United States General Accounting Office

GAO Report to the Chairman, Committee on

Banking, Housing, and Urban Affairs,

U.S. Senate

May 1997 AUTOMATED TELLER

MACHINES

Banks Reported That

Use of Surcharge Fees

Has Increased

GAO/GGD-97-90

GAO United States

General Accounting Office

Washington, D.C. 20548

General Government Division

B-275468 

May 16, 1997

The Honorable Alfonse M. D’Amato

Chairman, Committee on Banking,

 Housing, and Urban Affairs

United States Senate

Dear Mr. Chairman:

This report responds to your request that we gather information on

fee-charging practices of banks and thrifts (hereafter referred to as banks)

with regard to automated teller machines (ATM) used by individuals who

do not hold accounts at the institutions owning the ATMs. Banks and other

ATM owners may charge a fee to non-account holders who use the owners’

ATMs; this fee is called a surcharge or access fee. According to

congressional testimony by senior industry officials, between 1990 and

April 1996, 15 states passed laws or issued regulatory rulings prohibiting

ATM networks from banning ATM surcharges. With other states considering

similar actions, the two primary national networks changed their policy in

April 1996 from prohibiting surcharges to allowing their ATM operator

members nationwide to assess surcharges.

You were interested in obtaining statistical information on banks’ current

practice of surcharging. As agreed with your office, the objectives of this

report are to summarize our survey data on the (1) number of banks that

operate ATMs, and (2) number of these banks that surcharge non-account

holders and the amounts of the surcharges assessed.

To answer the objectives, we conducted a statistically representative

survey of 246 randomly selected banks throughout the United States. All

the estimates presented in this report are based on responses to this

survey, which had a response rate of 87 percent. The sample size and

composition were determined by the need to obtain a high response rate,

as well as by time constraints. To obtain as much information as possible

about ATMs and surcharges, we sampled large banks at a higher rate than

other banks, because large banks, on average, operate more ATMs.

Consequently, the estimates for large banks are more precise, i.e., the

estimates have smaller sampling errors. While we also report the less

precise estimates with their sampling errors, we do not make comparisons

that are not supported by the survey results.

As agreed with your office, we did not include credit unions or nonbank

ATM operators in our survey. Through interviews, we did gather

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comparable information from four large nonbank ATM operators. We also

did not attempt to determine the effect surcharge fees have on the

deployment of new ATMs. Finally, this study was not intended to address

whether ATM operators are adequately disclosing information on ATM fees

to customers.

Results in Brief On the basis of our survey, we estimate that, as of February 1, 1997, about

three-fourths of all banks in the United States operated ATMs. Of the

estimated 8,600 banks that operated ATMs as of February 1, an estimated

8,000 had ATMs as of December 31, 1995.1

 In addition, we estimate that, as

of February 1, 1997, banks operated about 119,000 ATMs, an increase from

the 89,000 ATMs they operated at the end of 1995. Over this period, the

reported increases in ATM deployment occurred at both on-premise (i.e., at

banking facilities) and off-premise locations (i.e., at locations not at a

banking facility).

About one-third of the banks that operated ATMs reported that they

imposed surcharges on non-account holders who used their machines.

More of the large banks than smaller banks reported surcharging and a

greater percentage of the large banks reported that they began surcharging

during the past year. Our survey showed that, from the end of 1995 to

February 1, 1997, there was an estimated 320-percent increase in the

number of ATMs that had surcharge fees, from about 15,400 to about

64,400. For the ATMs with surcharges, the most typical fee was $1.00. The

maximum surcharge fee reported in our survey was $3.00.

Actual surcharge fees tend to occur in 50-cent increments, e.g., $1.00,

$1.50, $2.00. However, a commonly used measure of surcharge fees

throughout the industry is a simple average. We calculated the average

surcharge fee in two ways: for all ATMs, including those with no surcharge

fees, and for only those ATMs with surcharges. We estimated that the

average surcharge fee had more than tripled since the end of 1995, from

$0.17 to $0.62 in 1997 for all ATMs operated by banks, including those with

no surcharge fees. The average reported surcharge fee calculated for only

those ATMs with surcharges was $1.14 in 1997, not a significant increase

from $0.99 in 1995.

1

The estimates are unbiased, but the increase in the number of banks that operated ATMs is not

statistically significant at a 95 percent confidence level. In other words, on the basis of our sample, the

possibility that there was not an increase in the number of banks that operated ATMs is greater than

5 percent.

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B-275468 

According to the four large nonbank ATM operators with whom we spoke,

the number of ATMs they owned remained about the same in the past year.

Three of the four nonbanks reported surcharging. The average fee for the

three nonbanks that surcharged increased from $0.51 in December 1995 to

$0.71 as of February 1, 1997.

Background Studies done by financial industry groups such as the American Bankers

Association and the Bankers Roundtable report that ATMs can perform

many of the tasks bank tellers perform, and ATMs are typically available 24

hours a day. The studies report that ATMs are most often used by

consumers to make cash withdrawals from personal checking, savings,

and other deposit accounts. Some ATMs also enable consumers to carry out

financial transactions, such as obtaining product information, making loan

payments, purchasing insurance and investment products, accessing lines

of credit, and making payments on credit cards.

Consumers can gain access to ATMs by obtaining an electronic fund

transfer card from a bank. The card contains a magnetic stripe that is

electronically encoded with a cardholder number. The financial institution

is to maintain an individual record on each consumer issued a card. The

record contains the encrypted personal identification number (PIN) needed

to use the card. It also reflects the accounts that can be accessed with the

card, usage limits, and the card’s expiration date.

The ATM transaction begins when the consumer inserts the card into the

ATM. Generally, the consumer enters the PIN; selects the transaction to be

performed, such as a cash withdrawal from the consumer’s checking

account; and enters the dollar amount of the transaction. The terminal

sends this information to a processor that determines the institution that

issued the card to the consumer. The processor’s host computer verifies

the PIN for the cardholder and checks to see that the transaction and, in the

case of a cash withdrawal, the dollar amount requested are within the

usage limits established for that particular consumer and that funds are

available. If the transaction conditions are met, the processor sends a

message to the ATM terminal to complete the transaction (e.g., dispensing

cash to the consumer). At the card-issuing institution, the transaction is

posted to the consumer’s account and reflected in the monthly statement.

Banks have access to ATM networks that link their ATMs and computer

systems so that depositors from any member of the network can access

their accounts through any network bank’s ATM. There are regional,

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national, and international networks. These networks enable ATM users to

obtain ATM services over a much wider geographic area than that covered

by their own banks’ offices or ATMs.

There are fees associated with using ATMs. The fees may or may not be

directly passed to the ATM user. Banks may charge their own account

holders for using their ATMs; however, a majority of the fees are associated

with consumers using ATMs operated by other banks in the network

system. There can be up to three different fees charged when non-account

holders use ATMs not operated by their own banks. A switching fee is

assessed by the ATM network to the user’s home bank to pay for processing

each of its network transactions and to defray other network operating

costs, such as advertising and network security. Banks may choose to

absorb this fee or pass it to the ATM user. An interchange fee may be

charged by ATM owners to a non-account holder’s home bank for handling

one of its transactions. If the home bank passes this fee to ATM users, the

Federal Reserve’s Regulation E requires the users’ home banks to inform

users—normally when they open an account—that the charges will appear

on their bank statements. Finally, a surcharge fee (or access fee) may be

charged by ATM owners to ATM users who do not have accounts with them.

For surcharge fees, ATM owners may charge users’ banks, and the banks in

turn pay the fees and then may charge them directly to the users’ accounts.

The national networks require that, if the fee is passed to the user, the

charge appear on the receipt at the cash machine and again on the user’s

bank statement.

Most Banks Reported

Operating ATMs

From our statistical analysis of the survey responses, we estimate that, as

of February 1, 1997, about 75 percent (± 14 percent sampling error) of

banks in the United States operated ATMs. Of the approximately 8,600 (±

1,700) banks that reported operating ATMs as of February 1, about 8,000 (±

1,800) had ATMs as of December 31, 1995.2

 Our survey results show that for

smaller banks—those with assets of less than $1 billion—69 percent (± 16

percent) had at least one ATM in 1995, while 75 percent (± 15 percent) had

at least one ATM in 1997. The percentage of medium and large

banks—those with assets of $1 billion to $10 billion and those with assets

of over $10 billion, respectively—reporting at least one ATM remained

about 90 percent.

2

Throughout this report, December 1995 estimates are based on the responses of banks we surveyed in

February 1997.

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Although large banks account for about 1 percent of the total number of

banks that reported operating ATMs, they operate a larger percentage of the

total number of ATMs in the United States. As of February 1, 1997, banks

operated an estimated 119,000 ATMs in the United States, a statistically

significant increase from the estimated 89,000 ATMs they operated at the

end of 1995. According to our survey results, as of February 1, 1997, the

large banks operated 37 percent of the total ATMs, and the smaller banks

operated 32 percent, with medium banks making up the remainder. See

figure 1.

Figure 1: Percentage of ATMs

Reported by Large, Medium, and

Smaller Banks, 1997

37% • Large (>$10 billion in assets) - 77

banks

31%•

Medium ($1-$10 billion in assets) -

413 banks

•32%

Smaller (<$1 billion in assets) -

8,141 banks

Source: GAO analysis of survey results.

For banks that operate ATMs, large banks reported a median of 346 ATMs in

operation, compared to 2 for the smaller banks. Our analysis showed that

about 98 percent of these large banks had 26 or more ATMs in operation. As

indicated in figure 2, 60 percent (± 16 percent) of banks with ATMs had

three or fewer. In our survey, we found that these ATM operators were all

smaller banks.

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Figure 2: Percentage of Banks That

Reported Operating ATMs, by Number

of ATMs, 1997

60% • 1-3 ATMs

28%•

4-10 ATMs

•12%

More than 10 ATMs

Note: The estimates are subject to sampling errors of up to ± 16 percent.

Source: GAO analysis of survey results.

Banking officials’ responses indicated that between the end of 1995 and

February 1, 1997, more of the smaller banks began operating ATMs at both

on- and off-premise locations, rather than only at on-premise locations.

The estimated percentage of smaller banks with both on- and off-premise

ATMs was 31 percent (± 17 percent) in 1995 and 46 percent (± 19 percent)

in 1997, while about 95 percent of the large banks continued to operate

ATMs both on- and off-premises.

Banks indicated that non-account holder transactions across all of their

ATMs were 132 million (± 38 million) during January 1996 and 167 million

(± 64 million) during January 1997. The average number of these

transactions per ATM was 1,624 (± 566) in January 1997, which was not a

statistically significant decrease from the 1,774 (± 452) in January 1996.3

Our analysis indicated that 37 percent (± 16 percent) of the banks

experienced decreases in the number of non-account holder transactions

3

These averages were calculated from reported transaction volume and number of ATMs. Not all banks

reported transaction volume.

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B-275468 

per ATM during the same period, while 63 percent (± 16 percent) had an

increase in their average per ATM non-account holder transactions. We did

not attempt to evaluate the impact of surcharge fees on the change in

transactions for these two time periods. To do so would have required us

to look at factors such as increases in available ATMs, seasonal changes,

changes in consumers’ shopping patterns, and other factors that may

influence consumers’ reactions to surcharges.

We could not address the ATM surcharging practices followed by nonbank

ATM operators because of the lack of complete data on nonbank operators

of ATMs. However, to obtain an indication of nonbank surcharging

practices, we obtained surcharge information from four nonbanks that

operated ATMs in retail locations. Industry officials told us that these four

nonbanks accounted for approximately 80 percent of nonbank ATM

operations.

According to the four large nonbank ATM operators with whom we spoke,

overall ownership at these large nonbanks increased from 8,527 ATMs to

8,564 between December 31, 1995, and February 1, 1997. Three of the four

nonbanks said that the number of ATMs they owned increased by less than

4 percent from December 31, 1995, to February 1, 1997. An official from

the other nonbank told us it had had a 15-percent decrease in the number

of ATMs it was operating. The official told us that the decrease was

attributed to a lost contract.

Banks Reported Use

of Surcharge Fees Has

Increased

On the basis of our survey, we estimate that 2,900 (± 1,400) of 8,600 banks

that operated ATMs as of February 1, 1997, imposed surcharges, while 1,600

(± 1,100) of these banks imposed surcharges in 1995. Currently, 57 percent

of large banks are surcharging, an increase from the 20 percent that were

doing so in 1995. Thirty-two percent (± 16 percent) of the smaller banks

were surcharging in 1997, while 20 percent (± 14 percent) of these banks

imposed a surcharge in 1995.

The reported number of ATMs that have surcharge fees has also increased

since 1995. Our survey showed that, from the end of 1995 to February 1,

1997, there was an almost 320-percent increase in the number of ATMs that

had surcharge fees—from about 15,400 (± 6,500) to about 64,400 (±

16,700).4

 The increase included newly deployed or acquired ATMs, as well

as old ATMs that previously did not have a surcharge fee.

4

While about one-third of banks reported surcharge fees, these fees were charged for the use of about

54 percent of the ATMs in service as of February 1, 1997.

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Banks indicated that both on-premise and off-premise ATM surcharging has

increased since 1995. A higher percentage of the large banks (53 percent)

reported that they imposed surcharge fees for use of at least some of their

on-premise ATMs than did smaller banks (30 percent ± 17 percent). In

addition, 57 percent of the large banks reported that they imposed

surcharge fees for use of their off-premise ATMs, and 32 percent (±

18 percent) of the smaller banks surcharged for off-premise ATMs.

The Average Reported

ATM Surcharge Fee Has

Increased

According to our survey, the average ATM surcharge fee5 has more than

tripled since the end of 1995. The average surcharge fee reported by banks

was $0.62 (± $0.10) as of February 1, 1997, which was an increase from the

average fee of $0.17 (± $0.08) assessed in 1995. As shown in figure 3, the

average surcharge fee reported by the large banks was $0.71 (± $0.11) in

1997, while the fee assessed by the smaller banks was $0.48 (± $0.23). The

maximum ATM fee reported in our survey was $3.00. The average surcharge

fee reported by banks that imposed a surcharge fee was $1.14 (± $0.06) in

1997, while the average fee assessed in 1995 was $0.99 (± $0.12).6

5

We calculated every average surcharge fee on a per ATM basis. The average surcharge fee calculated

for all ATMs included ATMs with a surcharge fee of $0.00.

6

The average reported surcharge fee imposed by banks that surcharged was about $1.14 for both onand off-premise ATMs in 1997.

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Figure 3: Average ATM Surcharge

Fees Reported by Large, Medium, and

Smaller Banks, 1995 and 1997

Average surcharge fee (in dollars)

0

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90

1.00

Smaller Medium Large

Size of Banks

0.12

0.48

0.23

0.65

0.16

0.71

December 1995

February 1997

Note 1: The average ATM surcharge fees were calculated for all ATMs, including those which

have no surcharges.

Note 2: Although some of the sampling errors were much greater than ± 10 percent, all of the

differences within the three size groups were statistically significant.

Source: GAO analysis of survey results.

Our survey showed that the number of ATMs that have surcharge fees of

$1.00 or more has increased since 1995. (See figure 4.) As indicated in

table 1, this increase has occurred for large and medium banks.7

7

The increase for smaller banks was not significant at a 95 percent confidence level.

Page 9 GAO/GGD-97-90 Automated Teller Machine Surcharge Fees
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Figure 4: ATM Surcharges Reported by

Banks, 1995 and 1997 Percent of ATMs

0

10

20

30

40

50

60

70

80

90

$0.00 $0.00-$0.99 $1.00 $1.01-$1.99 $2.00 or more

Amount of surcharge

83

46

3 3

13

33

1

16

1 1

December 1995

February 1997

Source: GAO analysis of survey results

Table 1: Percentage of ATMs With

Reported Surcharges, by Bank Size,

1995 and 1997

Large banks’ ATMs Medium banks’ ATMs Smaller banks’ ATMs

Surcharge 1995 1997 1995 1997 1995 1997

$0.00 84% 40% 76%a 41%a 87% 57%a

$0.01 - $0.99 1 3 7 5 2 1

$1.00 14 31 12 38a 10 31a

$1.01 - $1.99 1 25a 1 14 0 9

$2.00 or more 0 0 3 2 1 1

Note: Sampling errors were not calculated for estimates of less than 10 percent. Totals may not

add to 100 percent because of rounding.

aSampling error exceeded ± 10 percent.

Source: GAO analysis of survey results.

As of February 1, 1997, three out of the four large nonbanks said that they

imposed surcharge fees. As reported by these nonbanks, the surcharge fee

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B-275468 

had remained the same since the end of 1995 for two nonbanks that

surcharge, while one had doubled its fee. The average surcharge fee for

the ATMs operated by the four nonbanks increased from $0.12 in December

1995 to $0.32 as of February 1, 1997. The maximum surcharge fee reported

to us by these nonbanks was $1.00. The three nonbanks that surcharge

reported that the average surcharge fee was $0.71 as of February 1, 1997,

an increase from $0.51 at the end of 1995.

Objectives, Scope,

and Methodology

Our objectives were to provide summary data on the number of banks that

operate ATMs, the number of banks that levy surcharges against

non-account holders who use the banks’ ATMs, and the amounts of the

surcharges assessed. We also agreed to use statistical sampling techniques

to ensure that the information gathered on the use of surcharge fees would

represent practices in the banking industry as a whole. The sampling

procedures are discussed in detail in appendix II.

We sent a questionnaire (see appendix I) to a sample of banks to obtain

information on ATMs they operated on February 1, 1997, and December 31,

1995; surcharge fees assessed non-account holders using these ATMs for

these two dates; and ATM transaction volume data during January 1996 and

February 1997. We selected the December 1995 date to obtain data prior to

the national ATM networks’ lifting of the surcharge ban in April 1996, and

the February 1997 date to obtain data several months after the two

national ATM networks lifted their bans on surcharges.

We selected our sample from a universe of all banks that we identified

through data collected by the bank regulatory agencies. Our stratified

random sample was designed to provide unbiased point estimates of all

variables. However, the sample size of 246 banks was not large enough to

detect significant differences in some of the estimates for subgroups

within the sample, or to draw certain conclusions about comparisons

between 1995 to 1997. The sample size was dictated by time and resource

constraints because, in our judgment, the most significant threat to the

study’s validity was a low response rate. To minimize this threat, we

telephoned every bank in our sample to determine the appropriate

respondent at each bank before we mailed the questionnaires.

In this study, we did not address (1) whether surcharge fees affect

efficiency and competition within the financial services industry, (2) the

reasons for the deployment of ATMs, and (3) consumer protection and

disclosure issues. We did not attempt to evaluate the impact of the

Page 11 GAO/GGD-97-90 Automated Teller Machine Surcharge Fees
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surcharge fees on the number of transactions completed at each of the

banks’ ATMs. To do so would have required us to look at numerous factors,

such as changes in the number of ATMs available to consumers, seasonal

factors, and changes in consumer behavior.

Further, this study does not fully address the ATM surcharging practices

followed by nonbank ATM operators, because of the lack of complete data

on these operators of ATMs. However, to obtain an indication of nonbank

practices in ATM surcharging, we obtained surcharge information from four

nonbanks that operate ATMs in retail locations. Industry officials told us

that these four nonbanks account for approximately 80 percent of

nonbank ATM operations.

We did our work between December 1996 and April 1997 in accordance

with generally accepted government auditing standards.

As agreed with your office, unless you announce the contents of this

report earlier, we plan no further distribution until 30 days after the date

of this letter. At that time, we will send copies of this report to the Ranking

Minority Member of your Committee, the Chairmen and Ranking Minority

Members of other interested congressional committees, individual

members, federal agencies, and the public on request.

This report was prepared under the direction of Susan S. Westin, Assistant

Director, Financial Institutions and Markets Issues. Other major

contributors are listed in appendix III. Please contact either Ms. Westin on

(202) 512-3655 or me on (202) 512-8678 if you have any questions about

this report.

Sincerely yours,

Thomas J. McCool

Associate Director

Financial Institutions

 and Markets Issues

Page 12 GAO/GGD-97-90 Automated Teller Machine Surcharge Fees
Page 13 GAO/GGD-97-90 Automated Teller Machine Surcharge Fees
Contents

Letter 1

Appendix I 

Survey Instrument

Used to Collect Data

From a Sample of

Banks

16

Appendix II 

Objectives, Scope,

and Methodology

20

Appendix III 

Major Contributors to

This Report

24

Tables Table 1: Percentage of ATMs With Reported Surcharges, by Bank

Size, 1995 and 1997

10

Table II.1: Disposition of Bank Survey Sample 21

Figures Figure 1: Percentage of ATMs Reported by Large, Medium, and

Smaller Banks, 1997

5

Figure 2: Percentage of Banks That Reported Operating ATMs, by

Number of ATMs, 1997

6

Figure 3: Average ATM Surcharge Fees Reported by Large,

Medium, and Smaller Banks, 1995 and 1997

9

Figure 4: ATM Surcharges Reported by Banks, 1995 and 1997 10

Abbreviations

ATM Automated teller machine

PIN Personal identification number

Page 14 GAO/GGD-97-90 Automated Teller Machine Surcharge Fees
Page 15 GAO/GGD-97-90 Automated Teller Machine Surcharge Fees
Appendix I 

Survey Instrument Used to Collect Data

From a Sample of Banks

Page 16 GAO/GGD-97-90 Automated Teller Machine Surcharge Fees
Appendix I 

Survey Instrument Used to Collect Data

From a Sample of Banks

Page 17 GAO/GGD-97-90 Automated Teller Machine Surcharge Fees
Appendix I 

Survey Instrument Used to Collect Data

From a Sample of Banks

Page 18 GAO/GGD-97-90 Automated Teller Machine Surcharge Fees
Appendix I 

Survey Instrument Used to Collect Data

From a Sample of Banks

Page 19 GAO/GGD-97-90 Automated Teller Machine Surcharge Fees
Appendix II 

Objectives, Scope, and Methodology

Our objectives were to provide summary data on the number of banks that

operate ATMs, the number of banks that levy surcharges against

non-account holders who use the banks’ ATMs, and the amounts of the

surcharges assessed. As agreed with your office, we focused our work on

U.S. banks.

To determine the extent of bank ATM operations, surcharging, and

transaction volume, and to identify changes in these parameters across a

time period, we collected data for various time periods between December

31, 1995, and February 1, 1997. We selected these dates to obtain

information prior to and after two national ATM networks (CIRRUS, PLUS)

lifted their ban on surcharging. We conducted a mail questionnaire survey

of a random sample of banks that was statistically representative of the

universe of the entire banking industry.

From the 11,553 active banks and thrifts with individual charters that we

identified from a database of the September 1996 Federal Financial

Institutions Examination Council’s Call Reports and Office of Thrift

Supervision’s Thrift Financial Reports, we drew a random sample of 246

banks, allocated across 11 strata defined by total asset size. We did not

assess the quality of the database.

We contacted each of the 246 institutions in our sample by telephone to

determine whether it was currently an active bank eligible for our survey,

and if so, whether it operated any ATMs as of February 1, 1997. For banks

reporting no ATMs, this information constituted a complete response. For

banks that indicated that they had at least one ATM, we then identified the

most appropriate respondent and mailed that person a questionnaire

requesting the number and type of ATMs operated, access or surcharge fees

assessed non-account holders at each ATM, and the total number of

non-account holder ATM transactions. We asked each bank to enumerate

its ATMs and corresponding surcharges as of December 31, 1995, and

February 1, 1997, and we further asked the banks to provide the

non-account holder transaction volume data for the months of

January 1996 and January 1997. We selected those dates to obtain ATM

operation data for time periods before and after two national ATM

networks (CIRRUS, PLUS) lifted their ban on surcharges. A copy of the

questionnaire is included in appendix I.

We mailed the questionnaires in mid-February 1997 and asked the banks to

respond by fax. At the end of February and the beginning of March, we

telephoned institutions that had not yet responded. While some of those

Page 20 GAO/GGD-97-90 Automated Teller Machine Surcharge Fees
Appendix II 

Objectives, Scope, and Methodology

banks ultimately returned questionnaires by mail or fax, we also

conducted telephone interviews to collect questionnaire data from others.

When we closed the survey field period in late March of 1997, 209 of the

240 eligible banks in our original sample (87 percent) had provided at least

partial responses. Of the 209 usable responses, 30 were from banks

without ATMs. The remaining 179 responses from banks with ATMs were

weighted to represent the total estimated number of banks with ATM

machines in each stratum. We did not verify information provided by the

survey respondents. Table II.1 lists, by bank asset size, the strata we used

to categorize the population of banks, as well as the disposition of the

sample of banks that we drew for participation in our survey.

Table II.1: Disposition of Bank Survey Sample

Sample disposition

Bank size Sample strata Population Sample Ineligiblea Refusals

No

response

Usable

response

Response

rateb

Large banks Over $10 billion 85 84 1 5 12 66 80%

Medium banks Over $8 billion, up to

$10 billion

22 12 0 0 0 12 100

Over $6 billion, up to

$8 billion

33 14 0 1 1 12 86

Over $4 billion, up to

$6 billion

64 18 2 2 1 13 81

Over $2 billion, up to

$4 billion

132 22 1 1 1 19 90

Over $1 billion, up to

$2 billion

224 19 0 2 0 17 89

Smaller banks Over $500 million,

up to $1 billion

414 17 1 1 0 15 94

Over $300 million,

up to $500 million

573 13 1 0 2 10 83

Over $150 million,

up to $300 million

1,451 19 0 0 0 19 100

Over $90 million, up

to $150 million

1,797 11 0 1 0 10 91

$90 million or less 6,758 17 0 1 0 16 94

Total 11,553 246 6 14 17 209 87%

aNot a depository institution, no longer in business, merged, or otherwise closed.

bResponse rate calculated as the number of banks completing usable questionnaires divided by

the number of eligible banks in the sample (original sample less ineligibles).

Source: GAO sampling and survey results.

Page 21 GAO/GGD-97-90 Automated Teller Machine Surcharge Fees
Appendix II 

Objectives, Scope, and Methodology

The survey estimates printed in this report are projected to the entire

population of U.S. banks from which our sample was drawn. While we

sampled relatively more of the institutions with a large amount of assets

than institutions with a small amount of assets in order to develop precise

estimates of ATM-related activity, each completed questionnaire was

assigned a mathematical weight that made its contribution to the overall

results proportional to the number of banks of similar asset size in the

population. However, because we surveyed only a sample of banks, each

of the survey estimates in this report has a sampling error, which is a

measure of the precision with which the estimate approximates the true,

unknown population value. All of the sampling errors for our survey

estimates are no larger than plus or minus 10 percent at the 95 percent

confidence level, unless otherwise noted.

In addition to the reported sampling errors, the practical difficulties of

conducting any survey may introduce other types of “nonsampling” errors.

For example, differences in how a particular question is interpreted, in the

sources of information that are available to respondents, or in the types of

organizations that do not respond can introduce unwanted variability into

the survey results. While we did not verify the survey results, we included

steps in the data collection and data analysis stages to minimize

nonsampling errors. While designing the questionnaire, we solicited expert

opinion on the wording and structure of our questions, and we pretested

the survey instrument with several banks. Follow-up telephone calls were

made to nonrespondents, and inconsistent answers were identified during

questionnaire editing and followed up on. A number of keypunched

records were verified during data entry, and computer analyses were

performed to identify additional inconsistencies or other indications of

errors. All computer analyses were checked by an independent analyst.

We also attempted to determine whether banks that responded were

significantly different from the few that did not. Based on the information

we collected during our telephone precontacts with the banks, we

concluded that those banks that did not respond to the subsequent mail

survey (including those that refused) had a higher number of estimated

ATMs, on average, than did the banks that responded. While this suggests

that our survey results underrepresent banks with a large number of ATMs,

we feel that any potential bias is limited by the small number (31) of

nonrespondents involved.

While we collected ATM data before and after the national networks lifted

their ban on surcharges, it is not possible to attribute all of the change we

Page 22 GAO/GGD-97-90 Automated Teller Machine Surcharge Fees
Appendix II 

Objectives, Scope, and Methodology

observed to that event. Any number of factors that we did not measure

could have influenced bank ATM deployment activity, surcharge policy, and

ATM use by non-account holders. We did not attempt to evaluate the impact

of the surcharge fees on the change in transactions. To do so would have

required us to look at numerous factors, such as changes in the number of

ATMs available to consumers, weather, and changes in consumer behavior

(including changes in purchasing patterns). We also did not address

whether surcharge fees affect efficiency and competition within the

financial services industry, the deployment of ATMs, and consumer

protection and disclosure issues.

Further, this study does not fully address the ATM surcharging practices

followed by nonbank ATM operators, because of the lack of reliable public

data on the universe of nonbank operators of ATMs. However, we

interviewed officials from several nonbank organizations that operated a

large number of ATMs (100 or more each) to get some idea of the

surcharging practices of nonbank ATM operators. We also reviewed the

results of several studies of bank and nonbank ATM operations conducted

by industry associations and private consulting firms.

Page 23 GAO/GGD-97-90 Automated Teller Machine Surcharge Fees
Appendix III 

Major Contributors to This Report

General Government

Division

Lamont J. Kincaid, Evaluator-in-Charge

Tamara E. Cross, Senior Evaluator

Nancy M. Eibeck, Evaluator

James M. Fields, Senior Social Science Analyst

George H. Quinn, Jr., Social Science Analyst

Carl M. Ramirez, Senior Social Science Analyst

Darleen A. Wall, Evaluator

Edward S. Wroblewski, Senior Evaluator

(233511) Page 24 GAO/GGD-97-90 Automated Teller Machine Surcharge Fees
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