ATM statistics – are we slipping back into our old ways?

The introduction of ATM direct charging in March 2009 has been one of the more public experiments in consumer behaviour within Australian retail payments. With three and a half years of statistics now available, we are developing a clearer view of its impact.

On the supply side, direct charging has accompanied a rise in the number of ATMs. There were 25,000 ATMs in Australia in mid-2008 and now there are over 30,000.

Despite more ATMs, direct charging has also seen a contraction in the number of withdrawals, with a drop by about 30 million withdrawals between 2008-09 and 2009-10. While this decline coincides with the GFC, the average withdrawal amount rose slightly during this period – suggesting slightly fewer but slightly larger withdrawals from ATMs as a response to direct charging.

There have been other consumer responses. One has been the embrace of EFTPOS cash-out. Prior to direct charging less than 20 per cent of cash withdrawals were EFTPOS cash-out.

However, the most dramatic change has been the shift away from foreign ATMs towards own institution ATMs.

Upon closer examination, there appears to have been three phases. The first phase was a sharp spike with the introduction of direct charging in March 2009. From February to March 2009, the number of “own ATM” transactions as a percentage of all ATM transactions jumped from 55.5 per cent to 61.8 per cent.

The second phase saw this new paradigm holding firm and indeed a gradual increase in own ATM use, peaking in March 2011 at 62.6 per cent of all ATM transactions.

However there now appears to be a third phase, where own ATM use appears to be slipping back below 60 per cent of all ATM transactions. The figures between March 2011 and September 2012 suggest the initial “sticker shock” of the direct charge and the associated behavioural change is starting to wear off. Another year or so of data would confirm this.

Source: RBA

If this hypothesis is correct, then consumers are indeed slipping back into their old ways. It suggests, not surprisingly, that responses to a new pricing has an initial response, then a gradual adjustment of behaviours in response but, as time passes, the effects of the new pricing eventually wear off. Slowly but surely consumers revert back to patterns similar to those seen before the change.

A new pricing paradigm may have a short to medium term effect on behaviours but, longer term, non-price considerations may reassert. More data on direct charging over the coming years should provide an even clearer picture as to the outcome.