Summary

The Gramm-Leach-Bliley Act of 1999 required GAO to explore the feasibility of providing real-time disclosure of fees charged to automated teller machine (ATM) cardholders during electronic fund transfers conducted at ATMs. Cardholders may be charged both a surcharge and a "foreign" ATM fee when they use an ATM that is not owned by the financial institution that issued the card. Although technically feasible, real-time foreign ATM fee disclosure would require extensive restructuring by all major participants in the ATM industry. Hardware and software would have to be revised and upgraded, and functions, such as message processing and calculation of ATM fees, would have to be modified. Most industry representatives could not offer precise estimates of the costs or the time frames associated with such changes, but estimates for software and hardware changes alone ranged from $5 million for a large third-party processor to tens of millions of dollars for large banks, with estimates from two to three years for implementation. The potential consequences for foreign fee disclosure may offset consumer benefits. Few consumer complaints have been made about fee disclosure, consumer groups' concerns are more focused on the fairness of surcharges, and surveys suggest that only a minority of ATM cardholders pay foreign fees. A requirement for real-time foreign fee disclosure could produce unintended consequences, which GAO believes could offset any potential benefits of disclosure.

GAO noted that: (1) according to ATM industry representatives, real-time foreign ATM fee disclosure is technically feasible but would require extensive restructuring by all major participants in the ATM industry; (2)they stated that extensive alterations to the current infrastructure - hardware and software systems - would be needed to support both the real-time foreign fee disclosure scenarios GAO examined in detail and more simplified real-time disclosure options; (3) U.S, ATM system is built on technology that allows an ATM cash withdrawal or other electronic fund transfer activity to be performed with a single message transmission for authorization and settlement of the transaction; (4) to provide real-time foreign ATM fee disclosure, the ATM industry could adopt one of several possible disclosure scenarios; (5) each of these scenarios would require card-issuing banks, networks, and ATM owners to revise and upgrade their hardware and software, in addition to modifying functions such as message processing, calculation of ATM fees, and stand-in processing; (6) most of the industry representatives GAO contacted indicated that there were too many unknowns, including dependencies on other industry participants, for them to estimate with any precision the costs or timeframes involved with implementing real-time ATM fee disclosure; (7) cost estimates, for software and hardware changes alone, ranged from $5 million for a large third-party processor to tens of millions of dollars for large banks; (8) time frame estimates ranged from 2 to 3 years to implement real-time ATM fee disclosure; (9) some industry representatives suggested that the burden of real-time fee disclosure might fall more heavily on smaller firms and organizations; (10) if consumers are unaware of foreign fees for ATM transactions or dissatisfied with the way they are disclosed, then they might benefit from real-time fee disclosure; (11) however, the banking regulators reported that they received very few complaints on the disclosure of ATM fees; (12) some ATM industry representatives suggested other options for enhanced disclosure of foreign fees that would cost less than real-time disclosure; and (13) they suggested augmenting the existing required written disclosure with more prominent written reminders in monthly statements or modifying the general statement on the ATM screen that a consumer's bank may levy a fee in addition to the surcharge amount to include an average or range of the foreign fee amount.