United States General Accounting Office

GAO Report to the Chairman, Committee on

Banking, Housing, and Urban Affairs,

U.S. Senate

April 1998 AUTOMATED TELLER

MACHINES

Survey Results Indicate

Banks’ Surcharge Fees

Have Increased

GAO/GGD-98-101

GAO United States

General Accounting Office

Washington, D.C. 20548

General Government Division

B-279227 

April 24, 1998

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 update our May 1997 report

Automated Teller Machines: Banks Reported That Use of Surcharge Fees

Has Increased (GAO/GGD-97-90). Automated teller machine (ATM) surcharge

fees are assessed by some banks and thrifts (hereinafter referred to as

banks) on noncustomers—individuals who do not hold an account at their

institution. Our 1997 report provided information on ATM deployment and

surcharge fees.

As agreed with your office, the objectives of this report were to summarize

our survey data on changes over the past year in (1) ATM deployment by

banks in the United States and (2) the number of banks that surcharge

noncustomers and the amounts surcharged. We also provide similar

information on ATMs owned by selected nondepository institutions

(nonbanks).

To address these two objectives, we conducted a statistically

representative survey of about 500 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 90 percent. In an

effort to obtain more precise estimates than we were able to include in our

1997 report, we expanded our sample from about 250 banks to about 500

banks. We categorized banks as large, medium, and smaller and defined

these categories as banks with assets of over $10 billion, $1 billion to

$10 billion, and less than $1 billion, respectively. We collected information

from all the banks responding in this year’s sample as of February 1, 1998.

We also collected February 1, 1997, information from the banks we

surveyed this year and used it to revise our 1997 estimates, taking

advantage of the larger sample to provide more precise estimates. All

estimates are subject to sampling errors, which we reported if the errors

are greater than plus or minus 10 percent.1

 In addition, reported changes in

estimates from 1997 to 1998 are statistically significant unless otherwise

noted. (See app. II for details on our objectives, scope, and methodology.)

1

Sampling errors are the maximum amount by which the estimates from a statistical sample can be

expected to differ from the true population values being estimated.

Page 1 GAO/GGD-98-101 Banks’ ATM Surcharge Fees Have Increased
B-279227 

We did our work between December 1997 and April 1998 in accordance

with generally accepted government auditing standards.

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

ATM operators in our survey. However, we gathered information

comparable to that for banks from 7 of the 10 largest nonbank ATM owners.

In this report, nonbank ATM owners are nondepository institutions that

own ATMs—such as grocery store chains or other specialized companies.

Results in Brief Our survey results indicated that approximately the same percentage of

banks in the United States operated ATMs as of February 1, 1998, as

operated them as of February 1, 1997—just over 70 percent. However,

during this 1-year period, the number of ATMs that banks operated

increased about 13 percent, to an estimated 132,000.2

 About 66 percent of

this growth was in ATMs located off bank premises. Our survey results also

indicated that, for the month of January, the average number of customer

withdrawal transactions per ATM declined 15 percent from 1997 to 1998,

while the average number of noncustomer withdrawal transactions per

ATM declined 24 percent during this period.

According to our survey results, the percentage of banks operating ATMs

that assessed surcharges increased from 39 percent as of February 1, 1997,

to 64 percent as of February 1, 1998. Also, the estimated number of ATMs

with surcharges increased by more than 50 percent during the same

period. Our estimates indicated that the average surcharge fee assessed by

banks, including in our calculation the ATMs without surcharges, increased

from $0.69 as of February 1, 1997, to $1.00 as of February 1, 1998.

Additionally, the estimated average surcharge fee, calculated for those

ATMs with surcharges only, increased from $1.17 to $1.27 during this

period. For ATMs with surcharges, the most typical fee as of February 1,

1998, was $1.50, compared to $1.00 the previous year.

Background According to a Federal Reserve study3

 and other industry sources, some

banks began deploying ATMs in the early 1970s to gain an advantage over

their competitors by offering customers 24-hour access to their funds.

Industry sources indicated that, by the early 1980s, consumers were

substantially increasing their use of ATMs. The Federal Reserve study found

2

Sampling error is plus or minus 12 percent.

3

Payments Primer: Traditional Payments, No. 6, Automated Teller Machine, Federal Reserve System,

December 1997.

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that, today, many ATMs are located at sites where consumers would most

likely want to have them; these sites are frequently off the premises of

banks, such as at grocery and convenience stores, shopping malls, and

movie complexes. Nonbanks are also operating ATMs at such locations.

According to industry sources, the majority of ATM transactions continue

to be for cash withdrawals from personal checking, savings, and other

deposit accounts. However, technological advances have made an array of

additional services available to ATM users. Some ATMs enable users to

complete 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.

Regional, national, and/or international ATM networks link ATMs and

computer systems, allowing the customers of one network member to

access their accounts through other network members’ ATMs. These

networks are designed to enable users to obtain ATM services over a much

wider geographical area than that covered by their own institution.

Until April 1996, the two primary national networks banned the practice of

surcharging noncustomers for use of their networks’ ATMs. However, the

bans could not be implemented in 15 states that statutorily prohibited ATM

networks from enforcing them. With other states considering similar

prohibitions, the two primary networks lifted their bans in April 1996.

Since then, some ATM operators in states where surcharges were formerly

banned by the networks have begun assessing surcharges.

ATM operators assess surcharge fees on the user’s bank; the bank in turn

pays the fees and then assesses them directly on the user. The national

networks require that, if the surcharge fee is assessed on the user, the fee

appear on the receipt at the cash machine as well as on the user’s bank

statement.

In addition to surcharge fees, switching and interchange fees are

generated by ATM use. A switching fee is assessed by the ATM network on

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 absorb this fee or pass it on

to the ATM user. An interchange fee may be assessed by ATM operators on a

nonaccount holder’s home bank for handling a transaction. If the home

bank passes this fee on to the ATM user, the Federal Reserve’s Regulation E

requires the user’s home bank to inform the user—typically at the time an

Page 3 GAO/GGD-98-101 Banks’ ATM Surcharge Fees Have Increased
B-279227 

account is opened—that the assessment will appear on the user’s bank

statement.

ATM Deployment by

Banks

Our survey results indicated that approximately the same percentage of

banks operated ATMs as of February 1, 1998, as operated them as of

February 1, 1997. However, during this 1-year period, the estimated

number of ATMs that banks operated increased about 13 percent. Our

survey results also indicated that, for the month of January, the average

number of withdrawal transactions per ATM decreased from 1997 to 1998.

The Percentage of Banks

Operating ATMs Remained

Constant, While the

Number of ATMs Increased

According to our survey results, just over 70 percent of banks in the

United States operated ATMs as of both February 1, 1998, and February 1,

1997. We estimated that approximately 8,010 of 10,960 banks active at the

time of our survey operated ATMs as of February 1, 1998, and

approximately 8,210 of 11,110 banks operated ATMs as of February 1, 1997.

The percentage of large and medium banks that had at least one ATM was

about 90 percent as of these dates. For smaller banks, just over 70 percent

had at least one ATM as of both dates.

According to our survey results, banks operated an estimated 132,0004

ATMs in the United States as of February 1, 1998, a 13 percent increase over

the estimated 117,0005 ATMs they operated as of February 1, 1997.6

 Our

survey results indicated that about 66 percent of this growth was in ATMs

located off bank premises. Large banks operated more ATMs than either

medium or smaller banks as of February 1, 1998. (See fig. 1.)

4

Sampling error is plus or minus 12 percent.

5

Sampling error is plus or minus 11 percent.

6

Point estimates are subject to a sampling error that differs from the sampling error on our estimates

of the change between 1997 and 1998. While the confidence intervals on the point estimates may

overlap, the estimate of the change between the two years is statistically significant. (See app. II for

details.)

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Figure 1: Percentages of ATMs Operated by Large, Medium, and Smaller Banks as of February 1, 1997, and February 1,

1998

1997

Large

(76 banks)

Medium

(414 banks)

Smaller

(7,721 banks)

37%

31%

32%

1998

Large

(72 banks)

Medium

(334 banks)

Smaller

(7,600 banks)

31%

49%

19%

Note: Percentages may not add to 100 due to rounding.

Source: GAO analysis of survey results.

According to our survey results, for those large banks that operated ATMs,

the median7

 number of ATMs operated increased by about 100 from

February 1, 1997, to February 1, 1998. Medium and smaller banks operated

approximately the same median number of ATMs as of both these dates.

(See table 1.)

Table 1: Median Number of ATMs

Operated by Large, Medium, and

Smaller Banks as of February 1, 1997,

and February 1, 1998

Median number of ATMs

Bank size February 1, 1997 February 1, 1998

Large 345 440

Medium 45 43

Smaller 2 3

Source: GAO analysis of survey results.

7

The median is the middle observation—that is, half the observations lie above this value and half lie

below it.

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As indicated in figure 2, an estimated 59 percent of banks with ATMs had

three or fewer ATMs as of February 1, 1998. Our survey results indicated

that these ATM operators were nearly all smaller banks.

Figure 2: Percentages of Banks That Operated ATMs, by Number of ATMs, as of February 1, 1997, and February 1, 1998

1997

64% 20%

15%

1998

13%

1 - 3 ATMs

4 -10 ATMs 

More than

10 ATMs

1 - 3 ATMs

4 -10 ATMs 

More than

10 ATMs

59% 27%

Note: Percentages do not add to 100 due to rounding.

Source: GAO analysis of survey results.

The seven nonbanks that provided us information reported that, in

aggregate, the number of ATMs they deployed increased over the past year.

These nonbanks reported an 11 percent increase in the number of ATMs

they owned—from 9,223 ATMs to 10,277 ATMs—between February 1, 1997,

and February 1, 1998.

The Average Number of

Withdrawal Transactions

Per ATM Decreased

Our survey results indicated that, for the month of January, the average

number of customer withdrawal transactions per ATM declined 15 percent

from 1997 to 1998, while the average number of noncustomer withdrawal

transactions per ATM declined 24 percent during this period. (See table 2.)

Overall, the seven nonbanks reported little change in withdrawal

transaction volume per ATM during the same period.

Page 6 GAO/GGD-98-101 Banks’ ATM Surcharge Fees Have Increased
B-279227 

Table 2: Average Customer and

Noncustomer Withdrawal Transactions

Per ATM for January 1997 and

January 1998

Withdrawal transactions per ATM

Transaction type January 1997 January 1998 Percent change

Customer

withdrawal

2,551a 2,163b –15%c

Noncustomer

withdrawal

1,343 1,023 –24

aSampling error is plus or minus 16 percent.

bSampling error is plus or minus 12 percent.

cPoint estimates are subject to a sampling error that differs from the sampling error on our

estimates of the change between 1997 and 1998. While the confidence intervals on the point

estimates may overlap, the estimate of the change between the two years is statistically

significant. (See app. II for details.)

Source: GAO analysis of survey results.

More Banks Assessed

Surcharges, and Fees

Increased

Our survey results indicated both that a greater percentage of banks

assessed surcharges as of February 1, 1998, than assessed them a year

before and that surcharge fees increased during this period. In particular,

the percentage of ATMs that had surcharge fees of $1.50 or more increased

from 21 to 40 percent.

More Banks Surcharged According to our survey results, almost 64 percent of banks that operated

ATMs as of February 1, 1998, assessed surcharges on at least some of their

ATMs, while about 39 percent of the banks that operated ATMs as of

February 1, 1997, imposed surcharges. We found that large and smaller

banks increased their use of surcharging during this period.8

 (See fig. 3.)

8

The increase from 1997 to 1998 in the percentage of medium banks that surcharged was not

statistically significant.

Page 7 GAO/GGD-98-101 Banks’ ATM Surcharge Fees Have Increased
B-279227 

Figure 3: Percentages of Large,

Medium, and Smaller Banks That

Assessed Surcharges on at Least

Some of Their ATMs as of February 1,

1997, and February 1, 1998

0

20

40

60

80

100

Smaller Medium Large

Percentage of banks that surcharged

a

a

1997

1998

All banks

39

64

58

83

54

73

38

63

Size of banks

aSampling error is plus or minus 11 percent.

Source: GAO analysis of survey results.

The estimated number of ATMs with surcharge fees also increased. Our

survey results indicated that from February 1, 1997, to February 1, 1998,

the number of ATMs with surcharge fees increased by more than

50 percent—from about 69,1009

 to about 104,10010 ATMs. This represents an

increase from 59 percent to 79 percent of ATMs. The increase included

newly deployed or acquired ATMs, as well as existing ATMs that previously

did not have a surcharge fee. Similarly, during the same period, the seven

nonbanks we contacted reported a 61 percent increase—from 5,056 to

8,120—in the number of ATMs they owned that charged users an access

fee.11

9

Sampling error is plus or minus 15 percent.

10Sampling error is plus or minus 15 percent.

11When referring to nonbanks, we use the generic term access fee rather than surcharge fee. Surcharge

fees refer to the access fees that banks charge individuals who do not hold an account at their

institution. However, nonbanks do not have deposit account holders.

Page 8 GAO/GGD-98-101 Banks’ ATM Surcharge Fees Have Increased
B-279227 

ATM Surcharge Fees

Increased

According to our 1998 survey results, the average ATM surcharge fee has

increased since February 1, 1997.12 Our estimates indicated that the

average surcharge fee assessed by banks, including in our calculations the

ATMs without surcharges, increased from $0.69 as of February 1, 1997, to

$1.00 as of February 1, 1998.13 The average surcharge fee as of

December 31, 1995, was $0.17.14 This was before the two primary national

networks lifted their ban on surcharge fees. (See fig. 4.) The maximum ATM

fee reported by banks in our sample as of both dates was $3.00.

12We calculated average surcharge fees on a per ATM basis rather than on a per bank basis.

13Actual surcharge fees tend to occur in 50-cent increments (e.g., $1.00, $1.50, and $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.

14Sampling error exceeds plus or minus 10 percent.

Page 9 GAO/GGD-98-101 Banks’ ATM Surcharge Fees Have Increased
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Figure 4: Average ATM Surcharge

Fees Assessed by Large, Medium, and

Smaller Banks, Including ATMs

Without Surcharges, as of December

31, 1995; February 1, 1997; and

February 1, 1998

0

0.2

0.4

0.6

0.8

1

1.2

Smaller Medium Large All banks

1997

1998

1995

Average ATM surcharge fees (dollars)

0.12

0.64

0.85

0.23

0.73

0.92

0.16

0.70

1.12

0.17

0.69

1.00

Size of banks

Note 1: We collected December 1995 data during our 1997 survey. We did not collect additional

1995 data during our 1998 survey. December 1995 estimates were based on the responses of

banks we surveyed in February 1997.

Note 2: Although some of the sampling errors for the data for smaller, medium, and large banks

were greater than plus or minus 10 percent, all of the differences between the 1995 and 1997

data within the three size groups were statistically significant, and the differences for the smaller

and large banks between 1997 and 1998 were also statistically significant.

Note 3: The average ATM surcharge fees were calculated for all ATMs, including those that did

not surcharge.

Source: GAO analysis of survey results.

In addition to the previously discussed average fees, the estimated average

surcharge fee assessed by banks, excluding ATMs that did not surcharge,

increased from $1.17 as of February 1, 1997, to $1.27 as of February 1,

1998.

Page 10 GAO/GGD-98-101 Banks’ ATM Surcharge Fees Have Increased
B-279227 

Our survey results indicated that for the ATMs with surcharges, the most

typical fee as of February 1, 1998, was $1.50 compared to $1.00 for the

previous year. These results also indicated that the number of ATMs with

surcharge fees of $1.50 or more had increased since 1997. Specifically, an

estimated 21 percent of ATMs had fees of $1.50 or more as of February 1,

1997, and an estimated 40 percent of ATMs had such fees as of February 1,

1998. (See fig. 5.) Additionally, as shown in table 3, the percentage of ATMs

with surcharge fees of $1.50 or more increased for large banks but

remained relatively constant for smaller banks.15

Figure 5: Percentages of ATMs With

Various Surcharges as of February 1,

1997, and February 1, 1998

0

10

20

30

40

50

0.0 $.50 $1.00 $1.50 $2.00

Surcharge amount

Percentage of ATMs with various surcharges

1997

1998

Other a

<1

3

41

21

34 34

20

39

11 1

4

aIncludes all other fee levels combined.

Source: GAO analysis of survey results.

15The increase in the percentage of ATMs with surcharge fees of $1.50 or more was not statistically

significant for medium banks.

Page 11 GAO/GGD-98-101 Banks’ ATM Surcharge Fees Have Increased
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Table 3: Percentages of ATMs With Various Surcharges, by Bank Size, as of February 1, 1997, and February 1, 1998

Large bank ATMs Medium bank ATMs Smaller bank ATMs

Surcharge 1997 1998 1997 1998 1997 1998

$0.00 40% 17% 37%a 26% 45% 24%

0.50 3 <1 3 <1 2 1

1.00 31 24 40a 42a 31a 47a

1.50 24 58a 16 26 19 17

2.00 <1 <1 3 3 1 2

All other fee levels

combined

1 1 1 4 1 8

Note: Totals may not add to 100 percent because of rounding.

aSampling errors exceed plus or minus 10 percent.

Source: GAO analysis of survey results.

Consistent with the results of our bank survey, the seven large nonbank

ATM owners generally reported that they increased their access fees. The

average fee, including in our calculations the ATMs without access fees,

increased from $0.48 on February 1, 1997, to $0.81 on February 1, 1998.

The maximum access fee reported by these nonbanks was $8.00. The

average fee reported, excluding ATMs that did not charge a fee, increased

from $0.87 as of February 1, 1997, to $1.03 as of February 1, 1998.

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.

Page 12 GAO/GGD-98-101 Banks’ ATM Surcharge Fees Have Increased
B-279227 

This report was prepared under the direction of Cecile O. Trop, Assistant

Director, Financial Institutions and Markets Issues. Other major

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

(312) 220-7600 or me on (202) 512-8678 if you have any questions about

this report.

Sincerely yours,

Susan S. Westin

Associate Director

Financial Institutions

 and Markets Issues

Page 13 GAO/GGD-98-101 Banks’ ATM Surcharge Fees Have Increased
Contents

Letter 1

Appendix I 

Survey Instrument

Used to Collect Data

From a Sample of

Banks

16

Appendix II 

Objectives, Scope,

and Methodology

22

Survey Sample 22

Survey Sample Design 22

Questionnaire Design 24

Survey Administration 24

Survey Response 24

Calculation of Survey Estimates 25

Sampling Error 25

Nonsampling Error 26

Information on ATMs Owned by Nonbanks 27

Appendix III 

Major Contributors to

This Report

28

Tables Table 1: Median Number of ATMs Operated by Large, Medium,

and Smaller Banks as of February 1, 1997, and February 1, 1998

5

Table 2: Average Customer and Noncustomer Withdrawal

Transactions per ATM for January 1997 and January 1998

7

Table 3: Percentages of ATMs With Various Surcharges, by Bank

Size, as of February 1, 1997, and February 1, 1998

12

Table II.1: Disposition of Bank Survey Sample 23

Figures Figure 1: Percentages of ATMs Operated by Large, Medium, and

Smaller Banks as of February 1, 1997, and February 1, 1998

5

Figure 2: Percentages of Banks That Operated ATMs, by Number

of ATMs, as of February 1, 1997, and February 1, 1998

6

Page 14 GAO/GGD-98-101 Banks’ ATM Surcharge Fees Have Increased
Contents

Figure 3: Percentages of Large, Medium, and Smaller Banks That

Assessed Surcharges on at Least Some of Their ATMs as of

February 1, 1997, and February 1, 1998

8

Figure 4: Average ATM Surcharge Fees Assessed by Large,

Medium, and Smaller Banks, Including ATMs Without

Surcharges, as of December 31, 1995; February 1, 1997; and

February 1, 1998

10

Figure 5: Percentages of ATMs With Various Surcharges as of

February 1, 1997, and February 1, 1998

11

Abbreviations

ATM automated teller machine

Page 15 GAO/GGD-98-101 Banks’ ATM Surcharge Fees Have Increased
Appendix I 

Survey Instrument Used to Collect Data

From a Sample of Banks

Page 16 GAO/GGD-98-101 Banks’ ATM Surcharge Fees Have Increased
Appendix I 

Survey Instrument Used to Collect Data

From a Sample of Banks

Page 17 GAO/GGD-98-101 Banks’ ATM Surcharge Fees Have Increased
Appendix I 

Survey Instrument Used to Collect Data

From a Sample of Banks

Page 18 GAO/GGD-98-101 Banks’ ATM Surcharge Fees Have Increased
Appendix I 

Survey Instrument Used to Collect Data

From a Sample of Banks

Page 19 GAO/GGD-98-101 Banks’ ATM Surcharge Fees Have Increased
Appendix I 

Survey Instrument Used to Collect Data

From a Sample of Banks

Page 20 GAO/GGD-98-101 Banks’ ATM Surcharge Fees Have Increased
Appendix I 

Survey Instrument Used to Collect Data

From a Sample of Banks

Page 21 GAO/GGD-98-101 Banks’ ATM Surcharge Fees Have Increased
Appendix II 

Objectives, Scope, and Methodology

The objectives of this report were to summarize our survey data on the

changes over the past year in (1) ATM deployment by banks and (2) number

of banks (including thrifts) in the United States that surcharge

noncustomers and the amounts surcharged. We also provide limited

information on ATMs owned by selected nondepository institutions

(nonbanks).

Survey Sample To address our objectives, we estimated the number of (1) banks that

operate ATMs; (2) ATMs operated by banks; and (3) withdrawal transactions

as of February 1, 1997, and February 1, 1998. We also estimated the

number of banks that surcharge account holders and the amounts

surcharged as of those dates. Finally, we estimated the change in these

numbers between February 1, 1997, and February 1, 1998. We did not

include credit unions or nonbanks in our survey.

To obtain our estimates, we conducted statistically representative surveys

of banks in both February 1997 and February 1998. In February 1998 we

surveyed a random sample of 501 banks and thrifts throughout the United

States. Some of these 501 institutions had been sampled in our 1997

survey. We asked these banks to answer the same questions again for 1998

(and for 1997, if they had not answered them during the 1997 survey). We

also asked a supplemental sample of banks, drawn for the first time in

1998, to provide data for both years. Using the additional data covering

1997 that we obtained in 1998, we were able to make more precise, revised

estimates of 1997 ATM operations for this year’s report. All of the estimates

made in this report are representative of the entire banking industry as it

existed in February 1997 and February 1998.

Survey Sample Design We recontacted the 197 banks that were still active from the original

stratified probability sample of 246 banks drawn in 1997. (The bank

charters of 49 of last year’s sample had become inactive, mostly through

their being acquired by other institutions.) We drew a supplemental

stratified random sample of 304 additional institutions, for a total of 501

institutions. The 1997 responses of the 49 inactive banks, as available,

contributed only to the 1997 estimates.

We allocated proportionately more of our sample to banks in the

population with greater assets because they, on average, operated more

ATMs. This allowed us to cover as many of the banks operating ATMs, and

the ATMs themselves, as possible. Because we sampled large banks at a

Page 22 GAO/GGD-98-101 Banks’ ATM Surcharge Fees Have Increased
Appendix II 

Objectives, Scope, and Methodology

higher rate than other banks, the estimates for large banks are more

precise—that is, they have smaller sampling errors. (Sampling errors are

discussed later in this appendix.) The allocation of this year’s random

sample across 11 strata—defined by the total assets that banks reported in

their September 1997 Federal Financial Institutions Examination Council

Call Report (or the Office of Thrift Supervision’s Thrift Financial

Reports)—is described in the first four columns of table II.1.

Table II.1: Disposition of Bank Survey Sample

Sample disposition

Bank size

category Sample strata

1998

population

size

1998

sample

size Ineligiblea Refusals

No

response

Useable

responseb

Response

ratec

Large Over $10 billion 81 81 2 1 10 68 86.1%

Medium Over $8 billion, up to $10

billion

16 12 0 1 2 9 75.0

Over $6 billion, up to $8

billion

28 17 1 1 2 13 81.3

Over $4 billion, up to $6

billion

54 24 0 1 1 22 91.7

Over $2 billion, up to $4

billion

123 31 2 1 5 23 79.3

Over $1 billion, up to $2

billion

205 28 2 1 1 24 92.3

Smaller Over $500 million, up to $1

billion

425 33 0 3 3 27 81.8

Over $300 million, up to

$500 million

546 28 0 1 1 26 92.9

Over $150 million, up to

$300 million

1,431 52 1 0 3 48 94.1

Over $90 million, up to $150

million

1,730 50 0 5 3 42 84.0

$90 million or less 6,374 145 0 2 4 139 95.9

Total 11,013 501 8 17 35 441 89.5%

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

bUseable responses included not only completed questionnaires from banks with ATMs, but also

the determination during telephone precontact that a bank had no ATMs.

cThe response rate was calculated as the number of banks completing useable questionnaires

divided by the number of eligible banks in the sample (original sample minus ineligibles).

Source: GAO survey.

Page 23 GAO/GGD-98-101 Banks’ ATM Surcharge Fees Have Increased
Appendix II 

Objectives, Scope, and Methodology

The samples in both years were drawn from the populations of banks

identified as active institutions in the September 1996 and September 1997

Call Report databases obtained from the Federal Deposit Insurance

Corporation. Although neither we nor the agencies that produced the

source data have fully assessed the reliability of this database, Call Report

data are widely used by researchers in academia, government, and private

industry.

Questionnaire Design We administered the same questionnaire that we used last year, after

making some minor modifications and adding questions on ATM customer

transactions and merger activity. Each questionnaire was to be filled out

by a separate, individually chartered institution. Respondents were

instructed to provide answers, to the extent possible, for the offices of the

one institution named on the questionnaire only, and were instructed not

to include any bank holding company parent or other subsidiaries.

Because we extensively pretested the questionnaire before administering

the survey last year, we asked only a small number of banks that were to

be in our sample to review our new questions before we administered the

revised questionnaire.

Survey Administration During the first 2 weeks of January 1998, we contacted all sampled

institutions by phone. Following a written calling protocol, we determined

whether each of the 501 sampled banks was a currently active institution

and, if so, whether it operated any ATMs. For banks not operating at least

one ATM, this information constituted a complete response. For those

banks operating ATMs, we then identified the most appropriate respondent

and mailed that person a questionnaire at the end of January 1998. After

making multiple calls to encourage the return of all outstanding

questionnaires and following up on some questionnaires that contained

missing or inconsistent data, we ended our fieldwork in the second week

of March 1998.

Survey Response We received useable responses (an indication that no ATMs were operated,

or answers to at least some of the questions on the questionnaire mailed to

ATM operators) from 441 sampled banks, for a response rate of

approximately 90 percent. (See table II.1.) No systematic differences in the

rate of survey participation across different bank size strata were

detected.

Page 24 GAO/GGD-98-101 Banks’ ATM Surcharge Fees Have Increased
Appendix II 

Objectives, Scope, and Methodology

Calculation of Survey

Estimates

After weighting survey responses to account for selection probabilities

and nonresponse, we were able to make estimates of the number of banks

operating ATMs, the number of ATMs, and surcharging characteristics for

the entire population of banks active as of February 1, 1998. Using 1997

survey data and retrospective reports of other banks responding for the

first time this year, we were also able to update estimates for the entire

population of banks as of February 1, 1997.

Although the sample design of this survey incorporates elements of a

panel survey design, where individual sample elements are tracked over

time, estimates of change between the two years are based on the

differences between the overall estimates for each of the two years and

not on changes within particular institutions. However, information about

change at the individual bank level, where 1997 and 1998 data for one bank

active in both years exists, helped us to more accurately determine the

precision of these change estimates, as described later in this appendix.

Sampling Error Because we reviewed a statistical sample of banks, each estimate

developed from the sample (for either the 1997 or 1998 point estimate, or

the change between these two estimates) has a measurable precision, or

sampling error. The sampling error is the maximum amount by which the

estimate obtained from a statistical sample can be expected to differ from

the true population value being estimated. Sampling errors are stated at a

certain confidence level—in this case, 95 percent. This means that the

chances are 19 out of 20 that, if we surveyed all of the banks in the

population, the true value obtained for a question on this survey would

differ from the estimate obtained from our sample by less than the

sampling error for that question.

The sampling errors account for the stratified sample design and are

reported for all of our 1997 and 1998 estimates unless they are less than

plus or minus 10 percentage points, or 10 percent of the quantity

estimated. All differences cited are statistically significant unless

otherwise noted. That is, any differences in ATM characteristics between

subgroups of banks, or in some industry characteristic over time, can be

considered present in the underlying population and not simply due to

chance introduced by relying on one sample of the whole population.

Our analysis also accounted for the association between the status of

individual banks in 1997 and 1998—that is, it accounted for the fact that

bank characteristics, such as the number of ATMs operated, tend to change

Page 25 GAO/GGD-98-101 Banks’ ATM Surcharge Fees Have Increased
Appendix II 

Objectives, Scope, and Methodology

in a predictable way for individual banks. As a result, we could more

precisely estimate changes in bank characteristics than would be expected

given the large sampling errors of some of the point estimates. Thus, the

point estimates of a characteristic in 1997 and 1998 might have large

sampling errors, while the estimate of change for that characteristic

between the two years might have a relatively small sampling error.

Nonsampling Error 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, the

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

banks that do not respond can all introduce unwanted variability into the

survey results. Although we did not verify respondents’ answers, we did

include steps in the data collection and analysis processes to minimize

nonsampling errors. Specifically, we modified our questions based on

pretests and our experiences from the 1997 survey to make them more

understandable and easier to answer. We also checked respondent’s

answers for internal consistency and out-of-range values, and we

attempted to obtain missing data. Finally, we conducted callbacks to

encourage a high level of response that would reduce the effects of any

nonresponse bias.

In addition, our surveys were conducted in February 1997 and

February 1998, while the Call Report data that we used to draw our sample

was dated 4 months earlier. Although we incorporated revised Call Report

data released by the Federal Deposit Insurance Corporation in December

of 1997 into our 1998 sample frame, changes to the banking industry (such

as mergers resulting in the discontinuance of some bank charters and the

issuance of new charters) between the dates our sample frames were

defined and the dates our surveys were administered did occur. Those

changes resulting in a decrease in the number of chartered banks in the

population were reflected in our survey analysis by those banks we

sampled and found ineligible due to recent mergers or closings. However,

to the extent that newly chartered institutions had been created in the

period between the definition of our sample frame and the survey, those

increases in the population would not be reflected in our sample, resulting

in a small but unknown amount of under coverage in our sample of the

true population of banks in February 1997 and February 1998. We

performed tests on two revisions of the September 1997 Call Report

database to assess the magnitude of changes in listings over time.

Page 26 GAO/GGD-98-101 Banks’ ATM Surcharge Fees Have Increased
Appendix II 

Objectives, Scope, and Methodology

Also, banks that were sampled for the first time in 1998 and reported that

they did not operate ATMs were not asked for 1997 data. We assumed that

these 64 banks did not operate ATMs in 1997, based on reports from

another group of 27 banks that did not operate ATMs in 1998 but had been

sampled the year before. Only 2 of those 27 banks had operated ATMs the

previous year.

Information on ATMs

Owned by Nonbanks

We gathered information comparable to that for banks from 7 of the 10

largest nonbank owners, excluding credit unions, to obtain an indication

of nonbank practices.16 This information could not be projected to the

universe of nonbank ATM owners because we did not draw a statistical

sample from this universe. We were unable to draw a statistical sample

because the complete data necessary for defining the universe was not

available.

16The 10 largest nonbank ATM owners were identified from the top 350 ATM owners listed in Credit

Card Management: Debit Card Directory, 1998 Edition (New York, NY: Faulkner and Gray, Inc., 1997).

Seven of the 10 provided us with information on their ATM operations.

Page 27 GAO/GGD-98-101 Banks’ ATM Surcharge Fees Have Increased
Appendix III 

Major Contributors to This Report

General Government

Division, Washington,

D.C.

Kristi A. Peterson, Evaluator-in-Charge

Carl M. Ramirez, Senior Social Science Analyst

James M. Fields, Senior Social Science Analyst

Stuart M. Kaufman, Senior Social Science Analyst

Joanne D. Meikle, Senior Social Science Analyst

George H. Quinn, Jr., Computer Specialist

Sidney H. Schwartz, Senior Social Science Analyst

Chicago Field Office Barry A. Kirby, Evaluator

San Francisco Field

Office

Tre M. Forlano, Evaluator

May M. Lee, Evaluator

Grace K. Sakoda, Evaluator

(233550) Page 28 GAO/GGD-98-101 Banks’ ATM Surcharge Fees Have Increased
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