Estimated percentage: 94; 
95 percent confidence interval--lower bound, upper bound): (92, 96); 
Large: 
Estimated percentage: 92; 
95 percent confidence interval--(lower bound, upper bound): (86, 96). 

2011; 
Small: 
Estimated percentage: 96; 
95 percent confidence interval--(lower bound, upper bound): (92, 98); 
Medium: 
Estimated percentage: 95; 
95 percent confidence interval--(lower bound, upper bound): (89, 98); 
Large: 
Estimated percentage: 98; 
95 percent confidence interval--(lower bound, upper bound): (95, 99). 

2012; 
Small: 
Estimated percentage: 95; 
95 percent confidence interval--(lower bound, upper bound): (93, 97); 
Medium: 
Estimated percentage: 97; 
95 percent confidence interval--(lower bound, upper bound): (95, 98); 
Large: 
Estimated percentage: 97; 
95 percent confidence interval--(lower bound, upper bound): (95, 99). 

Source: GAO analysis of Moebs Services data. 

[End of table] 

Table 17: Estimated Percentage of Financial Institutions Charging a 
Foreign Fee, by Size of Financial Institution and Year (2007-2012): 

2007; 
Small: 
Estimated percentage: 52; 
95 percent confidence interval--(lower bound, upper bound): (45, 59); 
Medium: 
Estimated percentage: 61; 
95 percent confidence interval--(lower bound, upper bound): (52, 70); 
Large: 
Estimated percentage: 70; 
95 percent confidence interval--(lower bound, upper bound): (60, 78). 

2008; 
Small: 
Estimated percentage: 52; 
95 percent confidence interval--(lower bound, upper bound): (45, 60); 
Medium: 
Estimated percentage: 58; 
95 percent confidence interval--(lower bound, upper bound): (48, 68); 
Large: 
Estimated percentage: 69; 
95 percent confidence interval--(lower bound, upper bound): (59, 77). 

2009; 
Small: 
Estimated percentage: 39; 
95 percent confidence interval--(lower bound, upper bound): (32, 46); 
Medium: 
Estimated percentage: 59; 
95 percent confidence interval--(lower bound, upper bound): (49, 68); 
Large: 
Estimated percentage: 73; 
95 percent confidence interval--(lower bound, upper bound): (63, 81). 

2010; 
Small: 
Estimated percentage: 53; 
95 percent confidence interval--(lower bound, upper bound): (47, 60); 
Medium: 
Estimated percentage: 57; 
95 percent confidence interval--(lower bound, upper bound): (48, 66); 
Large: 
Estimated percentage: 72; 
95 percent confidence interval--(lower bound, upper bound): (63, 79). 

2011; 
Small: 
Estimated percentage: 45; 
95 percent confidence interval--(lower bound, upper bound): (40, 51); 
Medium: 
Estimated percentage: 51; 
95 percent confidence interval--(lower bound, upper bound): (45, 56); 
Large: 
Estimated percentage: 75; 
95 percent confidence interval--(lower bound, upper bound): (69, 80). 

2012; 
Small: 
Estimated percentage: 50; 
95 percent confidence interval--(lower bound, upper bound): (46, 54); 
Medium: 
Estimated percentage: 56; 
95 percent confidence interval--(lower bound, upper bound): (52, 59); 
Large: 
Estimated percentage: 73; 
95 percent confidence interval--(lower bound, upper bound): (69, 77). 

Source: GAO analysis of Moebs Services data. 

[End of table] 

Table 18: Estimated Average Surcharge Fee, by Size of Financial 
Institution and Year (2007-2012): 

2007; 
Small: 
Estimated fee: $1.72; 
95 percent confidence interval--(lower bound, upper bound): (1.63, 
1.81); 
Medium: 
Estimated fee: $1.76; 
95 percent confidence interval--(lower bound, upper bound): (1.67, 
1.86); 
Large: 
Estimated fee: $1.98; 
95 percent confidence interval--(lower bound, upper bound): (1.88, 
2.07). 

2008; 
Small: 
Estimated fee: $1.81; 
95 percent confidence interval--(lower bound, upper bound): (1.68, 
1.93); 
Medium: 
Estimated fee: $1.76; 
95 percent confidence interval--(lower bound, upper bound): (1.63, 
1.89); 
Large: 
Estimated fee: $2.01; 
95 percent confidence interval--(lower bound, upper bound): (1.88, 
2.14). 

2009; 
Small: 
Estimated fee: $1.93; 
95 percent confidence interval--(lower bound, upper bound): (1.83, 
2.04); 
Medium: 
Estimated fee: $1.94; 
95 percent confidence interval--(lower bound, upper bound): (1.80, 
2.09); 
Large: 
Estimated fee: $2.19; 
95 percent confidence interval--(lower bound, upper bound): (2.04, 
2.35). 

2010; 
Small: 
Estimated fee: $1.97; 
95 percent confidence interval--(lower bound, upper bound): (1.87, 
2.07); 
Medium: 
Estimated fee: $1.97; 
95 percent confidence interval--(lower bound, upper bound): (1.89, 
2.05); 
Large: 
Estimated fee: $2.17; 
95 percent confidence interval--(lower bound, upper bound): (2.04, 
2.30). 

2011; 
Small: 
Estimated fee: $1.94; 
95 percent confidence interval--(lower bound, upper bound): (1.85, 
2.02); 
Medium: 
Estimated fee: $2.06; 
95 percent confidence interval--(lower bound, upper bound): (1.98, 
2.14); 
Large: 
Estimated fee: $2.21; 
95 percent confidence interval--(lower bound, upper bound): (2.11, 
2.31). 

2012; 
Small: 
Estimated fee: $2.01; 
95 percent confidence interval--(lower bound, upper bound): (1.95, 
2.07); 
Medium: 
Estimated fee: $2.15; 
95 percent confidence interval--(lower bound, upper bound): (2.11, 
2.20); 
Large: 
Estimated fee: $2.25; 
95 percent confidence interval--(lower bound, upper bound): (2.19, 
2.31). 

Source: GAO analysis of Moebs Services data. 

Note: Dollar amounts are in 2012 dollars, calculated using the 
Consumer Price Index calendar year values. 

[End of table] 

Table 19: Estimated Average Foreign Fee, by Size of Financial 
Institution and Year (2007-2012): 

2007; 
Small: 
Estimated fee: $1.32; 
95 percent confidence interval--(lower bound, upper bound): (1.23, 
1.42); 
Medium: 
Estimated fee: $1.37; 
95 percent confidence interval--(lower bound, upper bound): (1.26, 
1.48); 
Large: 
Estimated fee: $1.73; 
95 percent confidence interval--(lower bound, upper bound): (1.62, 
1.84). 

2008; 
Small: 
Estimated fee: $1.35; 
95 percent confidence interval--(lower bound, upper bound): (1.25, 
1.46); 
Medium: 
Estimated fee: $1.38; 
95 percent confidence interval--(lower bound, upper bound): (1.22, 
1.53); 
Large: 
Estimated fee: $1.56; 
95 percent confidence interval--(lower bound, upper bound): (1.46, 
1.67). 

2009; 
Small: 
Estimated fee: $1.37; 
95 percent confidence interval--(lower bound, upper bound): (1.22, 
1.52); 
Medium: 
Estimated fee: $1.49; 
95 percent confidence interval--(lower bound, upper bound): (1.34, 
1.65); 
Large: 
Estimated fee: $1.50; 
95 percent confidence interval--(lower bound, upper bound): (1.40, 
1.59). 

2010; 
Small: 
Estimated fee: $1.34; 
95 percent confidence interval--(lower bound, upper bound): (1.21, 
1.47); 
Medium: 
Estimated fee: $1.52; 
95 percent confidence interval--(lower bound, upper bound): (1.39, 
1.64); 
Large: 
Estimated fee: $1.57; 
95 percent confidence interval--(lower bound, upper bound): (1.46, 
1.68). 

2011; 
Small: 
Estimated fee: $1.31; 
95 percent confidence interval--(lower bound, upper bound): (1.24, 
1.39); 
Medium: 
Estimated fee: $1.43; 
95 percent confidence interval--(lower bound, upper bound): (1.36, 
1.49); 
Large: 
Estimated fee: $1.67; 
95 percent confidence interval--(lower bound, upper bound): (1.55, 
1.78). 

2012; 
Small: 
Estimated fee: $1.36; 
95 percent confidence interval--(lower bound, upper bound): (1.29, 
1.43); 
Medium: 
Estimated fee: $1.45; 
95 percent confidence interval--(lower bound, upper bound): (1.39, 
1.51); 
Large: 
Estimated fee: $1.62; 
95 percent confidence interval--(lower bound, upper bound): (1.56, 
1.68). 

Source: GAO analysis of Moebs Services data. 

Note: Dollar amounts are in 2012 dollars, calculated using the 
Consumer Price Index calendar year values. 

[End of table] 

Estimated Prevalence and Amounts of Surcharge and Foreign Fees by 
Location of Financial Institution: 

We evaluated four locations of financial institutions: large city, 
rural, small city, and suburban. Tables 20 through 23 show the 
estimated prevalence of surcharge and foreign fees and estimated 
average surcharge and foreign fees for financial institutions located 
in large city, rural, small city, and suburban locations from 2007 
through 2012. 

Table 20: Estimated Percentage of Financial Institutions Charging a 
Surcharge Fee, by Location of Financial Institution and Year (2007-
2012): 

2007; 
Large city: 
Estimated percentage: 75; 
95 percent confidence interval--(lower bound, upper bound): (66, 82); 
Rural: 
Estimated percentage: 89; 
95 percent confidence interval--(lower bound, upper bound): (80, 95); 
Small city: 
Estimated percentage: 88; 
95 percent confidence interval--(lower bound, upper bound): (84, 91); 
Suburban: 
Estimated percentage: 82; 
95 percent confidence interval--(lower bound, upper bound): (77, 85). 

2008; 
Large city: 
Estimated percentage: 88; 
95 percent confidence interval--(lower bound, upper bound): (80, 93); 
Rural: 
Estimated percentage: 90; 
95 percent confidence interval--(lower bound, upper bound): (79, 96); 
Small city: 
Estimated percentage: 78; 
95 percent confidence interval--(lower bound, upper bound): (70, 85); 
Suburban: 
Estimated percentage: 85; 
95 percent confidence interval--(lower bound, upper bound): (80, 88). 

2009; 
Large city: 
Estimated percentage: 89; 
95 percent confidence interval--(lower bound, upper bound): (81, 94); 
Rural: 
Estimated percentage: 86; 
95 percent confidence interval--(lower bound, upper bound): (76, 93); 
Small city: 
Estimated percentage: 85; 
95 percent confidence interval--(lower bound, upper bound): (78, 91); 
Suburban: 
Estimated percentage: 91; 
95 percent confidence interval--(lower bound, upper bound): (87, 94). 

2010; 
Large city: 
Estimated percentage: 88; 
95 percent confidence interval--(lower bound, upper bound): (78, 94); 
Rural: 
Estimated percentage: 97; 
95 percent confidence interval--(lower bound, upper bound): (95, 98); 
Small city: 
Estimated percentage: 91; 
95 percent confidence interval--(lower bound, upper bound): (86, 94); 
Suburban: 
Estimated percentage: 92; 
95 percent confidence interval--(lower bound, upper bound): (89, 95). 

2011; 
Large city: 
Estimated percentage: 93; 
95 percent confidence interval--(lower bound, upper bound): (83, 97); 
Rural: 
Estimated percentage: 94; 
95 percent confidence interval--(lower bound, upper bound): (86, 98); 
Small city: 
Estimated percentage: 97; 
95 percent confidence interval--(lower bound, upper bound): (93, 99); 
Suburban: 
Estimated percentage: 95; 
95 percent confidence interval--(lower bound, upper bound): (92, 97). 

2012; 
Large city: 
Estimated percentage: 98; 
95 percent confidence interval--(lower bound, upper bound): (94, 100); 
Rural: 
Estimated percentage: 97; 
95 percent confidence interval--(lower bound, upper bound): (94, 98); 
Small city: 
Estimated percentage: 96; 
95 percent confidence interval--(lower bound, upper bound): (94, 97); 
Suburban: 
Estimated percentage: 94; 
95 percent confidence interval--(lower bound, upper bound): (89, 97). 

Source: GAO analysis of Moebs Services data. 

[End of table] 

Table 21: Estimated Percentage of Financial Institutions Charging a 
Foreign Fee, by Location of Financial Institution and Year (2007-2012): 

2007; 
Large city: 
Estimated percentage: 55; 
95 percent confidence interval--(lower bound, upper bound): (46, 63); 
Rural: 
Estimated percentage: 63; 
95 percent confidence interval--(lower bound, upper bound): (52, 73); 
Small city: 
Estimated percentage: 52; 
95 percent confidence interval--(lower bound, upper bound): (44, 60); 
Suburban: 
Estimated percentage: 55; 
95 percent confidence interval--(lower bound, upper bound): (50, 60). 

2008; 
Large city: 
Estimated percentage: 60; 
95 percent confidence interval--(lower bound, upper bound): (51, 69); 
Rural: 
Estimated percentage: 49; 
95 percent confidence interval--(lower bound, upper bound): (37, 61); 
Small city: 
Estimated percentage: 59; 
95 percent confidence interval--(lower bound, upper bound): (51, 66); 
Suburban: 
Estimated percentage: 56; 
95 percent confidence interval--(lower bound, upper bound): (51, 61). 

2009; 
Large city: 
Estimated percentage: 50; 
95 percent confidence interval--(lower bound, upper bound): (41, 59); 
Rural: 
Estimated percentage: 41; 
95 percent confidence interval--(lower bound, upper bound): (30, 52); 
Small city: 
Estimated percentage: 53; 
95 percent confidence interval--(lower bound, upper bound): (45, 60); 
Suburban: 
Estimated percentage: 49; 
95 percent confidence interval--(lower bound, upper bound): (44, 54). 

2010; 
Large city: 
Estimated percentage: 55; 
95 percent confidence interval--(lower bound, upper bound): (45, 64); 
Rural: 
Estimated percentage: 62; 
95 percent confidence interval--(lower bound, upper bound): (51, 72); 
Small city: 
Estimated percentage: 53; 
95 percent confidence interval--(lower bound, upper bound): (46, 60); 
Suburban: 
Estimated percentage: 53; 
95 percent confidence interval--(lower bound, upper bound): (48, 58). 

2011; 
Large city: 
Estimated percentage: 51; 
95 percent confidence interval--(lower bound, upper bound): (41, 61); 
Rural: 
Estimated percentage: 44; 
95 percent confidence interval--(lower bound, upper bound): (48, 63); 
Small city: 
Estimated percentage: 51; 
95 percent confidence interval--(lower bound, upper bound): (46, 57); 
Suburban: 
Estimated percentage: 52; 
95 percent confidence interval--(lower bound, upper bound): (47, 58). 

2012; 
Large city: 
Estimated percentage: 59; 
95 percent confidence interval--(lower bound, upper bound): (47, 70); 
Rural: 
Estimated percentage: 51; 
95 percent confidence interval--(lower bound, upper bound): (47, 56); 
Small city: 
Estimated percentage: 55; 
95 percent confidence interval--(lower bound, upper bound): (52, 59); 
Suburban: 
Estimated percentage: 53; 
95 percent confidence interval--(lower bound, upper bound): (46, 59). 

Source: GAO analysis of Moebs Services data. 

[End of table] 

Table 22: Estimated Average Surcharge Fee, by Location of Financial 
Institution and Year (2007-2012): 

2007; 
Large city: 
Estimated Fee: $1.85; 
95 percent confidence interval--(lower bound, upper bound): (1.75, 
1.96); 
Rural: 
Estimated Fee: $1.70; 
95 percent confidence interval--(lower bound, upper bound): (1.59, 
1.81); 
Small city: 
Estimated Fee: $1.78; 
95 percent confidence interval--(lower bound, upper bound): (1.69, 
1.88); 
Suburban: 
Estimated Fee: $1.75; 
95 percent confidence interval--(lower bound, upper bound): (1.69, 
1.80). 

2008; 
Large city: 
Estimated Fee: $1.71; 
95 percent confidence interval--(lower bound, upper bound): (1.59, 
1.84); 
Rural: 
Estimated Fee: $1.73; 
95 percent confidence interval--(lower bound, upper bound): (1.57, 
1.90); 
Small city: 
Estimated Fee: $1.85; 
95 percent confidence interval--(lower bound, upper bound): (1.73, 
1.97); 
Suburban: 
Estimated Fee: $1.81; 
95 percent confidence interval--(lower bound, upper bound): (1.73, 
1.88). 

2009; 
Large city: 
Estimated Fee: $2.01; 
95 percent confidence interval--(lower bound, upper bound): (1.88, 
2.13); 
Rural: 
Estimated Fee: $2.00; 
95 percent confidence interval--(lower bound, upper bound): (1.84, 
2.15); 
Small city: 
Estimated Fee: $1.92; 
95 percent confidence interval--(lower bound, upper bound): (1.79, 
2.04); 
Suburban: 
Estimated Fee: $1.94; 
95 percent confidence interval--(lower bound, upper bound): (1.87, 
2.01). 

2010; 
Large city: 
Estimated Fee: $2.10; 
95 percent confidence interval--(lower bound, upper bound): (1.97, 
2.23); 
Rural: 
Estimated Fee: $1.97; 
95 percent confidence interval--(lower bound, upper bound): (1.87, 
2.08); 
Small city: 
Estimated Fee: $1.97; 
95 percent confidence interval--(lower bound, upper bound): (1.88, 
2.06); 
Suburban: 
Estimated Fee: $2.03; 
95 percent confidence interval--(lower bound, upper bound): (1.95, 
2.11). 

2011; 
Large city: 
Estimated Fee: $2.07; 
95 percent confidence interval--(lower bound, upper bound): (1.91, 
2.24); 
Rural: 
Estimated Fee: $2.02; 
95 percent confidence interval--(lower bound, upper bound): (1.90, 
2.14); 
Small city: 
Estimated Fee: $1.99; 
95 percent confidence interval--(lower bound, upper bound): (1.92, 
2.06); 
Suburban: 
Estimated Fee: $2.08; 
95 percent confidence interval--(lower bound, upper bound): (1.99, 
2.16). 

2012; 
Large city: 
Estimated Fee: $2.15; 
95 percent confidence interval--(lower bound, upper bound): (1.98, 
2.32); 
Rural: 
Estimated Fee: $2.08; 
95 percent confidence interval--(lower bound, upper bound): (2.01, 
2.14); 
Small city: 
Estimated Fee: $2.09; 
95 percent confidence interval--(lower bound, upper bound): (2.04, 
2.14); 
Suburban: 
Estimated Fee: $2.18; 
95 percent confidence interval--(lower bound, upper bound): (2.06, 
2.29). 

Source: GAO analysis of Moebs Services data. 

Note: Dollar amounts are in 2012 dollars, calculated using the 
Consumer Price Index calendar year values. 

[End of table] 

Table 23: Estimated Average Foreign Fee, by Location of Financial 
Institution and Year (2007-2012): 

2007; 
Large city: 
Estimated Fee: $1.39; 
95 percent confidence interval--(lower bound, upper bound): (1.27, 
1.52); 
Rural: 
Estimated Fee: $1.33; 
95 percent confidence interval--(lower bound, upper bound): (1.21, 
1.45); 
Small city: 
Estimated Fee: $1.37; 
95 percent confidence interval--(lower bound, upper bound): (1.26, 
1.47); 
Suburban: 
Estimated Fee: $1.45; 
95 percent confidence interval--(lower bound, upper bound): (1.35, 
1.54). 

2008; 
Large city: 
Estimated Fee: $1.32; 
95 percent confidence interval--(lower bound, upper bound): (1.21, 
1.42); 
Rural: 
Estimated Fee: $1.27; 
95 percent confidence interval--(lower bound, upper bound): (1.13, 
1.40); 
Small city: 
Estimated Fee: $1.45; 
95 percent confidence interval--(lower bound, upper bound): (1.32, 
1.58); 
Suburban: 
Estimated Fee: $1.32; 
95 percent confidence interval--(lower bound, upper bound): (1.26, 
1.38). 

2009; 
Large city: 
Estimated Fee: $1.45; 
95 percent confidence interval--(lower bound, upper bound): (1.29, 
1.61); 
Rural: 
Estimated Fee: $1.46; 
95 percent confidence interval--(lower bound, upper bound): (1.24, 
1.68); 
Small city: 
Estimated Fee: $1.44; 
95 percent confidence interval--(lower bound, upper bound): (1.31, 
1.58); 
Suburban: 
Estimated Fee: $1.36; 
95 percent confidence interval--(lower bound, upper bound): (1.29, 
1.43). 

2010; 
Large city: 
Estimated Fee: $1.45; 
95 percent confidence interval--(lower bound, upper bound): (1.29, 
1.60); 
Rural: 
Estimated Fee: $1.56; 
95 percent confidence interval--(lower bound, upper bound): (1.40, 
1.72); 
Small city: 
Estimated Fee: $1.33; 
95 percent confidence interval--(lower bound, upper bound): (1.21, 
1.45); 
Suburban: 
Estimated Fee: $1.44; 
95 percent confidence interval--(lower bound, upper bound): (1.35, 
1.53). 

2011; 
Large city: 
Estimated Fee: $1.51; 
95 percent confidence interval--(lower bound, upper bound): (1.33, 
1.69); 
Rural: 
Estimated Fee: $1.39; 
95 percent confidence interval--(lower bound, upper bound): (1.29, 
1.48); 
Small city: 
Estimated Fee: $1.40; 
95 percent confidence interval--(lower bound, upper bound): (1.33, 
1.46); 
Suburban: 
Estimated Fee: $1.36; 
95 percent confidence interval--(lower bound, upper bound): (1.27, 
1.45). 

2012; 
Large city: 
Estimated Fee: $1.36; 
95 percent confidence interval--(lower bound, upper bound): (1.20, 
1.53); 
Rural: 
Estimated Fee: $1.40; 
95 percent confidence interval--(lower bound, upper bound): (1.32, 
1.47); 
Small city: 
Estimated Fee: $1.44; 
95 percent confidence interval--(lower bound, upper bound): (1.37, 
1.50); 
Suburban: 
Estimated Fee: $1.42; 
95 percent confidence interval--(lower bound, upper bound): (1.33, 
1.52). 

Source: GAO analysis of Moebs Services data. 

Note: Dollar amounts are in 2012 dollars, calculated using the 
Consumer Price Index calendar year values. 

[End of table] 

Estimated Prevalence and Amounts of Surcharge and Foreign Fees by 
Geographic Region of Financial Institution: 

We evaluated four geographic regions of financial institutions: East, 
Midwest, South, and West. Tables 24 through 27 show the estimated 
prevalence of surcharge and foreign fees and estimated average 
surcharge and foreign fees for financial institutions located in the 
East, Midwest, South, and West from 2007 through 2012. 

Table 24: Estimated Percentage of Financial Institutions Charging a 
Surcharge Fee, by Region of Financial Institution and Year (2007-2012): 

2007; 
East: 
Estimated percentage: 87; 
95 percent confidence interval--(lower bound, upper bound): (82, 90); 
Midwest: 
Estimated percentage: 82; 
95 percent confidence interval--(lower bound, upper bound): (74, 89); 
South: 
Estimated percentage: 94; 
95 percent confidence interval--(lower bound, upper bound): (88, 97); 
West: 
Estimated percentage: 80; 
95 percent confidence interval--(lower bound, upper bound): (74, 85). 

2008; 
East: 
Estimated percentage: 83; 
95 percent confidence interval--(lower bound, upper bound): (76, 88); 
Midwest: 
Estimated percentage: 81; 
95 percent confidence interval--(lower bound, upper bound): (71, 88); 
South: 
Estimated percentage: 89; 
95 percent confidence interval--(lower bound, upper bound): (79, 95); 
West: 
Estimated percentage: 73; 
95 percent confidence interval--(lower bound, upper bound): (57, 85). 

2009; 
East: 
Estimated percentage: 84; 
95 percent confidence interval--(lower bound, upper bound): (72, 92); 
Midwest: 
Estimated percentage: 83; 
95 percent confidence interval--(lower bound, upper bound): (73, 90); 
South: 
Estimated percentage: 94; 
95 percent confidence interval--(lower bound, upper bound): (87, 97); 
West: 
Estimated percentage: 81; 
95 percent confidence interval--(lower bound, upper bound): (64, 91). 

2010; 
East: 
Estimated percentage: 86; 
95 percent confidence interval--(lower bound, upper bound): (80, 91); 
Midwest: 
Estimated percentage: 94; 
95 percent confidence interval--(lower bound, upper bound): (88, 97); 
South: 
Estimated percentage: 95; 
95 percent confidence interval--(lower bound, upper bound): (90, 98); 
West: 
Estimated percentage: 94; 
95 percent confidence interval--(lower bound, upper bound): (90, 96). 

2011; 
East: 
Estimated percentage: 96; 
95 percent confidence interval--(lower bound, upper bound): (93, 98); 
Midwest: 
Estimated percentage: 96; 
95 percent confidence interval--(lower bound, upper bound): (90, 98); 
South: 
Estimated percentage: 97; 
95 percent confidence interval--(lower bound, upper bound): (90, 99); 
West: 
Estimated percentage: 90; 
95 percent confidence interval--(lower bound, upper bound): (70, 97). 

2012; 
East: 
Estimated percentage: 97; 
95 percent confidence interval--(lower bound, upper bound): (94, 99); 
Midwest: 
Estimated percentage: 95; 
95 percent confidence interval--(lower bound, upper bound): (92, 96); 
South: 
Estimated percentage: 98; 
95 percent confidence interval--(lower bound, upper bound): (96, 99); 
West: 
Estimated percentage: 94; 
95 percent confidence interval--(lower bound, upper bound): (89, 96). 

Source: GAO analysis of Moebs Services data. 

[End of table] 

Table 25: Estimated Percentage of Financial Institutions Charging a 
Foreign Fee, by Region of Financial Institution and Year (2007-2012): 

2007; 
East: 
Estimated percentage: 54; 
95 percent confidence interval--(lower bound, upper bound): (44, 63); 
Midwest: 
Estimated percentage: 57; 
95 percent confidence interval--(lower bound, upper bound): (48, 66); 
South: 
Estimated percentage: 62; 
95 percent confidence interval--(lower bound, upper bound): (50, 72); 
West: 
Estimated percentage: 40; 
95 percent confidence interval--(lower bound, upper bound): (32, 48). 

2008; 
East: 
Estimated percentage: 59; 
95 percent confidence interval--(lower bound, upper bound): (51, 67); 
Midwest: 
Estimated percentage: 56; 
95 percent confidence interval--(lower bound, upper bound): (46, 66); 
South: 
Estimated percentage: 57; 
95 percent confidence interval--(lower bound, upper bound): (45, 67); 
West: 
Estimated percentage: 45; 
95 percent confidence interval--(lower bound, upper bound): (34, 57). 

2009; 
East: 
Estimated percentage: 46; 
95 percent confidence interval--(lower bound, upper bound): (37, 55); 
Midwest: 
Estimated percentage: 46; 
95 percent confidence interval--(lower bound, upper bound): (36, 55); 
South: 
Estimated percentage: 55; 
95 percent confidence interval--(lower bound, upper bound): (43, 65); 
West: 
Estimated percentage: 43; 
95 percent confidence interval--(lower bound, upper bound): (32, 54). 

2010; 
East: 
Estimated percentage: 60; 
95 percent confidence interval--(lower bound, upper bound): (52, 68); 
Midwest: 
Estimated percentage: 62; 
95 percent confidence interval--(lower bound, upper bound): (53, 71); 
South: 
Estimated percentage: 52; 
95 percent confidence interval--(lower bound, upper bound): (42, 61); 
West: 
Estimated percentage: 47; 
95 percent confidence interval--(lower bound, upper bound): (35, 59). 

2011; 
East: 
Estimated percentage: 47; 
95 percent confidence interval--(lower bound, upper bound): (40, 55); 
Midwest: 
Estimated percentage: 53; 
95 percent confidence interval--(lower bound, upper bound): (47, 60); 
South: 
Estimated percentage: 51; 
95 percent confidence interval--(lower bound, upper bound): (44, 58); 
West: 
Estimated percentage: 33; 
95 percent confidence interval--(lower bound, upper bound): (26, 41). 

2012; 
East: 
Estimated percentage: 54; 
95 percent confidence interval--(lower bound, upper bound): (49, 60); 
Midwest: 
Estimated percentage: 55; 
95 percent confidence interval--(lower bound, upper bound): (51, 59); 
South: 
Estimated percentage: 53; 
95 percent confidence interval--(lower bound, upper bound): (48, 58); 
West: 
Estimated percentage: 51; 
95 percent confidence interval--(lower bound, upper bound): (44, 57). 

Source: GAO analysis of Moebs Services data. 

[End of table] 

Table 26: Estimated Average Surcharge Fee, by Region of Financial 
Institution and Year (2007-2012): 

2007; 
East: Estimated fee: $1.71; 
East: 95 percent confidence interval-
-(lower bound, upper bound): (1.58, 1.83)
Midwest: Estimated fee: $1.69; 
Midwest: 95 percent confidence interval--(lower bound, upper bound): 
(1.58, 1.80)
South: Estimated fee: $1.80; 
South: 95 percent confidence interval--(lower bound, upper bound): 
(1.68, 1.92)
West: Estimated fee: $1.86; 
West: 95 percent confidence interval--(lower bound, upper bound): 
(1.78, 193). 

2008; 
East: Estimated fee: $1.73; 
East: 95 percent confidence interval-
-(lower bound, upper bound): (1.58, 1.87)
Midwest: Estimated fee: $1.86; 
Midwest: 95 percent confidence interval--(lower bound, upper bound): 
(1.75, 1.96)
South: Estimated fee: $1.78; 
South: 95 percent confidence interval--(lower bound, upper bound): 
(1.60, 1.96)
West: Estimated fee: $1.77; 
West: 95 percent confidence interval--(lower bound, upper bound): 
(1.62, 1.92). 

2009; 
East: Estimated fee: $1.94; 
East: 95 percent confidence interval-
-(lower bound, upper bound): (1.77, 2.11)
Midwest: Estimated fee: $1.86; 
Midwest: 95 percent confidence interval--(lower bound, upper bound): 
(1.73, 1.98)
South: Estimated fee: $2.05; 
South: 95 percent confidence interval--(lower bound, upper bound): 
(1.88, 2.22)
West: Estimated fee: $1.98; 
West: 95 percent confidence interval--(lower bound, upper bound): 
(1.83, 2.12). 

2010; 
East: Estimated fee: $1.90; 
East: 95 percent confidence interval-
-(lower bound, upper bound): (1.74, 2.06)
Midwest: Estimated fee: $1.86; 
Midwest: 95 percent confidence interval--(lower bound, upper bound): 
(1.77, 1.96)
South: Estimated fee: $2.08; 
South: 95 percent confidence interval--(lower bound, upper bound): 
(1.99, 2.18)
West: Estimated fee: $2.14; 
West: 95 percent confidence interval--(lower bound, upper bound): 
(1.99, 2.29). 

2011; 
East: Estimated fee: $1.94; 
East: 95 percent confidence interval-
-(lower bound, upper bound): (1.80, 2.08)
Midwest: Estimated fee: $2.00; 
Midwest: 95 percent confidence interval--(lower bound, upper bound): 
(1.92, 2.07)
South: Estimated fee: $2.00; 
South: 95 percent confidence interval--(lower bound, upper bound): 
(1.90, 2.10)
West: Estimated fee: $2.22; 
West: 95 percent confidence interval--(lower bound, upper bound): 
(2.08, 2.37). 

2012; 
East: Estimated fee: $2.06; 
East: 95 percent confidence interval-
-(lower bound, upper bound): (1.98, 2.13)
Midwest: Estimated fee: $2.05; 
Midwest: 95 percent confidence interval--(lower bound, upper bound): 
(1.99, 2.11)
South: Estimated fee: $2.18; 
South: 95 percent confidence interval--(lower bound, upper bound): 
(2.12, 2.25)
West: Estimated fee: $2.11; 
West: 95 percent confidence interval--(lower bound, upper bound): 
(2.01, 2.20). 

[End of table] 

Source: GAO analysis of Moebs Services data. 

Note: Dollar amounts are in 2012 dollars, calculated using the 
Consumer Price Index calendar year values. 

Table 27: Estimated Average Foreign Fee, by Region of Financial 
Institution and Year (2007-2012): 

2007; 
East: 
Estimated fee: $1.27; 
95 percent confidence interval--(lower bound, upper bound): (1.18, 1.37)
Midwest: 
Estimated fee: $1.40; 
95 percent confidence interval--(lower bound, upper bound): (1.28, 1.53)
South: 
Estimated fee: $1.37; 
95 percent confidence interval--(lower bound, upper bound): (1.23, 
1.50); 
West: 
Estimated fee: $1.41; 
95 percent confidence interval--(lower bound, upper bound): (1.29, 
1.53). 

2008; 
East: 
Estimated fee: $1.24; 
95 percent confidence interval--(lower bound, upper bound): (1.16, 1.32)
Midwest: 
Estimated fee: $1.39; 
95 percent confidence interval--(lower bound, upper bound): (1.25, 1.52)
South: 
Estimated fee: $1.41; 
95 percent confidence interval--(lower bound, upper bound): (1.23, 1.59)
West: 
Estimated fee: $1.39; 
95 percent confidence interval--(lower bound, upper bound): (1.20, 
1.58). 

2009; 
East: 
Estimated fee: $1.21; 
95 percent confidence interval--(lower bound, upper bound): (1.13, 1.28)
Midwest: 
Estimated fee: $1.39; 
95 percent confidence interval--(lower bound, upper bound): (1.26, 1.52)
South: 
Estimated fee: $1.60; 
95 percent confidence interval--(lower bound, upper bound): (1.39, 1.82)
West: 
Estimated fee: $1.34; 
95 percent confidence interval--(lower bound, upper bound): (1.25, 
1.43). 

2010; 
East: 
Estimated fee: $1.39; 
95 percent confidence interval--(lower bound, upper bound): (1.17, 1.60)
Midwest: 
Estimated fee: $1.32; 
95 percent confidence interval--(lower bound, upper bound): (1.22, 1.43)
South: 
Estimated fee: $1.58; 
95 percent confidence interval--(lower bound, upper bound): (1.41, 1.76)
West: 
Estimated fee: $1.44; 
95 percent confidence interval--(lower bound, upper bound): (1.21, 
1.67). 

2011; 
East: 
Estimated fee: $1.23; 
95 percent confidence interval--(lower bound, upper bound): (1.15, 1.31)
Midwest: 
Estimated fee: $1.40; 
95 percent confidence interval--(lower bound, upper bound): (1.31, 1.48)
South: 
Estimated fee: $1.42; 
95 percent confidence interval--(lower bound, upper bound): (1.34, 1.50)
West: 
Estimated fee: $1.54; 
95 percent confidence interval--(lower bound, upper bound): (1.43, 
1.64). 

2012; 
East: 
Estimated fee: $1.34; 
95 percent confidence interval--(lower bound, upper bound): (1.27, 1.42)
Midwest: 
Estimated fee: $1.44; 
95 percent confidence interval--(lower bound, upper bound): (1.36, 1.52)
South: 
Estimated fee: $1.45; 
95 percent confidence interval--(lower bound, upper bound): (1.37, 1.53)
West: 
Estimated fee: $1.42; 
95 percent confidence interval--(lower bound, upper bound): (1.33, 
1.52). 

Source: GAO analysis of Moebs Services data. 

Note: Dollar amounts are in 2012 dollars, calculated using the 
Consumer Price Index calendar year values. 

[End of table] 

[End of section] 

Appendix IV: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Alicia Puente Cackley, (202) 512-8678 or cackleya@gao.gov: 

Staff Acknowledgments: 

In addition to the contact named above, Paul Schmidt (Assistant 
Director), Jim Ashley, Bethany M. Benitez, Katie Boggs, John Karikari, 
Jill Lacey, Kristeen McLain, Marc Molino, Christine San, Jennifer 
Schwartz, and Andrew Stavisky made significant contributions to this 
report. 

[End of section] 

Footnotes: 

[1] Federal Reserve System, The 2010 Federal Reserve Payments Study: 
Noncash Payment Trends in the United States: 2006 - 2009 (Washington, 
D.C.: April 2011). 

[2] See GAO, Bank Fees: Federal Banking Regulators Could Better Ensure 
that Consumers Have Required Disclosure Documents Prior to Opening 
Checking or Savings Accounts, [hyperlink, 
http://www.gao.gov/products/GAO-08-281] (Washington, D.C.: Jan. 31, 
2008). 

[3] We originally intended to deploy the survey to 10 independent ATM 
operator firms. However, our pretests revealed that the survey would 
have been overly burdensome for smaller firms, so we limited our 
outreach to the 4 firms that, according to our research, had more than 
10,000 ATMs. 

[4] Community banks can be defined based on a number of criteria, but 
for the purpose of this report, we use size (less than $10 billion in 
assets) as the sole criterion to distinguish community banks from 
their larger counterparts. 

[5] A metropolitan statistical area is a geographic entity defined by 
the Office of Management and Budget for use by federal statistical 
agencies in collecting, tabulating, and publishing federal statistics. 
A metropolitan area contains a core urban area population of 50,000 or 
more. 

[6] There are several types of independent ATM operators that are not 
affiliated with a financial institution. These can include independent 
sales organizations, independent ATM deployers, and independent ATM 
operators or processors. In this report we use the term "independent 
ATM operator" to refer to all types. 

[7] Industry representatives told us some smaller financial 
institutions use a third-party firm to process "on-us" ATM 
transactions. 

[8] In addition to cash withdrawals, consumers can conduct other 
transactions at an ATM such as checking account balances or making 
deposits; however, cash withdrawals are the most common transactions 
conducted at ATMs, as shown by our survey results in appendix II. 
Credit cards can also be used at ATMs to withdraw cash. However, ATM 
operators are not always able to track whether or not a transaction 
was initiated with a debit card or a credit card. For example, in our 
survey, out of the 26 financial institutions that responded to the 
question, only 11 said they could track the frequency of credit card-
based transactions at their ATMs, and reported between 0.3 and 5 
percent of the transactions at their ATMs used a credit card in 
calendar year 2011. The other fifteen operators responded "unable to 
determine." 

[9] The ATM sponsoring financial institution is the entity that 
sponsors access to the EFT network. Therefore banks and credit unions 
are their own sponsoring financial institutions. Sometimes the 
sponsoring financial institution is referred to as the "acquirer." 

[10] This report focuses exclusively on the fees paid to conduct 
transactions at ATMs in the United States. 

[11] Regulation E implements the Electronic Fund Transfer Act, the 
primary federal statute that governs the disclosure of ATM fees. 15 
U.S.C. §§ 1601, 1693-1693r. Regulation E requires ATM operators that 
charge a fee to provide notice that a fee will be imposed and disclose 
the amount of the fee. 12 C.F.R. §1005.16. On December 20, 2012, the 
President signed into law a bill that eliminated the statutory 
requirement that the fee be posted on the outside of the ATM, so now 
only the on-screen notice is required. 15 U.S.C. §1693b(d)(3)(B), 
(2013) amended by Pub. L. No. 112-216, 126 Stat. 1590 (2012). 

[12] Regulation E requires financial institutions to provide consumers 
with initial disclosures of the terms and conditions of EFT services. 
12 C.F.R. §1005.7. In addition, Regulation DD, which implements the 
Truth in Savings Act, requires depository institutions to disclose, 
among other things, the amount of any fee that may be imposed in 
connection with an account and the conditions under which such fees 
are imposed. 12 C.F.R. § 1030.4. Banks, thrifts, and credit unions are 
subject to supervisory oversight, which includes on-site examinations 
and other steps, to enforce compliance with the relevant laws and 
regulations that pertain to ATM transactions. The Bank Service Company 
Act, 12 U.S.C. §§ 1861-1867(c), permits examination and regulation of 
bank service companies or independent servicers performing under a 
contract or otherwise any service for a federally regulated depository 
institution by the appropriate federal banking agency of the 
depository institution acquiring the service, which includes OCC, the 
Federal Reserve, and FDIC. See 12 U.S.C. § 1867(c). The Federal 
Reserve has supervisory responsibility for state-chartered banks that 
are members of the Federal Reserve System, as well as bank holding 
companies and their nonbank subsidiaries, other than savings 
institutions and credit unions. 12 U.S.C. § 1844(c)(2)(A)(i)-(ii). 
FDIC oversees state-chartered banks and savings associations with 
federally insured deposits that are not members of the Federal Reserve 
System. 12 U.S.C. §§ 1813(q)(2), 1819(a). OCC oversees national banks 
and federal savings associations. 12 U.S.C. §§ 481, 1813(q)(1). NCUA 
oversees federally chartered and state-chartered credit unions whose 
member accounts are federally insured. 12 U.S.C. § 1784. State-
chartered banks, thrifts, and credit unions are also subject to 
supervision by the state in which they are chartered. CFPB examines 
insured depository institutions and credit unions with more than $10 
billion in assets as well as entities with which they have third-party 
contracts, such as independent ATM operators and network providers, to 
assess compliance with federal consumer financial laws. Pub. L. No. 
111-203, §§ 1002(26),1025(d). 

[13] As previously discussed, we surveyed a total of 30 financial 
institutions--the 10 largest banks and 10 largest credit unions (by 
asset size) and 10 randomly selected midsize banks (with assets 
between $10 billion and $50 billion). Response rates for this question 
were: 9 large banks, 9 credit unions, and 8 midsize banks. For these 
and all other survey data, the period covered is calendar year 2011. 
For more survey results, see appendix II. 

[14] Our survey included a question asking what factors are taken into 
account when setting fees. Eight large banks, eight midsize banks, and 
nine credit unions responded to this question. We analyzed those 
responses and grouped them into like categories. Competition was the 
most frequently cited factor the financial institutions take into 
account when setting fees, mentioned by 16 survey respondents. 

[15] Cost was cited by 13 respondents as a factor they take into 
account when setting surcharge fees. 

[16] ATM usage levels were cited by six respondents as a factor they 
take into account when setting surcharge fees. 

[17] We obtained this information from the ATM Industry Association. 
In addition, two major EFT networks--based on their industry 
knowledge--also told us they estimated that independent ATM operators 
run half or just over half of the ATMs in the United States. 

[18] According to one independent ATM firm, in some cases the contract 
for an ATM placement may stipulate that both the merchant and 
independent ATM operator mutually consent to the amount of the 
surcharge fee. 

[19] As previously discussed, we analyzed data from a private vendor, 
Moebs Services, Inc. (Moebs), to assess ATM fees charged by financial 
institution ATM operators. Moebs provided data gathered through 
telephone surveys for each of the years 2007 through 2012, based on 
statistically representative samples of financial institutions. We 
computed weighted estimates and 95 percent confidence intervals of the 
percentage of institutions charging surcharge and foreign fees and 
weighted averages and medians of these fees. All percentage estimates 
presented in this report have a margin of error of +/-5 percentage 
points or fewer, and all average and median estimates have a relative 
margin of error of +/-5 percent or less, unless otherwise noted. All 
differences between estimated values in this report are statistically 
significant at the 95 percent confidence level (p-value <= 0.05), 
unless otherwise noted. For more detailed information on the 
characteristics of the data, see appendix I. 

[20] Our analysis focused on surcharge and foreign fees for cash 
withdrawals. However, a small percentage of other transactions that 
occur at the ATM incur fees. See appendix II for survey results on 
these other fees. 

[21] Unless noted otherwise, dollar amounts for ATM surcharge and 
foreign fees in this report are in 2012 dollars, calculated using the 
Consumer Price Index calendar year values. We analyzed the prevalence 
of charging a surcharge and foreign fee, and then we excluded 
financial institutions that did not charge a fee from our calculation 
of the average fees. In our previous work on ATM fees, we calculated 
the average ATM surcharge and foreign fee by averaging the fee charged 
by all institutions, including those that did not charge a fee, and 
reported those numbers in 2006 dollars. See GAO, Bank Fees: Federal 
Banking Regulators Could Better Ensure that Consumers Have Required 
Disclosure Documents Prior to Opening Checking or Savings Accounts, 
[hyperlink, http://www.gao.gov/products/GAO-08-281] (Washington, D.C.: 
Jan. 31, 2008). 

[22] The median estimates for 2007 and 2012 are not significantly 
different; the median estimate for 2012 has a margin of error of 
±$0.15 and a relative margin of error of ±15 percent. 

[23] We examined the differences between the estimated prevalence and 
average fees for type and size of financial institution, as well as 
geographic region and type of location of the financial institution 
separately. We did not conduct a multivariate analysis using all of 
these factors or control for any additional factors in our analysis. 

[24] We analyzed the estimated average, median, and range of ATM fees 
for all financial institutions from 2007 through 2012, but due to a 
large sample size, we chose to present the estimated averages in 
discussing differences in the amount of the surcharge fees for various 
types and sizes of institutions, or in geographic regions or types of 
areas, such as rural, urban, or suburban, in which the financial 
institution was located. 

[25] The Moebs data set defined small financial institutions as those 
with less than $10 million in assets, medium financial institutions as 
those with $10 million to $999 million in assets, and large financial 
institutions as those with $1 billion or more in assets, so we used 
those definitions in our analysis of fees. 

[26] We also analyzed the variation in amount and prevalence of 
surcharge fees from 2007 through 2011 based on the institution size 
and type, and type of location and geographic region in which the 
financial institution is located. Within each year, we examined the 
differences between the estimated average fees for these factors 
separately. We did not conduct a multivariate analysis using all of 
these factors or control for any additional factors in our analysis. 
See appendix III for more analysis of surcharge fees based on these 
factors for 2007 through 2012. 

[27] We also analyzed the differences in the estimated average amount 
and prevalence of foreign fees from 2007 through 2011 based on the 
institution size and type, and type of location and geographic region 
in which the financial institution is located. Within each year, we 
examined the differences between the estimated average fees for these 
factors separately. We did not conduct a multivariate analysis using 
all of these factors or control for any additional factors in our 
analysis. See appendix III for more analysis of foreign fees based on 
these factors for 2007 through 2012. 

[28] As previously discussed, we analyzed data from a private vendor, 
Informa Research Services, Inc. (Informa), to assess ATM fees charged 
by independent ATM operators in 2012. The Informa data are from a 
nonrepresentative sample of independent ATM operators and were 
gathered by sending shoppers to selected ATMs to conduct a transaction 
and report their results. For more detailed information on the 
characteristics of data sets and the data reported by each vendor, see 
appendix I. 

[29] Due to the judgmental and nongeneralizable sample of data we 
obtained from Informa, we are also unable to analyze differences in 
surcharge fees for independent ATMs based on the type or size of ATM 
operator or geographic region or type of area in which the independent 
ATM is located. 

[30] As previously stated, our sample of independent ATM operators 
focused on ATMs in grocery stores, drug stores, gas stations, and 
liquor stores, and our sample is not generalizable to all independent 
ATMs in the United States. 

[31] As previously discussed, dollar amounts for ATM surcharge fees in 
this report are in 2012 dollars, calculated using the Consumer Price 
Index calendar year values. The nominal values for the average ATM 
surcharge fees reported by this independent operator were $1.39 in 
2002 and $2.42 in 2011. 

[32] The firms also reported on transactions other than cash 
withdrawals--balance inquiries, fund transfers, and denials--none of 
which incurred a surcharge. For more information, see appendix II. 

[33] Although we interviewed officials from this firm and they 
submitted cost and revenue information to us, they did not complete 
the survey. While we were not able to independently verify these 
estimates, we do know there are independent ATM firms that have 
substantial branding and surcharge-free network programs. 

[34] As previously discussed, all survey results are for calendar year 
2011. 

[35] As previously discussed, this report focuses exclusively on fees 
paid to conduct transactions at ATMs in the United States. 

[36] As of February 2013, these three firms reported having 38,000, 
30,000, and 23,000 ATMs in their surcharge-free networks. However, 
since an ATM could be part of more than one surcharge free network, it 
is not possible to determine the number of distinct ATMs that 
participate in these three surcharge-free networks. 

[37] Twenty-six financial institutions--9 large banks, 9 credit 
unions, and 8 midsize banks--responded to this question and reported a 
total of 12,701 branded ATMs. 

[38] As previously discussed, independent ATMs may be owned by 
merchants, not the independent operators, and in those cases, the 
merchant-owners bear some of the ATM operational costs. We developed 
the cost categories and their content by reviewing various reports and 
studies on ATM operations, as well as a Federal Reserve survey 
recently deployed on debit card processing costs. We then received 
input on the categories from knowledgeable industry representatives 
and staff from the Federal Reserve and CFPB. For a detailed discussion 
of the costs survey methodology, see appendix I. 

[39] In some cases, in lieu of rent, the ATM operator shares a portion 
of fee revenues with the merchant as part of a revenue-sharing 
arrangement. 

[40] Independent ATM operators typically pay these network fees to 
their sponsoring bank, which is the entity with the membership in the 
EFT network. 

[41] As previously discussed, until December 2012, the Electronic Fund 
Transfer Act required ATM operators that charge a fee to post physical 
notice of that fee on the ATM terminal; the revised statute requires 
only the on-screen notification. 15 U.S.C. § 1693b(d)(3)(B) (2013), 
amended by Pub. L. No. 112-216, 126 Stat. 1590 (2012). 

[42] In the survey we asked the ATM operators to report their "net" 
fraud losses, which are total fraud losses, minus any offsets from 
insurance payments or other sources. 

[43] As previously discussed, we received responses from 9 out of 10 
large banks, 8 out of 10 midsize banks, and 9 out of 10 credit unions, 
but response rates varied by question. 

[44] There may be several reasons why the large banks' percentage of 
costs dedicated to hardware and software is higher than the other two 
financial institution types included in our survey. Industry sources 
and representatives we interviewed indicate that several of the 
largest banks are updating their ATM fleets with new, more expensive 
terminals, and these major investments may be one reason for greater 
hardware and software costs. 

[45] According to knowledgeable financial regulatory staff we spoke 
with, one possible reason the large banks in our survey reported 
incurring less in infrastructure and processing costs, as a percentage 
of total costs, might be because they often do processing services in-
house. Processors that perform similar services for other financial 
institutions on an outsourced basis may bundle those costs with other 
services or charge more. 

[46] Response rates for this question were: 6 out of 10 large banks, 6 
out of 10 midsize banks, and 8 out of 10 credit unions. In the survey 
we defined rent costs as: the amount paid for ATM facilities at off-
premise locations (not in a bank or credit union facility); and the 
amount of any revenues shared (partially or entirely) with a merchant 
or other party for ATM facilities at that location or locations. Some 
revenue-sharing arrangements are based, partially or entirely, on 
transaction levels, so as the number of transactions increases, so do 
rent costs. For a full description of each cost category, as well as 
average per-ATM costs, see table 11 in appendix II. 

[47] Response rates for this question were: 6 out of 10 large banks, 7 
out of 10 midsize banks, and 8 out of 10 credit unions. 

[48] For a break-out of capitalized and noncapitalized hardware and 
software costs, see table 11 in appendix II. 

[49] Response rates for this question were: 5 out of 10 large banks, 8 
out of 10 midsize banks, and 8 out of 10 credit unions. 

[50] Response rates for this question were: 5 out of 10 large banks, 7 
out of 10 midsize banks, and 8 out of 10 credit unions. 

[51] Response rates for this question were: 4 out of 10 large banks, 6 
out of 10 midsize banks, and 7 out of 10 credit unions. 

[52] Response rates for this question were: 4 out of 10 large banks, 6 
out of 10 midsize banks, and 6 out of 10 credit unions. 

[53] The new ADA requirements for ATMs required operators to add 
certain audio and touch-based technologies that assist vision-impaired 
consumers. These new requirements were announced in 2010, when the 
Department of Justice issued revised rules for Title III of the 
Americans with Disabilities Act of 1990, which prohibits 
discrimination on the basis of disability and requires commercial 
facilities to be designed, constructed, and altered in compliance with 
certain accessibility standards. Pub. L. No.101-336, 104 Stat. 327 
(1990), (codified at 42 U.S.C. §§ 12101-12213). Building on the 1991 
ADA standards that required ATMs to be accessible to individuals using 
wheelchairs, the Department of Justice's 2010 standards added specific 
technical requirements to ATMs for speech output, privacy and 
tactilely-discernible input controls, among other things. 28 C.F.R. § 
36, Appendix B. ATM operators were required to have completed required 
upgrades by March 15, 2012. 75 Fed. Reg. 56, 236, 56,254 (Sept. 15, 
2010). 

[54] Given the small number of independent operators that participated 
in our survey--two out of four firms--what we can report without 
revealing the identity of a given firm is limited, and therefore we 
are not able to provide specific dollar amounts for the cost 
categories. In addition, these data are not representative of 
independent ATM operators in general. 

[55] Although we interviewed officials from this firm and they 
submitted cost and revenue information to us, they did not complete 
the survey. Therefore we cannot compare this firm's reported costs 
with those of the survey respondents directly because we are not 
assured that the categories are similar enough. 

[56] Four financial institutions did not respond to the question, and 
one reported "no opinion." 

[57] In addition to asking the respondents to classify the level of 
cost increases or decreases, we asked an optional follow-up question--
to describe the changes in operating costs and the reasons why. We 
then analyzed those responses and grouped them into like categories. 
Thirteen operators cited upgrading to more versatile ATMs as a major 
cost driver, eight cited compliance with ADA requirements, and six 
cited software upgrades. For more information about our content 
analysis of narrative responses, see appendix I. 

[58] Four operators cited fraud prevention efforts as a reason why 
costs increased, three operators cited adding ATMs to their fleets, 
and two cited increases in network fees. 

[59] Twenty-six financial institution operators responded to the 
question, including two operators that answered "no opinion." 

[60] All participants in the EFT networks, including ATM operators, 
are required to meet certain industry-wide data security standards 
established by the Payment Card Industry Security Standards Council. 
These requirements include installing and maintaining systems to 
protect cardholder data and that ATMs include the use of approved 
encrypted personal identification number pads. Also, the U.S. ATM and 
debit point-of-sale markets are moving in the direction of new cards 
("chip cards") that use an embedded chip microprocessor for payment 
transactions, as opposed to the current magnetic stripe technology. As 
publicly announced, by 2017, MasterCard and VISA will shift liability 
for fraudulent transactions to whichever party has not adopted the 
chip card technology, so many ATM operators told us they will be 
updating their ATMs to accept the new cards. 

[61] We ran our data reports from SNL on May 7, 2012, so the asset 
rankings were as of that date. 

[62] We accepted one additional survey questionnaire submitted by a 
financial institution on October 15, 2012, after the formal deadline. 

[63] A metropolitan statistical area (metro area) is a geographic 
entity defined by the Office of Management and Budget for use by 
federal statistical agencies in collecting, tabulating, and publishing 
federal statistics. A metro area contains a core urban area population 
of 50,000 or more. Each metro area consists of one or more counties 
and includes the counties containing the core urban area, as well as 
any adjacent counties that have a high number of residents who commute 
to work within the urban core. 

[64] We received survey responses from 9 out of 10 large banks, 8 out 
of 10 midsize banks, and 9 out of 10 credit unions, although response 
rates varied by question. 

[65] For more information on the survey methodology, see appendix I. 

[66] We calculated the per-ATM average by summing the costs in a 
category for all institutions of that type (large banks, midsize 
banks, or credit unions) and then dividing by the total number of ATMs 
represented by those institutions that provided cost data. 

[67] As previously discussed, due to the sensitivity and the possibly 
proprietary nature of the information that we collected with the 
survey, we have aggregated cost information at a high level, and we 
present it in a way that prevents individual organizations from being 
identified. 

[68] In instances where we identified a reported cost that appeared to 
be an outlier, we examined the sources reported by the financial 
institution, and in some cases we followed up with representatives 
from the financial institution to ensure they had reported the 
information correctly and according to the category description in the 
questionnaire. For more on our survey methodology, including quality 
review of the data, see appendix I. 

[69] There were two types of nonresponses. First, an institution may 
not have answered the question--providing no cost data for that 
category. A second type of nonresponse was when an institution 
responded "unable to determine" if they were unable to identify a data 
source for a particular category or were unable to isolate ATM 
operational costs from other related business costs, such as those 
pertaining to debit cards. 

[End of section] 

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