Cashing in and out ING Direct

ING Direct is not the first bank to offer fee-free transaction banking but it is the first to offer unlimited ATM withdrawals without owning an ATM fleet or being part of an ATM network.

The bank's new transaction account, Orange Everyday, introduced a month ago but getting its first marketing push this week, will offer to rebate ATM direct charges (anywhere from  $1.50 to $2) at any ATM the customer uses as long as the withdrawal is more than $200.

However, the account will not be quite as generous as the version trialled with staff and which paid all ATM fees on withdrawals.

The rebate applies only to withdrawals, not balance inquiries or other ATM transactions.

ING Direct executive director savings, Brett Morgan, says the rebate has been calculated in the long-term business case for the product and he is confident it is sustainable.

He says: "Our decision not to join an ATM network was taken because we think our customers should have access to every ATM in the country."

But ING Direct is hoping to encourage customers to change their behaviour and use cash-out at point of sale terminals to make withdrawals. It will put 50 cents into the customer's account each time the customer takes out cash of more than $200 using Eftpos (though on an ING Visa debit card).

It will be interesting to see if that incentive is enough to wean customers off cash machines.

About one third of transactions at point of sale, at large retailers at least, include a cash-out component.

Other features of the new account include the full range of online Bpay and "pay anyone" transfers, and scheduled payments.

There is no cheque facility and no credit card offer. Customers can use Australia Post for deposits and withdrawals.

The account pays no interest. Morgan says interest on transaction accounts produces very little return for most people. The bank's view is that people would rather avoid fees than earn a small amount of interest.

According to Infochoice there are several other financial institutions offering fee-free transaction accounts. They include BankWest and Heritage Building Society. BankWest has a minimum monthly deposit requirement.

National Australian Bank, Westpac and St George will waive their monthly fees if minimum deposit requirements are met - $3,500 in NAB's case and $2,000 for the other two.