Automated Teller Machines: Some Consumer Fees Have Increased
Released: 2013-04-11T00:00:00

Letter

Background

ATM transactions involve several different participants, including the customer at the terminal (the “consumer”); financial institutions such as banks, thrifts, and credit unions; and other entities involved in electronically processing transactions. Financial institutions typically issue debit cards to account holders that can be used for purchases at the point of sale or to conduct ATM transactions. ATM owners can be depository institutions, such as banks and credit unions, or public or private companies, such as merchants or independent operators that specialize in offering ATMs and related processing and support services. Independent operators may own their ATMs as well as provide ATMs under contract to merchants (for which the independent operators provide processing and other support services). Some independently owned ATMs are “branded” ATMs, where an independent firm owns and operates the machine but a financial institution pays for the right to display its logo on the terminal and to allow its customers to access the machine free of charge. Independent ATM operators must have a depository institution that sponsors their membership in the EFT networks that process ATM transactions. Financial institutions have a relationship with account holders outside of ATM transactions, while independent ATM operators’ sole relationship with the consumer is through use of the ATM.

The EFT networks provide the infrastructure that allows funds to be transferred electronically and provide a means for an ATM card from one financial institution to be used at another financial institution’s or independent operator’s ATM. EFT networks route transactions between the ATMs and the card-issuing financial institutions and act as a clearinghouse to settle those transactions. They establish the rules and requirements for any financial institution that chooses to participate in the EFT network. These networks perform millions of transactions monthly.

The steps involved in an ATM transaction depend on whether or not a consumer uses an ATM owned by his or her financial institution (typically referred to as an “on-us” transaction) or an ATM owned by another financial institution or firm (typically referred to as an “off-us” transaction). On-us transactions are not routed through the EFT networks but instead are processed internally by the consumer’s financial institution. In both cases, the ATM transaction begins when the consumer inserts the ATM or debit card into an ATM, enters the personal identification number, selects the transaction to be performed—such as a cash withdrawal from the consumer’s checking account—and enters the amount of the transaction. For off-us transactions, the terminal sends this information to the sponsoring financial institution to identify the card-issuing financial institution, which determines the EFT network used to route the transaction. The EFT network passes the request for authorization to the consumer’s financial institution, which approves or denies the transaction based on the terms and conditions of the consumer’s account and the availability of funds. The approval or denial message is sent back to the ATM terminal, first through the EFT network and then through the sponsoring bank. If the transaction is authorized, the consumer receives the requested cash, and the transaction is posted to the consumer’s account, deducting the amount of money the consumer received at the ATM plus any fees assessed. Using the EFT network, the consumer’s financial institution pays the ATM owner the withdrawal amount plus any assessed surcharges. Figure 1 depicts the transaction flow among the parties involved in an off-us ATM transaction.

Several fees can be paid by the consumer and the other participants in order to process an ATM transaction. Consumers may be charged two types of fees. First, the ATM owner may assess a surcharge fee on the consumer for conducting a transaction at the ATM. Federal regulations require ATM operators to provide notice that the surcharge fee will be imposed and disclose the amount of the fee on the ATM screen before the consumer commits to paying the fee. Surcharge fees also appear on the transaction receipt and again on the consumer’s account statement— sometimes combined with the cash withdrawal amount. Second, a foreign ATM fee is a fee that may be assessed by the consumer’s financial institution when the consumer uses an ATM owned by another ATM operator. The foreign ATM fee is not disclosed at the ATM. Rather it is provided to consumers in information they receive when they open their account, in fee disclosures, and on their periodic statements when they incur the fee.

The consumer’s financial institution and the ATM operator also pay certain fees to process an ATM transaction. Specifically, the interchange fee is set by the EFT networks and paid by the consumer’s financial institution to the ATM owner for the costs of placing and maintaining ATMs. The switch fee is assessed by the EFT networks on the consumer’s financial institution to pay for processing each of its network transactions. Finally, the acquiring fee is paid by the ATM owner to the EFT networks for use of the networks to conduct the ATM transaction. Table 1 provides a summary of the fees paid by consumers, financial institutions, and ATM operators during an ATM transaction.

Business Models for Financial Institutions and Independent ATM Operators Impact How Fees Are Set

Financial institutions and independent ATM operators have different business models and, as a result, set ATM surcharge fees differently. Financial institutions operate ATMs as a convenience to their own account holders, who generally do not pay fees to use these ATMs. However, financial institutions do assess a surcharge fee when a transaction is conducted by nonaccount-holding consumers. Independent ATM operators charge surcharge fees to most customers, and in many cases operators work with merchants to determine those fees.

Financial Institutions Operate ATMs Primarily for Their Own Account Holders, Often with No Fees

According to industry estimates, there are approximately 420,000 ATMs currently operating in the United States, and financial institutions operate just under half of those machines, either in their own facilities or at off-site locations, such as shopping centers, drug stores, and grocery stores. Those financial institutions that responded to our survey—representing 81,833 ATMs—reported they placed 57 percent of their total ATM fleet at bank facilities, while 43 percent were located off site. Financial institutions typically own or operate their ATMs. In some cases, financial institutions partner with independent firms to operate branded ATMs that carry the financial institution’s logo and look and function as if they belong to the institution but are owned by an independent ATM operator. As previously discussed, under these arrangements, the account holders for that financial institution are allowed to use the branded ATMs without paying a fee.

Financial institution representatives told us they view access to ATMs as a key service they provide to account holders. A representative from a large national bank said that its personal banking business is driven by customer convenience. Therefore they view access to ATMs as an important service to their account holders and have invested in a large fleet of ATMs for customer use. Likewise, a community banker we interviewed said that they view their ATMs as a way of extending the bank’s hours for customers to receive cash and make deposits. Representatives from two large national banks said that they consider where their customer base is located when determining where to place an ATM. One large bank representative noted that the bulk of the bank’s ATM business is its own customers, so it invests in ATMs and places them in locations near the greatest numbers of account holders. Financial institutions that have smaller fleets of ATMs, such as some credit unions and community banks, may offer their account holders access to ATMs by participating in a surcharge-free network. When a financial institution enrolls in a surcharge-free network, all ATMs in that network are available to their account holders surcharge free.

Financial institutions generally do not charge their own account holders for transactions conducted within their own ATM network. When establishing surcharge fees charged to nonaccount-holding customers, the financial institutions we surveyed most frequently cited three factors that they consider, the first being competition—the fees being charged by nearby ATMs. Likewise, one bank representative we interviewed said that they do not want the fee to be so high that they turn away potential customers; instead, they want account holders from other financial institutions to use their ATMs and based on that experience, open accounts at their bank. Similarly, one of the community bankers we spoke to said that they try to set their fee just below those of other ATMs in the area so that they can increase their own transaction volume. In contrast, a few industry representatives told us that generally fees are set higher at areas where there is more limited ATM competition, such as airports and amusement parks.

The second most cited factor by survey respondents that they consider when setting surcharge fees was cost of operating the ATM. However, several of the financial institution officials we interviewed noted that the surcharge fees do not cover the costs of operating their ATMs, and the institution takes a loss on the ATM to provide the service to its account holders. The third most frequently cited factor the surveyed financial institutions take into account when setting surcharge fees was anticipated usage, or transaction levels. For example, representatives from two large banks noted that surcharge fees help ensure ATM availability for their account holders while also making the service available as a convenience for nonaccount-holding customers. Furthermore, the surcharge revenues at some locations can subsidize expensive or unprofitable ATM locations such as airports, colleges, and business districts.

Independent ATM Operators Work with Merchants to Operate Terminals and Set Fees

Independent ATM firms—those not part of a financial institution—own, operate, or service just over half of the nation’s ATMs in a variety of locations, such as gas stations and convenience stores, bars, restaurants, and small businesses, according to industry sources. The independent ATM industry is very diverse, with firms ranging in size from fewer than five ATMs to tens of thousands. According to information we have gathered, the two largest independent firms operate an estimated 47 percent of the independent ATM market. In addition to owning and operating their own ATMs, these independent firms offer a wide range of ATM-related services to merchants and other entities that own ATMs, such as monitoring and maintaining appropriate cash levels in terminals and processing transactions. There are four primary business models for independent ATM operators, shown in table 2.

According to the ATM Industry Association, approximately 20 percent of the independent ATMs in the United States are owned by an independent ATM firm. The other 80 percent of independent ATMs are owned by merchants and retailers. In these situations, independent ATM firms provide varying levels of nonownership services and support to merchants, depending on the business model established. We found that the independent ATM firms included in our study had similarly diversified portfolios, where they both owned and operated ATMs while also providing services to merchants who owned the ATMs in their stores. We also found that, among the firms in our study, there was great variability as to the percentage of ATMs owned by the firm versus the merchant. For example, one smaller independent firm we spoke with owned 79 percent of the approximately 500 ATMs in its fleet, while the remaining 21 percent were merchant owned. In contrast, the two independent firms that participated in our survey—representing approximately 66,000 ATMs— owned 2 percent of their ATMs, while merchants owned the other 98 percent.

Independent ATM operators generally levy a surcharge on consumers, although there are exceptions. Unlike financial institutions, which have a relationship with consumers who are also account holders through which they can gain revenue from other account fees, independent ATM operators’ only relationship with the consumer is through their use of the ATM. Most independent ATM operators charge a surcharge fee to consumers for the convenience of accessing their account from a machine outside their bank’s ATM network. In addition, as previously discussed, those consumers may be charged a foreign fee by their own bank for using these independent ATMs (or ATMs run by financial institutions other than their own). However, some transactions at independent ATMs are surcharge free because the ATMs may be bank- branded or may be part of one or more surcharge-free networks.

When placing, operating, and servicing ATMs in retail space, independent ATM firms establish contracts with the merchants that specify which party will set the surcharge fee and how, if at all, those and other fee revenues will be shared. For turnkey and merchant-assisted ATMs, the surcharge fees are generally set by the independent ATM firms because they own the machines. For ATMs that are owned by merchants or retailers in the United States, the fees are set by either the merchant or a combination of the merchant and the independent ATM firm. A representative from one independent firm said that if the ATM is owned by the merchant, the firm is not involved in setting the surcharge fee, except to make suggestions to the merchant or to refuse to process the transaction if it determines the fee is exorbitant.

Like financial institutions, when setting surcharge fees, independent operators typically consider fees at the nearby ATMs, the location, and operating costs. A representative from one independent ATM firm said that the market dictates the surcharge fee and he can only charge what his competitors are charging. The location of the ATM is also considered when setting the surcharge fee. Another independent operator said he considers the type of location where the ATM will be placed and the resulting demographic that will frequent that area. He evaluates what fee is competitive for the region or neighborhood and the type of location. For example, some ATMs have lower fees because they are placed in lower income areas. Another firm representative said that the surcharge fee in bars, nightclubs, and casinos is typically higher than the surcharge fee in a grocery store. The third factor is the cost of running the ATM terminal. An independent ATM operator we spoke with said that the firm establishes fees that, when combined with other revenues such as interchange fees, will provide sufficient revenue to cover the variable cost of processing transactions and the fixed cost of installing the ATM.

Some ATM Fees Have Increased, but Often Consumers Can Avoid Incurring Fees

Our review found that since 2007, surcharge fees assessed by financial institutions have generally increased. We also found that the percentage of financial institutions charging foreign fees and the amount ATM users pay in foreign fees has remained constant. However, consumers can obtain cash without paying ATM fees in a number of ways, such as using their own banks’ ATMs or requesting cash back at the point of sale.

ATM Surcharge Fees Assessed by Financial Institutions Have Increased, While Foreign Fees Remained Constant

Our analysis shows that the prevalence and amount of ATM surcharge fees levied by financial institutions have generally increased since 2007, while foreign fees have generally remained constant in prevalence and amount, as seen in figure 2. We analyzed data obtained from a private vendor—based on annual surveys of hundreds of banks, thrifts, and credit unions on selected banking fees—and found that the percentage of financial institutions charging surcharge fees rose from an estimated 87 percent to 96 percent from 2007 through 2012. Of those institutions that charged a surcharge fee, the estimated average ATM surcharge fee increased from $1.75 in 2007 to $2.10 in 2012. The estimated median ATM surcharge fee rose from $1.56 in 2007 to $2.00 in 2012. Surcharge fees charged by financial institutions in our sample ranged from $0.28 to $5.52 in 2007, and the range was $0.45 to $5.00 in 2012. Meanwhile, foreign fees did not significantly change in prevalence and amount from 2007 to 2012. Our analysis of the data shows that the estimated percentage of financial institutions charging their customers a foreign fee between 2007 and 2012 has remained fairly constant at about 55 percent. In addition, our analysis shows that for institutions that charge a foreign fee, the estimated average fee did not significantly change between 2007 ($1.36) and 2012 ($1.42). The estimated median foreign fee was $1.09 in 2007 and $1.00 in 2012. Foreign fees charged by financial institutions in the sample ranged from $0.28 to $5.52 in 2007, and the range was $0.25 to $5.00 in 2012.

We estimate that there were no statistically significant differences in 2012 in the prevalence of the surcharge fee based on the type and size of institution, or on geographic region or location—such as rural, urban, or suburban—in which the financial institution was located. The estimated average surcharge fee amount, for institutions that charged a fee, differed slightly by size and type of financial institution. In 2012, the estimated average surcharge fee for larger financial institutions was approximately $0.24 higher than the estimated average surcharge fee for smaller financial institutions, and banks’ estimated average surcharge fees were also $0.17 higher than the estimated average surcharge fees charged by credit unions. For example, in 2012, the estimated average surcharge fee for using a large financial institution’s ATM was $2.25, while the estimated average surcharge fee at a small financial institution’s ATM was $2.01. In contrast, there were no statistically significant differences in estimated average ATM fees in 2012 based on the type of location and geographic region in which the financial institution was located. See figure 3 for information on the estimated average surcharge fee amount based on several factors for 2012.

We estimate that a higher percentage of large financial institutions charged a foreign fee in 2012 than small financial institutions. Specifically, an estimated 73 percent of large financial institutions charged a foreign fee in 2012 compared to an estimated 50 percent of small financial institutions. For those institutions charging the foreign fee, the estimated average fee amount was greater for large institutions and for banks. In 2012, large financial institutions had an estimated average foreign fee of $1.62, which is $0.26 more than the estimated average foreign fee charged by small financial institutions, which had an estimated average foreign fee of $1.36. Additionally, the average foreign fee was an estimated $0.23 higher at banks than credit unions in 2012. See figure 4 for more information on the estimated average amount of foreign ATM fees based on various factors for 2012.

Historical or trend data for independent ATM operators’ fees are not available. However, we analyzed data from Informa Research Services on the fees charged by a judgmentally selected sample of 100 ATMs run by independent ATM operators in 2012. These data are not generalizable to the independent ATM population at-large. Our analysis of the Informa data shows that the average surcharge fee for the 100 independent ATMs surveyed was $2.24 in 2012. The median surcharge fee for independent ATMs included in the sample was $2.00. The surcharge fee ranged from $1.50 to $3.00. However, some independent ATMs may have surcharge fees that are higher or lower than those in our sample. While we do not have historical data on independent ATM surcharges, representatives from a large independent ATM firm told us that their average surcharge fees rose from $1.77 in 2002 to $2.46 in 2011.

Aggregate data are also not available on the prevalence of surcharge fees among independent ATM operators. However, data obtained by mystery shoppers from a sample of 100 judgmentally selected independent ATMs in the top 10 metropolitan statistical areas, show that most of these ATMs charged a surcharge fee to the mystery shopper, but some transactions were conducted surcharge free. Specifically, in our sample of 100 independent ATMs, six mystery shoppers conducted a transaction for free using the selected ATM. In four of the six cases, the shoppers were able to conduct a transaction surcharge free since both the ATM and the shopper’s debit card displayed the logo of a surcharge- free network. In the other two cases where no surcharge was incurred, we sent a second mystery shopper to use the terminal, and the second shopper was charged a fee. We were unable to determine why the first mystery shoppers were not charged surcharge fees, but we did note that the ATMs had surcharge-free network logos on them.

The independent ATM firms we surveyed reported similar results to the mystery shopping data. The two independent firms reported in our survey that out of 140,634,638 cash withdrawals at their ATMs in calendar year 2011, customers incurred a surcharge fee 97 percent of the time. However, the percentage of transactions that are surcharge free may vary depending on the extent to which the ATM operator is involved in surcharge-free networks or branding agreements. For example, one large independent ATM operator estimates that more than half of the transactions that occur on its ATMs do not generate a surcharge fee due to either a surcharge-free network or branding agreements.

Consumers Have Many Ways to Obtain Cash without Incurring Fees

To obtain cash without incurring fees, consumers can generally withdraw cash at a bank branch during banking hours or use ATMs in their bank’s network. Our analysis indicates that a majority of transactions at financial institution ATMs may occur in this way. Specifically, according to our survey data, approximately 92 percent of the 3.3 billion reported transactions in calendar year 2011 at the financial institutions that responded did not incur a surcharge fee. At midsize and large banks we surveyed, ATM cash withdrawals did not incur a surcharge fee about 85 percent of the time. Additionally, our survey results showed that cash withdrawals at credit unions were surcharge free 95 percent of the time. Further, some industry representatives told us that financial institutions’ ATMs typically have a higher volume of transactions than independent ATMs. While our survey results are not generalizable to the total population of ATM operators, they did reveal that per-ATM transaction levels were much higher at financial institution ATMs than at independent ATMs for operators responding to the survey. As previously discussed, bank representatives we spoke to said that transactions at their ATMs are primarily from their own account holders, who do not incur fees for the transaction, and a large EFT network estimated that 80 percent of ATM transactions are on-us transactions and do not incur a fee. Consumers also avoid paying foreign fees in on-us transactions, because they are using machines within their financial institution’s ATM network. However, all consumers may not have convenient access to their own financial institution’s ATMs to obtain cash. Some account holders may live in areas with limited access to a financial institution facility, or need cash at a time when they are unable to go to their own financial institution—for example when attending a sporting event or while travelling.

Additionally, some financial institutions participate in surcharge-free networks that allow their customers free access to ATMs outside their bank’s network of ATMs. In this way, a financial institution can expand the number and location of ATMs available to its customers. Three of the largest surcharge-free networks in the United States each offered more than 20,000 ATMs, and some customers whose financial institutions have enrolled in those networks can use those ATMs without incurring a surcharge fee. Four banks and eight credit unions in our survey reported that they participated in at least one surcharge-free network, expanding the number of surcharge-free ATMs available to their customers. For example, one credit union in the survey owned and operated 251 ATMs and enrolled in a surcharge-free network that gave its customers access to an additional 30,000 ATMs free of charge. However, ATMs in surcharge-free networks may not be available to all customers. One of the largest surcharge-free networks in the country states that 80 percent of the ATMs in its network are in metropolitan areas.

Also, many financial institutions use branding agreements to expand their network of ATMs, which allows their consumers to withdraw funds from these ATMs without incurring fees. For example, the number of branded ATMs with financial institution logos increased from 11,900 in 2010 to 15,400 in 2011 for one large independent ATM operator, according to the operator’s annual reports. Among our surveyed financial institutions, branded ATMs accounted for approximately 16 percent of the total number of reported ATMs. One small independent ATM operator estimated that 55 percent of customers who use its ATMs pay a fee, and that percentage has decreased over the past 5 years due to an increase in financial institution branding and access to surcharge-free networks.

Some financial institutions offer to refund ATM fees to account holders when they use an ATM. One community banker we spoke to said the bank gives consumers rebates on ATM fees up to $20 each month and that this approach is more cost effective than owning and maintaining a fleet of ATMs. Finally, industry participants we spoke with said that consumers are increasingly obtaining cash when making debit card purchases, which also allows them to avoid fees. One community banker we spoke to said that the bank educates customers and encourages them to obtain cash at the point of sale so that they do not incur ATM fees and the bank can have a smaller ATM fleet. However, as previously discussed, these options may not be available to all consumers, and we do not know the extent to which consumers obtain cash at the point of sale or receive ATM fee refunds.

ATM Operators Have Varying Costs, and Many Operators Anticipate Costs Will Rise

ATM operators incur a variety of costs—including rent to place the machines in retail locations and security costs to keep the machines safe, among others—and the amount of these costs varies widely among operators. ATM operators report taking a number of steps to respond to changing operating costs, such as increasing surcharge fees and investing less money in ATMs. However, operators also anticipate that many of these costs will rise in the future.

Financial Institution and Independent ATM Operators Have a Variety of Disparate Costs

ATM operators incur a wide variety of costs in providing ATM services. Our survey of a judgmental sample of the 10 largest banks and credit unions, 10 randomly selected midsize banks (“financial institution” operators), and 4 large independent ATM firms (“independent” operators) collected information on the following cost categories, all of which— except bank sponsorship—are typically borne by both financial institution and independent ATM operators.

Rent. Financial institution operators pay rent for ATM facilities at locations not in an institution facility, and independent operators pay rent for retail or other locations, such as grocery stores or gas stations.

Hardware and software investments. Operators purchase, install, and upgrade ATM software and equipment, including the ATM terminals and physical security equipment, such as bolting devices which secure the machines to walls or the floor.

Cash services. Operators must take steps to ensure that ATMs are adequately stocked with cash and, therefore, spend time and resources monitoring transaction levels in order to accurately forecast future cash needs. Cash is delivered to the ATM via armored carrier. Independent operators also need to pay to access a supply of cash from a bank vault.

Maintenance and repairs. Maintenance includes cleaning the machinery, making routine repairs, and restocking of supplies (such as receipt paper), as well as more significant repairs, which can incur higher costs for tools, parts, and labor.

Physical security and insurance. Physical security costs are those incurred to keep the ATM and the surrounding lobby or area safe and include items such as lighting and cameras. Insurance costs include those policies that cover the cash in the machines.

Infrastructure and processing. Operators need to install and maintain the telecommunications infrastructure necessary for ATM operations and transaction processing. Processing costs include fees associated with transaction processing (switch fees) and costs associated with interbank settlement and account posting.

Network fees. ATM operators pay membership or license fees to the EFT networks in order to route transactions on the networks. Network fees also include any fees the ATM operator pays for membership in one or more surcharge-free networks.

Taxes and licenses. In addition to property and sales taxes, ATM operators are sometimes required to pay for state and local licenses, on either a one-time or recurring basis.

Regulatory and compliance costs. Regulatory and compliance costs include paying for the required ATM signage alerting customers to any fees, as well as the costs of regulatory inspections and reviews.

Fraud prevention and fraud losses. Fraud prevention costs are those related to activities aimed at detecting and preventing ATM fraud. Fraud losses are those incurred by the ATM operator when fraud occurs, including cash theft and ATM robberies.

Bank sponsorship. Bank sponsorship is a cost borne only by independent ATM operators, which, as previously discussed, must have a financial institution that sponsors their membership in the EFT networks.

Key Operating Costs Varied across Different ATM Operators

ATM operators we surveyed and spoke with indicated that key drivers of operating costs varied. For example, in our survey, large banks reported much higher costs for some categories, as a percentage of total costs, than did midsize banks and credit unions. Likewise, in some cost categories there was a wide range of reported per-ATM costs, while in other categories, the per-ATM costs were fairly consistent. None of the data we collected on costs are generalizable to either the financial institution or independent ATM operator populations at-large, although some costs, such as hardware and software investments, were mentioned as key drivers by many of the operators included in our work.

Our analysis of the data collected from a sample of 30 institutions from three financial institution types—large bank, medium bank, and credit union—revealed some key differences in the biggest cost drivers for these ATM operators. The large banks’ costs for hardware and software investments were much higher as a percentage of their total costs than for midsize banks and credit unions in our survey. As shown in figure 5, the majority (63 percent) of the larger banks’ costs were for hardware and software investments and upgrades. The second most prominent cost for the large banks was rent (15 percent of overall costs), followed by maintenance and repair (9 percent of overall costs) and cash services (6 percent of overall costs). In contrast, the hardware and software investments were a much smaller percentage of reported total costs for the midsize banks (18 percent) and credit unions (23 percent) in our survey. In addition, midsize banks and credit unions that participated in our survey had much more even proportions of spending across the various cost categories. Midsize banks and credit unions also reported that a greater percentage of total costs were dedicated to infrastructure and processing (17 and 23 percent respectively), compared to the large banks (2 percent).

In some cost categories institutions reported a wide range of per-ATM costs across the three financial institution types, while in other categories, the per-ATM costs were fairly consistent. For example, the financial institutions we surveyed reported that per-ATM costs in calendar year 2011 for rent and hardware and software were much higher for the large banks than for the credit unions and midsize banks. The average rent cost, on a per-ATM basis, was $27,173 for large banks, $4,935 for midsize banks, and $4,032 for credit unions. We saw similar results for hardware and software investments, with large banks reporting, on average, $28,607 in costs per ATM, while midsize banks’ and credit unions’ average costs were, respectively, $3,642 and $7,422. These hardware and software costs include both capitalized and noncapitalized items, although not all institutions reported noncapitalized costs. In contrast, the costs for maintenance and repairs were much closer in range for the three financial institution types. The average maintenance and repair cost, on a per-ATM basis, was $5,444 for large banks, $3,485 for midsize banks, and $5,827 for credit unions.

In some cost categories credit unions reported higher costs than their bank counterparts—cash services, and infrastructure and processing. The average cost for cash services, on a per-ATM basis, was $6,847 for credit unions, $3,765 for midsize banks, and $3,495 for large banks. Similarly, the average cost for infrastructure and processing, on a per- ATM basis, was $7,958 for credit unions, $3,494 for midsize banks, and $1,191 for large banks. In contrast, credit unions’ costs for network fees were significantly lower than those of the banks, with an average cost, on a per-ATM basis, of $150 for credit unions, $331 for large banks, and $340 for midsize banks. For more information on average per-ATM costs across the three types of operators in all cost categories, see appendix II.

Community bankers we interviewed reported that their leading costs were investments in hardware and software, largely to upgrade older machines for compliance with Americans with Disabilities Act (ADA) requirements, or to purchase new machines all together. Specifically, one representative told us his bank spent more than $52,000 to upgrade the software in the bank’s 26 ATMs, a cost of approximately $2,000 per machine. The community bankers noted that while the newer machines are more expensive, they offer the customer more functionality and value due to their enhanced capabilities, such as being able to scan and deposit checks. The other prevalent costs for the community bankers were fraud (prevention efforts and losses), repairs, processing, and network fees.

Cost data are more limited for independent ATM operators, making identifying key costs difficult. One large independent ATM firm that we surveyed reported that its top five calendar year 2011 per-ATM costs (as a percentage of all costs) were (1) rent, (2) infrastructure and processing, (3) cash services, (4) hardware and software investments, and (5) bank sponsorship costs. Meanwhile the smaller firm that we surveyed reported that its top five calendar year 2011 costs (as a percentage of total costs) were (1) hardware and software investments, (2) maintenance and repairs, (3) cash services, (4) infrastructure and processing, and (5) rent. In addition to the cost information gathered through the survey, we interviewed two small independent ATM firms, and—like the two firms that participated in the survey—they told us their key costs included cash services and processing, among others. In addition, we interviewed officials from another large independent firm who provided us with cost data that indicated that the firm’s top costs for calendar year 2011 were rent, cash services, and maintenance and repair.

Increasing Costs and Declining Revenues Are Prompting Some Changes in ATM Operations

Most operators included in our study—financial institutions and independent firms—reported that overall ATM costs have increased over the past 5 years and they expect that they will continue to do so. Ten financial institutions we surveyed reported that per-ATM costs had significantly increased in the past 5 years, ten reported costs had slightly increased, and five reported costs remained about the same. The cost drivers most frequently cited by survey respondents were upgrading to more versatile ATMs—with functions such as check-imaging—complying with ADA requirements, and upgrading software. Other cost drivers the financial institution representatives reported were increasing fraud prevention efforts, adding ATMs to their fleets, and paying more in network fees. As previously discussed, the community bankers we interviewed also indicated that ATM upgrades to comply with ADA requirements were a leading cost driver in calendar year 2011, and some said network costs had increased as well over the past 5 years. The two independent operators in our survey reported their costs had increased slightly over the past 5 years. One operator noted higher manufacturing costs as a driver and the other reported an increase in fuel prices (which increases the costs to transport cash to the terminals via armored carrier). The two independent operators we interviewed also said their overall costs have risen in the past 5 years, for armored carrier services and network fees. They also reported increased rent costs, among others. Some of the operators noted that the costs associated with certain actions could yield future savings. For example, while the cost of purchasing the newer machines has increased, those ATMs have improved technology, so service costs have declined. Similarly, one operator reported that with the expanded function of deposit-imaging, the newer ATMs have reduced paper costs.

Many of the operators told us that during that same 5-year period, where costs have increased, ATM revenues have decreased. As previously discussed, ATM operators collect revenues from fees charged during some ATM transactions. In our survey, 14 financial institution operators reported that their per-ATM revenues had decreased—6 said they had done so significantly, and 8 said slightly. In contrast, 6 operators reported that revenues remained about the same, and 4 reported a slight increase during that same period. The most frequently cited reason the operators gave for the decreased revenues was declining transaction volumes— both overall and among non-account holders, who typically would generate income for the ATM operator through surcharge fees. Some financial institution operators stated that transaction levels are down due to the greater availability of surcharge-free networks and consumers obtaining cash at point-of-sale transactions, among other things. Several of the community bankers we spoke with expressed similar views that ATM revenues, along with transaction levels, have decreased generally over the past 5 years. The two independent operators in our survey reported their revenues had significantly decreased over the past 5 years, but cited reductions in their interchange fee revenues as a primary factor. The two smaller independent firms we interviewed reported similar issues with reduced interchange revenues.

Looking forward, many of the operators indicated they expect that costs would continue to rise and that revenues would remain flat or decline in the future. For example, our survey results showed that 18 out of 25 financial institution operators anticipate ATM costs will increase in the future. The main drivers cited for these future increases are further investments in new and enhanced ATM terminals or upgrades that will be needed in order to comply with new or enhanced industry wide data security standards. The community bankers and one independent firm we interviewed expressed similar views that ATM costs will continue to rise. Similarly, of the ten financial operators that addressed future revenue trends in our survey, seven indicated they anticipate a decline, due primarily to fewer transactions. Likewise, one of the two independent firms that participated in our survey also said it anticipates future revenues will be flat.

ATM operators reported taking various steps to adapt to the rise in costs and decline in revenues. For example, two credit unions reported in our survey that they recently raised their surcharge fee amounts in response to rising costs. Another credit union reported it was being more prudent in placing ATMs in new locations by first performing extensive evaluation of traffic flows, surrounding competition, and associated costs before committing to a new location. One of the large banks noted that because average revenues per ATM will likely continue to decline as consumers continue to avoid incurring surcharges, the bank would focus more on serving its own customers with ATM placements. Finally, some of the community bankers we interviewed said that as ATM transaction levels decline, so will their investments in ATMs. The owner of one one independent ATM firm we interviewed told us that independent operators need to seek opportunities to diversify their portfolio of ATM services, such as establishing or expanding branding partnerships in order to increase revenues. He also noted that maximizing the number of transactions on a per-ATM basis will be important. One large independent firm reported in the survey that as interchange fees and resulting revenues decrease, merchants—in those cases where they set fees—will increase the surcharge amounts to make up the difference. However, as we previously discussed, there are many factors taken into account when setting fees, and several of the operators told us that setting fees too high, above neighboring competitors, could discourage consumers from using their ATMs.

Agency Comments

We provided a draft of this report to CFPB, FDIC, the Federal Reserve, NCUA, and OCC for their review and comment. CFPB, the Federal Reserve, NCUA, and OCC submitted technical comments which were incorporated where appropriate.

We are sending copies of this report to CFPB, FDIC, the Federal Reserve, NCUA, and OCC, interested congressional committees, members, and others. In addition, this report will be available at no charge on our website at http://www.gao.gov.

Should you or your staff have questions concerning this report, please contact me at (202) 512-8678 or cackleya@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Key contributors to this report are listed in appendix IV.

Appendix I: Objectives, Scope, and Methodology

This report reviews the fees paid by consumers when conducting automated teller machine (ATM) transactions, as well as the costs borne by ATM operators in providing those services. Specifically, the objectives of this report are to discuss (1) the business models for ATM operators— financial institution and independent firms—and how they set ATM fees, (2) the amounts of fees that consumers incur to conduct ATM transactions and how these fees changed over time, and (3) the reported costs of ATM operations for financial institution and independent ATM operators and how costs and revenues are expected to change.

To understand the history of ATMs, how ATM transactions are processed, and requirements for ATM operators, we reviewed prior GAO, regulatory, and industry reports on ATM fees and operations, and we interviewed relevant officials from the Board of Governors of the Federal Reserve System (the Federal Reserve), the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), the National Credit Union Administration (NCUA), and the Bureau of Consumer Financial Protection, commonly known as CFPB. In addition, we interviewed officials from five associations: American Bankers Association (ABA) and the Independent Community Bankers of America (ICBA), which represent various sectors of the banking industry; the National ATM Council and the ATM Industry Association (ATMIA), which represent independent ATM operators; and U.S. PIRG, a federation of independent, state-based, citizen-funded organizations that advocate for consumer interests. We also interviewed representatives from two national banks, a credit union, one large independent ATM firm, three electronic funds transfer (EFT) networks, and a financial institution that sponsors independent ATM operators.

In order to gather information on ATM costs and operations for smaller financial institutions and independent ATM firms, we conducted two group interviews with representatives from nine community banks and two interviews with smaller independent ATM firms. We identified these firms with assistance from ABA, ICBA, and ATMIA. In addition, we relied on information provided to us by ATMIA that described the composition of the independent operator market—specifically, the percentage of ATMs owned by operators versus those operated by merchants. This information could not be corroborated because no comparable data were available, either publicly or from the financial regulators and other industry sources we asked. However, we determined that our use of the information from ATMIA was appropriate because it is used to describe the independent ATM market and provide context.

To discuss the operations and costs for ATM operators, in addition to the interviews discussed above, we surveyed a nonprobability sample of financial institutions and independent firms that operate ATMs to collect information on

ATM operations and business models,

ATM transaction levels for calendar year 2011,

ATM costs for calendar year 2011 in 12 specific cost categories, overall ATM cost and revenue trends for the past 5 years and in the future, and factors ATM operators consider when setting ATM fees.

In order to gain cost and operational information from ATM operators of various sizes, we deployed a survey to the 10 largest banks and 10 largest credit unions (by asset size), 10 randomly selected midsize banks (with assets between $10 billion and $50 billion), and 4 large independent ATM firms (with 10,000 or more ATMs in their portfolios). To select the banks, we used data from SNL Financial—a private financial database that contains publicly filed regulatory and financial reports. We eliminated those that did not offer personal checking account services, as well as any online banks, since they generally do not maintain substantial numbers of ATMs. To select the credit unions, we obtained a list of the largest credit unions, by asset size, from NCUA. Because none of the regulators and business associations we spoke with were able to provide data on the total population of independent ATM operators, and no data are publicly available, we relied on estimates provided to us by one of the largest independent operators as to the size and geographic locations of the independent firms in the industry. We used that list to select the firms and were able to verify the information provided only in the cases where the firm responded to the survey.

For the survey questionnaire, we developed 12 categories (11 applied to all operators, and 1 was a cost incurred only by independent ATM operators) in order to capture information on a broad range of ATM operational costs. After we drafted our initial cost categories, we asked for comments from knowledgeable officials at the Federal Reserve, CFPB, ABA, and a consulting firm that works extensively with the independent ATM industry. We conducted six pretests to verify that (1) the questions were clear and unambiguous, (2) terminology was used correctly, (3) the questionnaire did not place an undue burden on respondents, (4) the information could feasibly be obtained, and (5) the survey was comprehensive and unbiased. We chose the six pretest institutions to include various sizes of ATM operators: two large banks, one large credit union, one midsize bank, and one large and one small independent ATM firm. We conducted the pretests over the telephone. We made changes to the content and format of the questionnaire after each of the six pretests, based on the feedback we received. For additional quality control, an independent evaluator within GAO also reviewed a draft of the questionnaire prior to its administration. Furthermore, we determined— based on the pretest with the smaller independent ATM firm—that the questionnaire would be overly burdensome for smaller firms to complete, potentially leading to minimal participation. For this reason, we limited our independent ATM firm sample population to firms with 10,000 or more ATMs.

We sent the questionnaire by e-mail in an attached PDF form that respondents could return electronically after marking check-boxes or entering responses into open answer boxes. Alternatively, respondents could return the questionnaire by mail after printing the completed form. Through e-mails and phone calls in advance of the questionnaire, we determined the best contact at each financial institution or independent firm. We e-mailed the questionnaire with a cover letter to financial institutions between July 31 and August 1, 2012, and independent ATM firms between September 5 and September 11, 2012. Three weeks later, we sent a reminder e-mail to everyone who had not responded. We telephoned all respondents who had not returned the questionnaire after 4 weeks and asked them to participate. Completed questionnaires were accepted until September 28, 2012, for financial institutions and October 31, 2012, for the independent ATM firms.

Questionnaires were completed by 9 out of 10 large banks, 9 out of 10 credit unions, 8 out of 10 midsize banks, and 2 out of 4 independent ATM firms. However, the number of respondents varied by question. Specifically, three large banks and one credit union completed sections of the questionnaire on ATM transaction levels and overall cost and revenue trends, but did not submit dollar amounts for the cost categories. As previously discussed, we made multiple contacts by telephone and e-mail to nonresponding institutions, but one large bank, one credit union, two midsize banks, and two of the independent ATM firms declined to participate.

The practical difficulties of conducting any survey may introduce errors, commonly referred to as nonsampling errors. For example, difficulties in interpreting a particular question, sources of information available to respondents, or data analysis can introduce unwanted variability into the survey results. We took steps in developing the questionnaire, and in collecting and analyzing the data, to minimize such nonsampling error. Almost all responses from the PDF forms were directly read into a data file, and two analysts independently verified that all information provided in the forms was read in correctly. For the two forms that could not be read into the file, one analyst keypunched the responses and another verified the entries. All data analysis programs were independently verified for accuracy.

We were not able to independently verify the cost information submitted by survey respondents. However, during the pretests and in the survey questionnaires we asked the respondents to tell us what sources they would or did use in calculating the costs they reported. Commonly cited data sources for the costs included internal accounting reports and billing statements from external third-parties, such as processors. Based on the information provided on the cost data sources and follow-up calls with survey respondents, we determined the data they reported were sufficiently reliable for our purposes.

Using the data provided by the survey respondents, we calculated the number and type of ATM transactions in calendar year 2011, the percentage of total costs represented by each cost category, and the average per-ATM costs for each category. Due to the sensitive and possibly proprietary nature of the information we collected with the survey, we aggregated the cost data at a high level and presented it in a way that prevents individual organizations from being identified. For the four questions that asked about past and future cost and revenue trends, as well as the factors the operators take into account when setting fees, we performed a content analysis. Specifically, we analyzed the responses for each question and then grouped them into like categories. A second evaluator reviewed the categories to ensure that we were consistent in our coding. In any instance where the second reviewer disagreed with a categorization, team members met to discuss the categories and reached consensus on the final category assignment for each response. The numbers of responses in each content category were then summarized and tallied. For more detailed information on the survey results, see appendix II.

To report on the amounts of fees that consumers pay to conduct transactions at financial institution ATMs, and how these fees changed over time, we purchased and analyzed data on surcharge and foreign ATM fees charged by banks and credit unions from 2007 through 2012 from Moebs $ervices, Inc. (Moebs), a market research firm that specializes in the financial services industry. Moebs collected its data through telephone surveys with financial service personnel at each sampled institution. In the surveys, callers used a “mystery shopping” approach and requested rates and fees while posing as potential customers. The statistical design of the survey for each year consisted of a stratified random sample by (1) institution type, (2) institution size, and (3) regions of the country defined by metropolitan statistical area and state.

The surveys were completed in June for each of the years we requested, except for 2010, when the survey was completed in July. Table 3 shows the number of financial institutions for which we obtained data.

Using the Moebs data, we computed weighted estimates and 95 percent confidence intervals of the percentage of institutions charging surcharge and foreign fees and weighted averages and medians of these fees. All percentage estimates presented in this report have a margin of error of +/- 5 percentage points or fewer, and all average and median estimates have a relative margin of error of +/-5 percent or less, unless otherwise noted. All differences between estimated values identified in this report are statistically significant at the 95 percent confidence level (p-value <= 0.05), unless otherwise noted. We also examined the differences between the estimated prevalence and average fees for type and size of financial institution, as well as geographic region and type of location of the financial institution separately. We did not conduct a multivariate analysis using all of these factors, control for all factors at once, or control for additional factors in our analysis. To evaluate trends in ATM fees, we adjusted the numbers for inflation to remove the effect of changes in prices. The inflation-adjusted estimates used a base year of 2012 and Consumer Price Index calendar year values as the deflator. We reviewed interviews and analysis from our previous work on bank fees to understand Moebs’ methodology for collecting the data and ensuring its integrity. In addition, we conducted reasonableness checks on the data we received and identified any missing, erroneous, or outlying data. We also worked with Moebs representatives to ensure our analysis of their data was correct. We determined that the Moebs data were reliable for the purposes of this report.

Since data on ATM fees charged by independent operators were not available, we engaged the services of another market research firm— Informa Research Services (Informa)—to conduct “mystery shops” at 100 judgmentally selected independent ATMs. We selected 10 ATMs in each of the top 10 metropolitan statistical areas. In order to ensure we captured fee information from a wide variety of locations frequented by consumers on a regular basis, we directed Informa to choose ATM locations that covered the following types of stores: drug stores, grocery stores, gas stations/convenience stores, and liquor stores. We excluded ATMs at airports or casinos—locations where most consumers would not go on a regular basis and for which, according to market research, there is typically a higher fee. We also excluded ATMs at supermarket chains that were likely to have a bank branch or an ATM operated by a bank or credit union on the premises because the focus of this part of our study was ATM fees charged by independent operators. Prior to making the final selections, Informa contacted the locations and verified that the ATMs were nonbank operated and that they were in working order. Locations having bank-operated or branded ATMs or machines that were not working were replaced with locations having independent and functioning ATMs in the same neighborhood, or as close as possible.

The mystery shop process involved having the shoppers go to each selected ATM and use their own debit card to conduct a transaction. The shopper documented (1) the surcharge fee amount that was posted on the ATM, (2) the surcharge fee amount that appeared on the screen after the transaction was begun, and (3) the surcharge fee amount printed on his or her receipt. The mystery shoppers entered this information into an online database. In addition, the shoppers took pictures of the ATM, screen, and their receipt, which Informa staff used to verify that shoppers correctly recorded the fee information and that the correct images were attached to the correct responses. Finally, the receipts were double checked against the location addresses to ensure that the shoppers visited the correct ATM. We then analyzed the data we obtained from Informa and computed the average surcharge fees charged to mystery shoppers for ATMs included in the sample. These data indicate what independent ATM fees were on a particular day in 2012 at those 100 ATMs and are not generalizable to the population of independent ATMs in the United States.

We reviewed documentation submitted by Informa to understand their methodology for collecting the data and ensuring their integrity. We conducted reasonableness checks on the data we received and identified 10 mystery shoppers who did not report a fee printed on their ATM receipt. We instructed Informa to conduct follow up on these cases, which included checking to see if the mystery shopper used a card that was part of a surcharge-free network, and in certain cases, to send an additional mystery shopper to the ATM. We also worked with Informa representatives to ensure our analysis of their data was correct. We determined that Informa’s data were reliable for the purposes of this report.

We conducted this performance audit from November 2011 to April 2013 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

Appendix II: Selected Results from GAO’s Survey on ATM Operator Costs and Operations

This appendix presents selected results from GAO’s survey on ATM operator costs and operations. We surveyed financial institution and independent ATM operators to collect information on their business operations and models, costs, and transaction levels for calendar year 2011, and what factors they take into account when setting fees. The survey was deployed to the 10 largest banks and credit unions (by asset size) and 10 randomly selected midsize banks (with assets between $10 billion and $50 billion). We designed and deployed a separate survey to four independent ATM operators that operate 10,000 or more ATMs, and we received responses from two. We were not able to independently verify the cost information submitted by survey respondents. However, we asked the respondents to tell us what sources they used in calculating the costs they reported. They relied on sources such as internal accounting reports and third-party bills. Based on the source information provided and follow-up call with survey respondents, we determined the data they reported were sufficiently reliable for our purposes. None of the costs or operations data we collected are generalizable to ATM operators at-large.

Table 4 summarizes the number and size of financial institution ATM operators that participated in our survey, as well as the number of ATMs they were operating as of December 31, 2011.

We collected similar information from independent ATM operators. In addition to owning and operating their own ATMs, independent ATM firms offer a wide range of ATM-related services to merchants and other entities that own ATMs, such as monitoring and maintaining appropriate cash levels in terminals and processing transactions. There are four primary business models for independent ATM operators; therefore our survey asked for information on the number of ATMs for each model. In both the “turnkey” and “merchant-assisted” business models, the independent operator owns the ATM. In the turnkey model, the operator is responsible for most aspects of the ATM’s operations, while the merchant is responsible only for providing a place to locate the ATM and the electricity to operate it. The merchant-assisted model is similar to turnkey, but the merchant provides and loads cash into the machines, as well as provides basic maintenance. In the “merchant-owned and loaded” and “merchant cash-assisted” models, the merchant owns the ATM and is responsible for many of the operations. However, in the merchant owned- and loaded model, the merchant manages and loads cash into the ATM, while in the merchant cash-assisted model, the independent operator handles those tasks. Table 5 summarizes the number of independent ATM operators that participated in our survey, as well as the number of ATMs they were operating under each business model as December 31, 2011.

Tables 6 through 10 summarize the reported number and types of calendar year 2011 ATM transactions for the financial institutions and independent ATM operators that participated in our survey.

Table 11 shows the average reported per-ATM cost for financial institutions for each of the cost categories in our survey questionnaire. We are not able to present similar results from the independent operator survey since only two out of four firms responded to our questionnaire. As shown below, among the data reported by the financial institutions, there was a high level of variability across the financial institution types. For example, there are several instances in which the per-ATM average cost for one financial institution type is much higher or lower in a given category than the average of the other financial institution types. There was also variability in the number of responses for each cost category, also shown in table 11. Finally, due to the small size and nature of the sample, these results are not generalizable to the larger population of U.S. financial institutions. The descriptions of the cost categories listed below are reproduced verbatim from the survey questionnaire, and all data reported are for calendar year 2011.

Appendix III: Analysis of the Estimated Prevalence and Average Amount of ATM fees from 2007 to 2012

In addition to the analysis of estimated average ATM fees and their prevalence for 2012 that we presented in the report, we also conducted this analysis for 2007 through 2011. This appendix shows the estimated prevalence and average amounts of ATM fees based on four factors discussed in the report: type, size, location, and geographic region of the financial institution. We analyzed data from Moebs $ervices, Inc. (Moebs), a market research firm specializing in financial services data, to assess ATM fees charged by financial institution ATM operators. Moebs provided data gathered through telephone surveys for each of the years 2007 through 2012, based on statistically representative samples of financial institutions. See appendix I for more detailed information on the characteristics of the data. We examined the differences between the estimated prevalence and average fees for type and size of financial institution, as well as geographic region and type of location of the financial institution, separately. We did not conduct a multivariate analysis using all of these factors or control for any additional factors in our analysis. Dollar amounts for ATM surcharge and foreign fees in this appendix are in 2012 dollars, calculated using the Consumer Price Index calendar year values. We analyzed the prevalence of charging a surcharge and foreign fee, and then we excluded financial institutions that did not charge a fee from our calculation of the average fees. We computed weighted estimates and 95 percent confidence intervals of the percentage of institutions charging surcharge and foreign fees and weighted averages of these fees.

Estimated Prevalence and Amounts of Surcharge and Foreign Fees by Type of Financial Institution

We evaluated two types of financial institutions: banks and credit unions. Tables 12 through 15 show the variation in estimated prevalence of surcharge and foreign fees and estimated average surcharge and foreign fees for banks and credit unions from 2007 through 2012.

We evaluated three sizes of financial institutions: small financial institutions with assets less than $10 million, medium financial institutions with assets between $10 million and $999 million, and large financial institutions with assets of $1 billion and more. Tables 16 through 19 show the estimated prevalence of surcharge and foreign fees and estimated average surcharge and foreign fees for small, medium, and large financial institutions from 2007 through 2012.

We evaluated four locations of financial institutions: large city, rural, small city, and suburban. Tables 20 through 23 show the estimated prevalence of surcharge and foreign fees and estimated average surcharge and foreign fees for financial institutions located in large city, rural, small city, and suburban locations from 2007 through 2012.

We evaluated four geographic regions of financial institutions: East, Midwest, South, and West. Tables 24 through 27 show the estimated prevalence of surcharge and foreign fees and estimated average surcharge and foreign fees for financial institutions located in the East, Midwest, South, and West from 2007 through 2012.

Appendix IV: GAO Contact and Staff Acknowledgments

GAO Contact

Staff Acknowledgments

In addition to the contact named above, Paul Schmidt (Assistant Director), Jim Ashley, Bethany M. Benitez, Katie Boggs, John Karikari, Jill Lacey, Kristeen McLain, Marc Molino, Christine San, Jennifer Schwartz, and Andrew Stavisky made significant contributions to this report.