Australia's 2009 ATM Reforms: Transparency for Transparency's Sake

This paper reviews the effectiveness of the reforms to the Australian ATM of early 2009. Data indicate that consumers have acted on the more transparent display of fees by shifting their transactions towards fee-free ATMs provided by their own financial institution, thereby reducing the fees they pay, at the cost of added travel costs. But although consumer surplus has increased, the overall result has been a less-efficient use of the ATM network: banks have lost the whole fall in fee revenue, while consumers have gained only the fee saving, less the extra travel costs. Further, the promise of lower fees did not eventuate, and there was no significant increase in availability of ATMs. Nonetheless, the reforms have been hailed as a success because of the increased pricing transparency in the market. This paper questions the worth of increased transparency when prices are inefficient and welfare loss is the consequence.