ATM Direct Charging Reform: the Effect of Independent Deployers on Welfare

In Australia, interchange fees on shared ATM transactions have been recently removed and replaced by usage fees directly set and received by ATM owners. We develop a model to study how entry of independent ATM deployers (IADs) affects welfare under the direct charging scheme. We show that paradoxically, IAD entry benefits banks. Entry benefits consumers when they strongly value the associated growth of the ATM network.