From: dougnews@access.digex.com (Doug Humphrey)
Newsgroups: dc.general
Subject: Re: Banks in Northern Va.
Date: 23 Jan 1993 04:12:18 GMT
Organization: Express Access Online Communications, Greenbelt, MD USA
Distribution: usa
NNTP-Posting-Host: access.digex.com

A few words on the ATM cost issues...

>>> But the point is, this does NOT significantly run up the bank's overhead
>>> if you are using their own ATM. 

Any use of an ATM causes expense.  ATM processing is a classic application
of Transaction Processing, and a given system can support a given maximum
transaction rate before response time starts to drop.  After response time
hits the banks established minimum performance numbers, then they will 
have to upgrade their configuration (spend money) to be able to handle
the large number of transactions with the same response time.  Note also
that because there is a fairly strict response time requirement (people 
don't like to wait very long for their money) the systems must be sized
to handle peak loads, not average loads.  

TANSTASFL - nothing is for free, and that includes the transaction
that you send to be processed.

> I will skip the people costs vs. technology costs argument, except
> to note that people can actually be had pretty cheap, and the banking
> industry is infamous for its low rates of pay and bad benefits.

>Yes, but the point is, you get the same if you were to go INTO their bank
>once a day (or more) to withdraw $20.  A human would still have to verify
>everything, etc.  And the only real time-consuming part of all of this is
>the deposits.  Everything else is just a "total it all up and make sure the
>money dispensed = the money the machine THINKS it dispensed".

I suspect that the main incremental costs are on the processing side 
(mainframes, ATM message switch) and not the ATM itself, or the leased
line for its communications.  

>But see, banks these days all have central computers, which are generally 
>hooked up 24hrs/day anyway via leased line.  Because let's face it, if the
>bank doesn't have immediate access to it's main computer, then you could go
>to three different branches, withdraw all of your money, and end up with
>three times as much.  Now, I'm sure they'd catch you, but they don't even
>take that chance.

Yes, they do use leased lines (and nearly all are encrypted now, though 
there is some story of a particular type that still is not...).  The 
leased line bandwidth will be able to deal with whatever an ATM, or in
most cases several ATMs, can dish out, so that is pretty much a fixed cost.

Actually, the case that you cite happens all the time even today; 
when backend processing on a mainframe breaks down, and an ATM is not 
able to get account ballance data, many ATMs will have a set maximum 
limit that they will issue in cash without verification.  There are 
safeguards in place to prevent you from running from machine to machine
though; the proof is left to the reader as an exercise ;-)

>And so there is no added communication charge.  The hardware for the machines
>is a one-time charge, and I doubt the upkeep on the machines is that high.
>And I certainly don't understand how the cost is the same to the bank whether
>you use THEIR ATM or ANOTHER bank's.  Because if you use another banks, you
>have to pay a network fee to Cirrus or NYCE or MAC or one of them.

Well, if you use the network machines, rather than the banks own ATMs,
it will be cheaper for the local bank in terms of its own processing 
costs; let me explain how these things are *usually* set up:


          leased line                               
    ATM -------------------ATM Message------Backend Host 
                           Switch           with databases
                             |                     |           atm network
                             - - - - - - - - - - - - - - - - - - - - - - -


The ATM you know about.  The ATM Message Switch is generally a 
fault-tolerant system which talks to the ATMs and moves their transactions
around to the correct backend mainframes, because there are often multiple 
backend mainframes.  Also, because if the ATM in question is on one or
more of the networks (NYCE, Money Exchange, MOIST, etc.)  it will take the
transaction to that network, and not involve the local banks own mainframe
(which of course has no information of any use on someone from another 
bank).  Another important feature of the Message Switch is that it is often
(very often) a fault tolerant system, because people HATE to have ATMs 
that don't work.  There is a VERY strong "give me MY money NOW" sense in
people, and banks catch absolute hell when they have ATMs down.  The Mainframe
itself is often multiple systems, sometimes built by different vendors.
The Message switch will route the transaction to one of them, or in soime 
cases route pieces of one transaction to different mainframes, and then 
put the pieces together to complete the transaction.

So, a local bank pulling a transaction off the net and into its mainframe 
for processing has not done the Message Switch part of the work in many
cases; thus cheaper to have joe blow use a network ATM to come into his
local bank than to use a local ATM.  Of course, the bank that DOES own the 
ATM that he used wants its fee, because it let them use their message 
switch for a transaction that is not even theirs!  Thus, the networks 
sit in the middle and make sure that the fees all get charged, and the 
right amount of bucks goes to the right people.   Business goes on...

There are small banks that don't even have their own ATMs, but they 
give their customers network cards like MOIST; they have the mainframes
already, and just have to bolt them into the net and they are all set, and
thus the have minimal Message Switch front-end overhead, and of course no
ATM's to deal with.  Some, if not all, of the First American ATMs are not 
even owned by them, but are owned and operated by Wells Fargo, or so someone
at that bank told me.  

So, if they are charging per transaction on their own ATMs, they are either 
taking advantage of you, or they are trying to make the people who use the
ATMs pay for the ATM related overhead, so that people who don't use them 
(yes, they still exist) are not subsidizing those who do.  Take your pick.

>Oh well, it's not of major importance.  I've worked in the computer business
>long enough to know that with proper handling, the ATM's should only cost
>what a teller does, if that, and therefore I'm not going to patronize a 
>bank which wants to charge me money for access to my own money.

I will note that a bank ALWAYS charges you money for access to your
own money, in one form or another; That is what banks do.  


Doug 
-- 
Doug Humphrey    Express Access Public Access Internet   Voice (301) 220-2020
doug@digex.com   Dialup: (301) 220-0462 Login as "new"   Email info@digex.com
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"I say it again, in the land of the free; use your freedom of choice." - DEVO
Newsgroups: dc.general