When banks rob people at ten bucks a hit
ATM fees have long been a sticky topic. For many people, paying an ATM transaction fee is an unwelcome but accepted fact of life.
For Indigenous Australians in remote communities however, ATM fees can have a significant impact on their life, swiftly eroding their humble bank balance.
This is the finding of a report released late last year by the feisty Australian Financial Counselling and Credit Reform Association (AFCCRA), titled “ATM Fees in Indigenous Communities”, which focussed on excessive ATM fees in remote communities.
It found that too often, Indigenous people have no choice but to use the single ATM in a remote community.
Most concerning is the exorbitant fees that some “no-name” ATM operators charge. Transaction fees of $2 are common, but some remote communities incur fees up to $5 or $10 per transaction.
Many of these people exist on low incomes and Centrelink payments, checking their balances multiple times on the day a Centrelink payment is due. Needless to say, this quickly eats away at their payment.
The AFCCRA report argued these fees cause further hardship for those who can least afford it.
It was a bold move by AFCCRA who has never shied away from outing exploitation in the financial services sector. At the very least, the report made the Minister for Financial Services and Superannuation Bill Shorten sit up and take notice.
There’s no doubt that for low income earners, ATM fees quickly add up. The reality is that for an unemployed person on a Newstart allowance (which equates to living on $33 per day), it reduces the money they spend on food.
Case studies in AFCCRA’s report reveal that Indigenous consumers are more likely to withdraw small amounts of cash and so incur more fees – sometimes $20 to $40 on the day Centrelink payments are due.
The issue was heightened in 2009 after the Reserve Bank of Australia made sweeping ATM Fee Reforms which inadvertently made the situation worse for remote Indigenous communities.
The Fee Reforms were designed to encourage greater ATM competition by allowing direct charging by ATM owners (many of whom are private operators) and forcing them to compete for business with “other ATMs in the vicinity”.
And there’s the problem: “In the vicinity” works really well if you’re in the big smoke, but it’s a waste of time if you’re in sunny Yuendumu 300km north-west of Alice Springs.
Armed with their new powers some private operators have taken the opportunity to charge like wounded bulls because in the words of Gordon Gekko “greed is good and now it seems it’s legal”.
I’m sure some ATM operators provide a responsible fee for service and, to be fair, these fees will be higher because it is more expensive to operate an ATM in a remote community.
However, access to cash is an important service and I’ve yet to speak to one person who doesn’t want an ATM in their community. It appears the hole in the wall is just as handy in remote Australia as anywhere else. And I’m yet to meet anyone who enjoys being ripped off.
And so I’m uneasy with AFCCRA’s key recommendation from the report: “there should be no charge at all to use an ATM in an Indigenous community”.
If there is no financial incentive for operators, there will be no ATMs in communities. The good, the bad and the ugly will just pack up their gear and leave for more profitable places.
However it is not AFCCRA’s intention to make ATMs extinct in remote communities. What they are saying is “someone else needs to pay the ATM fee for people in remote communities”.
My concern is that having someone else foot the bill doesn’t address the underlying problem. It doesn’t improve levels of financial literacy and it doesn’t stop the exorbitant fees. It actually has the potential to accelerate both.
While I’m sure everyone has ideas, one alternative is to consolidate the ATM network into a single financial institution like the no-nonsense Darwin-based Traditional Credit Union (TCU).
With 17 years of successful operations and 11 branches in remote Indigenous communities throughout the Top End, the TCU is a model worth looking at.
The Minister for Indigenous Affairs Jenny Macklin has already allocated $14 million to expand the TCU into each of the 20 targeted growth towns in the Northern Territory.
The funding will train up to 330 Aboriginal people and provide 39 teller positions within these communities. In addition, 9,200 Aboriginal people will for the first time have access to culturally relevant and informed face-to-face banking.
The way I figure it is that if you’re in for a penny you might as well be in for a pound so why doesn’t the Government just bite the bullet and consolidate the ATM network into one organisation?
With an ATM costing between $60K and $100k each they’re not cheap and so the TCU is unlikely to go on a spending spree without some government support.
And if the government does kick in, the benefits are likely to be many.
First, the TCU’s Board is made up of high calibre traditional elders and Territorians who are unlikely to impose exploitative fees on their communities- at least not if they want to keep their positions.
Second, because it’s a Credit Union any profits will be ploughed back to its members to improve products and services. Essentially, the TCU could reinvest the money where it’s needed most.
And finally, ATM usage could be coupled with over-the-counter services of the TCU’s branches and tellers. Customers could deposit and transfer money and check account balances in addition to withdrawing cash.
It’s a more rounded financial solution for remote communities.
Interestingly, the TCU already has agreements with Westpac, ANZ and NAB which allow its members to access their ATMs for free, but at the least replacing all the no-name-white-label ATMs in remote communities with TCU ones would likely result in more transparent and accountable ATM fees.
If we’re serious about improving financial services and literacy in Indigenous communities, we need to look at ways to strengthen institutions like the Traditional Credit Union.
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