Legislature(1997 - 1998)
03/05/1998 01:52 PM Senate L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 212 - FEES FOR USE OF AUTOMATED TELLER MACHINES CHAIRMAN LEMAN announced SB 212 to be up for consideration. SENATOR ELLIS, sponsor, explained this bill relates to automated teller machines in Alaska, "a multi-billion dollar industry." This bill emphasizes safety and notice to the customer and the issue of double-charging. There is a trend nationwide to charge ATM holders a second fee. Up until a year ago the private sector itself had a ban on double-charging of customers for these services. He does not have a problem with charging a customer for the cost of the convenience, but the double-charge offends him. For someone with a lot of money that is not a big concern, but for lower income and working people, the charges get out of hand. He thought notice to the consumer was getting to be more important, because the machines are soon going to dispense coupons, tickets, and other things that will divert the attention of the consumer. Initiative for work on this issue came from Senator D'Amato who is working on this on a national level. Other aspects of the bill are patterned after the state of Washington and are based on some investigative news reports on ATMs being crime magnets across the country. There are provisions for safety evaluations, lighting requirements, etc. that will make them less likely to be points of crime commission. CHAIRMAN LEMAN asked regarding the first charge which is shared by banks, if there is a mechanism for the charge to be split. SENATOR ELLIS said the only mechanism he knows of is the agreements between the banks and, frankly, how they charge the fees is a mystery to him. He said there are banks that don't charge fees. It is also a mystery about how profitable these ATMs are. They are talking not just about the bank affiliated ATMs, but also the independent ATMs for which there's a much greater projected growth in that area. TAPE 98-12, SIDE A Number 001 SENATOR MACKIE asked how many actual ATM transactions there are in this State. SENATOR ELLIS said he didn't know, but could probably get that information. SENATOR MACKIE asked if the fee was a percentage or a set amount. SENATOR ELLIS answered that it is a set amount. SENATOR KELLY asked if he was specifically exempting credit unions that have automatic teller machines in this legislation. He noted that there is one credit union that is larger than all but one or two of the banks. SENATOR ELLIS said he thought the definition clause was big enough to cover everyone; it's not his intent to exclude credit unions or give them any advantage over banks. MR. JERRY WEAVER, Secretary, Alaska Bankers Association, said he is also an employee of the National Bank of Alaska. He said that anyone who wants to can set up a cash machine, if they have the money, but he didn't think the definition was expansive enough to fully include those people. The bulk of NBA's business is by customers of the bank and they aren't charged for use of ATM's. The machines cost roughly $25,000 and about $1,500 per month to service. The second fee is basically part of the service charge that comes from Cirrus and is 50 - 75 cents. Plus and Cirrus both have regulations that require two types of notice to be given to customers which has to be placed physically on the outside of the machine and before the transaction can be completed, the fees have to come up on the screen. All 120 machines the NBA has are lit and have video cameras with them, since video cameras require lighting to operate effectively. MR. WEAVER said they view this as a free enterprise issue; business competing against business. Consumers are very smart and quickly figure out what the fees are. They look for convenience the same as with the hundreds of other electronic products that are available to consumers. Alaska is unique because in some areas these machines almost act as banks, especially in bush locations. If they regulate fees and pass a bill such as this, they would see a fairly fast reduction of those machines in the availability and convenience to the consumers. There is competition out there and those people who have put out the heavy capital investment to get the machines out there should be allowed to make an adequate recovery. MR. JAMES BEVERIDGE, AKPIRG, explained that a surcharge like this to a person who was not a customer of the bank would mean they would be charged a fee by their own bank and the new surcharge would be billed to them at the time of the transaction. He said that bigger banks have a much broader network of ATM's and by placing this fee on customers who aren't members of their own bank, they are disadvantaging small banks and credit unions. The effect of these surcharges are not felt evenly by all people and disadvantage people of lower incomes who need to use them more frequently for smaller withdrawals. They are often compelled to receive their welfare or benefit checks electronically. MR. TERRY LUTZ, Chief Examiner, Division of Banking, said he had relatively few complaints, but he had a problem with the bill, because it seems to target banks. If they get rid of the first section identifying banks as the culprit, he thought the bill would be good. He thought we needed something statewide if the federal government doesn't. SENATOR KELLY asked if he thought the definition should be expanded to anyone who operates an ATM. MR.LUTZ answered yes. Number 242 CHAIRMAN LEMAN said they would hold the bill and work on language to take care of the concerns and bring it up next Tuesday.
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