03/03/1998 01:38 PM Senate L&C

        SB 212 - FEES FOR USE OF AUTOMATED TELLER MACHINES                     
                                                                               
CHAIRMAN LEMAN announced SB 212 to be up for consideration.                    
                                                                               
MS. CATHIE KEYES, Sr. Vice President, National Bank of Alaska, said            
she also represented the Alaska Bankers Association and opposed SB
.  She said contrary to popular belief, ATM's aren't profitable.            
The majority are subsidized by their owners to provide a service to            
their own customers.  An ATM costs anywhere from $18,000 - $35,000             
depending on the features.  There are costs to install, service,               
and maintain them which average $1,200 - $1,500.  There are also               
charges that are assessed for each transaction that they take.  The            
larger the ATM network, the larger the cost.  When ATMs were first             
used in 1980, the thought was that customers would gravitate to the            
ATMs, banks would be able to reduce their teller staff, and                    
therefore, there would be savings. That did not happen.  They found            
that customers wanted good branch networks and accessibility to the            
branches and increased their transaction activities through ATMs.              
Customers began to expect both.  Surcharging allow ATMs to pay for             
themselves and to expand to areas where they had not previously                
been able to justify placing one.  Nationally surcharging has been             
available in the lower 48 since 1976 and more are available because            
they aren't losing money.  A surcharge is just a convenience fee,              
she said, which is nothing new.  People pay for convenience in                 
purchasing many things, like tickets to a play, over the phone.                
They pay a little extra for going to a convenience store, but they             
make those choices themselves.                                                 
                                                                               
MR. JAMES BEVERIDGE, Alaska Public Interest Research Group (APIRG),            
said the ATM issue is one they have been following for a long time             
and they have seen an alarming trend in the lower 48, which is a               
fee that is being charged in addition to the fee that a customer's             
own bank will charge for a transaction.  For the consumer it means             
they will be charged twice for one transaction while banks, in                 
turn, are  receiving the additional fees.  The fees are also                   
increasing, costing the consumer as much as $2 when they use ATMs.             
This is particularly bad news for people with lower incomes who                
need to make smaller and more frequent withdrawals.  Their research            
indicates that NBA is now surcharging consumers of other banks who             
use their machines $1 per transaction as are independent owners of             
machines at bars and other convenience locations.  He also noted               
that big banks own most of the machines which causes a serious                 
competitive threat to small institutions and credit unions.                    
                                                                               
He concluded by saying that this legislation goes in the right                 
direction and consumers would be much better protected.                        
                                                                               
CHAIRMAN LEMAN thanked him for his testimony and said they would               
hold SB 212 over until Thursday and adjourned the meeting at 3:50              
p.m.