Senate Banking, Housing and Urban Affairs Committee

My name is Tony McEwen. I am Executive Vice President Visa U.S.A. for deposit and cash products and a director and Executive Vice President of the PLUS ATM network. PLUS is a wholly-owned subsidiary of Visa U.S.A. and has approximately 9000 financial institutions participating.

As an "ATM network, PLUS itself does not own or operate ATMs, nor does it issue ATM access cards. PLUS provides the systems and operating infrastructure that link financial institutions which install, own or operate ATMs and those which issue ATM access cards associated with a consumer's account. By associating with PLUS, financial institutions "share" their more than 140,000 ATMs in the United States and 184,000 more overseas. They do so under a common set of rules and display a common service mark, the PLUS logo. There are both national ATM networks such as PLUS, and regional ATM networks such as NYCE in New York. These regional networks carry the bulk of shared ATM network volume. PLUS processes only about 2% of switched ATM transactions in the United States. PLUS has no role whatever in setting the financial or other terms by which individual financial institutions price ATM access cards or ATM withdrawal services to consumers. In addition, any levying of ATM access fees provides no financial benefit to PLUS since the company derives no revenue from such fees.

From the date it was founded in 1982 until April 1996, PLUS did not permit its banks to levy ATM access fees on customers from other banks who used their ATMs under the PLUS service mark. We wanted to establish price predictability. Second, we were concerned that both the PLUS brand and the perceived value of the ATM access card could suffer with ATM access fees. But there were other competing goals:

• Availability of ATMs - Permitting ATM access fees may help increase the number and location of ATMs that consumers can access. In the early years of the network, most new machines were deployed at, or adjacent to, bank premises. In later years, most new machines were and are deployed off-premise where many costs can be higher.
  
  
• Consumer convenience and choice - New ATM deployment freed consumers from banking hours and premises. Consumers still have a number of choices to avoid ATM access fees: they can still go to their banks and their branches and the ATMs owned by their particular banks, or they can use an ATM that does not have an access fee. Consumers also have a number of other payment mechanisms, such as cashing checks or using debit cards, credit cards, travelers' checks, and regular checks. But if consumers choose to use their ATM cards elsewhere, they have convenient places to exercise their choices.

PLUS changed its rule as the balance between goals shifted. More and more states intruded into PLUS's private decision-making-g- process. PLUS is the only ATM network to be sued in two antitrust lawsuits in Federal Court filed by our own members challenging our "no ATM access fee" policy. We spent millions of dollars defending these cases and exposed the company to treble damages. A series of state laws were enacted across the country forbidding our policy and our ban on ATM access fees-the very same ban some are advocating today. Note the irony: A state legislature forced the PLUS network to accommodate these fees or face civil penalties. Over the ensuing years almost 1/3 of the states had effectively invalidated the PLUS no ATM access fee" policy.

Disclosures. Having been forced by governmental action to allow these fees, PLUS immediately imposed a number of comprehensive disclosure obligations. These disclosures are in addition to those disclosures already provided to consumers by the bank that issued the ATM card to the customer, which are already governed by relevant laws, such as the Electronic Funds Transfer Act and Regulation E. These disclosures must be given before the consumer ever uses the card to access the account. In our view, these required on-site ATM disclosures, together with the disclosures that must be made by card issuing banks, are more than adequate to inform the consumer in advance of all material information needed to allow the consumer to decide whether to choose to complete a particular transaction.

ATM Deployment. We heard from our member banks that our two principal concerns were outweighed by equally legitimate consumer needs: for more ATMs and for the placement of ATMs in remote, rural locations and in expensive locations such as airports, shopping malls, and sport stadiums where ATM operators must pay high rental costs to place their ATMs.

In the years since PLUS changed its rule, the number of ATMs deployed throughout the country has burgeoned. In 1996 alone, more than 33,000 were shipped, when orders for new ATMs increased by 40%. Today, about half of the nation's 93,000 convenience stores have ATMs, and 63% of the supermarkets. High rent or low volume locations can now support an ATM. About 75% of new ATM sites are off bank premises. This means consumers have the opportunity to choose to have quick access to their cash in places where it was previously unprofitable to place an ATM.

PLUS does not pretend it has made the only decisions that could have been made over the years. But we believe that our decisions have increased account access choices for, and thereby benefited, consumers. ATM fees are one of the many product features on which financial institutions compete with each other for a consumer's business. As a result, there are a wide range of account packages with pricing and features that suit an individual consumer's needs. We encourage consumers to evaluate their individual needs, shop around, and choose the banking services and packages that are right for them. We remain more confident than ever that even more government intrusion into private sector pricing decisions, at least in the absence of market failure, is unquestionably the wrong course.

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