In Japan, there is an extra charge of ?100 (about $1.20) if you withdraw cash from an ATM evenings or weekends. One wise-guy friend suggested that perhaps this is to give the capital equipment the same overtime pay as received by workers. Seriously, though, the only possible cost-based justification for this price discrimination in ATM usage is that workers might have to make sure the machines don’t run out of cash at those times, and their labor requires overtime pay. But surely the same thing is true in the U.S. and Europe, and I don’t see this ATM surcharge there. A more likely explanation is demand-based price discrimination – the banks realize that people have fewer alternatives (no bank tellers available) at those times and price accordingly. Maybe – but the biggest cost to banks is tellers’ time, so I should think that they would do anything to encourage ATM usage, regardless of time of day or week.
Do Japanese ATMs Price Discriminate?
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In my experience, American banks simply let ATMs run out of money on the weekend. Perhaps the Japanese are increasing the price based on limited supply?
“I should think that they would do anything to encourage ATM usage, regardless of time of day or week”
Don’t look at this as an extra charge during the nights/weekends, look at it as the normal charge, but to push people to use the ATM instead of the more expensive teller they give an ATM discount during the day.
In Europe the presence or absence of surcharges is based on location, rather than time. And sometimes which card you stick into the machine. The justification for the surcharges is usually “interbank charges” but these are just as arbitrary as time-based surcharges – as long as the EU didn’t sue them for operating a cartel the banks could just get together and agree to waive them on the grounds that they average out to zero in the long term.
As so often, one suspects that economists will be left scratching their heads until they accept that “whatever the market will bear” is a valid pricing principle in business….
It may be a reflection of the population using ATMs at any given time.
Those most insensitive to the fee (i.e. those with more disposable income) are the salary men and women who work during the day and are therefore not using ATMs — at least not nearly as frequently as they do in the evenings and on weekends.
Long hours at your desk means you’re not out making purchases that require a trip to pick up extra cash.
I always figured that banks will do anything to attract users in the US, free cash for signing up, special discounts for referring a friend, etc.
Here in Europe, Spain specifically, I was surprised to learn that many banks charge a monthly fee for service. !?
-Christine
Its more a matter of having a late night ATM is a relatively new thing. Brought about by Citi bank, if I remember my business class correctly. There was a strong fight to keep ATMs closed on nights and weekends and to this day in the country a lot of them are closed. There was a argument in the Diet about how people shouldn’t need them 24 hours and someone said something along the lines of his mother doesn’t need a teller that late at night. If you live anywhere except a large city you have to be prepared for a long holiday like Golden Week where the banks will only be open one day in seven. Many a new exchange student has had to bum money from friends to get them through those times as credit cards & debit cards aren’t as widely used as they are here.
“the banks realize that people have fewer alternatives (no bank tellers available) at those times and price accordingly”
combine your above observation with your following analysis
” but the biggest cost to banks is tellers’ time, so I should think that they would do anything to encourage ATM usage, regardless of time of day or week.”
Now, yes they have a strong incentive to encourage people to use ATM’s but that’s just during weekdays when staff is there. Not on weekends and evening. That’s when they can charge a higher fee due to fewer alternatives the customer have.
@Ian Kemmish
“the banks could just get together and agree to waive them on the grounds that they average out to zero in the long term”
Banks wouldn’t want to do waive these if competition (for attracting new customers) doesn’t force them to.
If I go to your bank’s ATM I pay an extra couple bucks; if you go to my bank’s ATM you pay an extra couple bucks. If you calculate that as a two party transaction then yes, it equals out… however when you include all four parties in the calculation you’ll realize that the only things equal here are that you and I are each equally a couple bucks poorer and the banks are each equally a couple bucks richer.