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Independent service operators in ATM markets

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  • Wenzel, Tobias

Abstract

This paper studies the impact of entry of non-banks (termed Independent Service Operators, ISOs) into ATM markets. We compare two different regimes by which the ISO may generate income: i) The ISO receives interchange fees and ii) the ISO charges consumers directly. We find that due to the entry of an ISO the size of the total ATM network increases independent of the way the ISO is financed. Account fees increase if the ISO receives interchange fees and decrease if the ISO charges consumers directly. Consumers may not benefit from the entry of the ISO. If a regulator can control the interchange fee, entry by an ISO financed through interchange fees increases consumer surplus, while the entry of a surcharging ISO decreases consumer surplus.

Suggested Citation

  • Wenzel, Tobias, 2013. "Independent service operators in ATM markets," DICE Discussion Papers 96, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    • Handle: RePEc:zbw:dicedp:96
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    References listed on IDEAS

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    1. Chung, Tai-Yeong, 1996. "Rent-Seeking Contest When the Prize Increases with Aggregate Efforts," Public Choice, Springer, vol. 87(1-2), pages 55-66, April.
    2. Jocelyn Donze & Isabelle Dubec, 2009. "Paying For Atm Usage: Good For Consumers, Bad For Banks?," Journal of Industrial Economics, Wiley Blackwell, vol. 57(3), pages 583-612, September.
    3. Wenzel Tobias, 2013. "Naive Consumers, Banking Competition, and ATM Pricing," Review of Network Economics, De Gruyter, vol. 12(3), pages 271-286, October.
    4. Knittel, Christopher R. & Stango, Victor, 2011. "Strategic incompatibility in ATM markets," Journal of Banking & Finance, Elsevier, vol. 35(10), pages 2627-2636, October.
    5. Donze Jocelyn & Dubec Isabelle, 2011. "ATM Direct Charging Reform: the Effect of Independent Deployers on Welfare," Review of Network Economics, De Gruyter, vol. 10(2), pages 1-23, June.
    6. Matutes, Carmen & Padilla, A. Jorge, 1994. "Shared ATM networks and banking competition," European Economic Review, Elsevier, vol. 38(5), pages 1113-1138, May.
    7. Mcandrews James J., 2003. "Automated Teller Machine Network Pricing - A Review of the Literature," Review of Network Economics, De Gruyter, vol. 2(2), pages 1-13, June.
    8. Donze, Jocelyn & Dubec, Isabelle, 2006. "The role of interchange fees in ATM networks," International Journal of Industrial Organization, Elsevier, vol. 24(1), pages 29-43, January.
    9. Stein, William E, 2002. "Asymmetric Rent-Seeking with More Than Two Contestants," Public Choice, Springer, vol. 113(3-4), pages 325-336, December.
    10. Alexander Matros, 2006. "Rent-seeking with asymmetric valuations: Addition or deletion of a player," Public Choice, Springer, vol. 129(3), pages 369-380, December.
    11. Ioana Chioveanu & Ramon Fauli‐Oller & Joel Sandonis & Juana Santamaria, 2009. "Atm Surcharges: Effects On Deployment And Welfare," Journal of Industrial Economics, Wiley Blackwell, vol. 57(3), pages 613-635, September.
    12. Nadia Massoud & Dan Bernhardt, 2002. ""Rip-Off" ATM Surcharges," RAND Journal of Economics, The RAND Corporation, vol. 33(1), pages 96-115, Spring.
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    Cited by:

    1. Wenzel Tobias, 2013. "Naive Consumers, Banking Competition, and ATM Pricing," Review of Network Economics, De Gruyter, vol. 12(3), pages 271-286, October.
    2. Markkula, Tuomas & Takalo, Tuomas, 2021. "Competition and regulation in the Finnish ATM industry," BoF Economics Review 8/2021, Bank of Finland.
    3. Kopsakangas-Savolainen Maria & Takalo Tuomas, 2014. "Competition Before Sunset: The Case of the Finnish ATM Market," Review of Network Economics, De Gruyter, vol. 13(1), pages 1-33, March.

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    More about this item

    Keywords

    Banking; ATM networks; Investment;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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