Caution reigns at ATMs

The dynamics of the market for dispensing cash through automatic teller machines may not be breaking as deployers in this segment may have anticipated.

A year after direct charging by owners of ATMs became the norm in Australia the average value of cash withdrawn at cash machines is trending down (though the decline is small).

Nor is there much, if any, bounce back in use of "other" or "foreign" ATMs more recently, as resistance to the direct fees (of around $2) faded and users learned to live with the fees.

Monthly data published by the Reserve Bank of Australia at its website yesterday shows the average value of a cash withdrawal at an ATM operated by a customer's own bank was $194.80 in February 2010, and about as low as at any time over the last three years.

At ATMs operated by some entity other than their bank (or an affiliate network) the average withdrawal was $152.60, marginally higher than before the fee reforms but consistent with a steady if mild decline in the average over more than six months.

One supposition, and borne out by parallel reforms offshore, was that the value of average withdrawals would rise.

Some banks are promoting cash out at the point of sale, which major merchants support, and this trend may continue if many ADIs see any merit in copying the product features of one transaction account promoted heavily by ING Direct over recent months. (ING pays the customer 50 cents for each cash out of $200 or more.)

Or the economic climate might be the primary explanation, though patterns of spending on credit and debit cards show a third month of recovery after a long, flabby spell in 2009.

Analysis by MWE Consulting of the payment card data published by the RBA shows that payment card spending in February 2010, at $17.3 billion, was six per cent more than in February 2009.

Michael Ebstein of MWE wrote in his regular report that "for the first time in a considerable period, we can say that the month-on-month results in card spend were clearly stronger than in each of the last three years."

Average balances on credit cards are increasing once again after a period of negligible growth.