Recently in Australia, the interchange fees on shared ATM transactions were removed and replaced by a fee directly set and received by the ATM owner ("direct charging scheme"). We develop a model to study how the entry of independent ATM deployers (IADS) affects welfare under the direct charging...

We compare the effects of the three most common ATM pricing regimes on consumers’ welfare and banks’ profits. We consider cases where the ATM usage is free, where customers pay a foreign fee to their bank and where they pay a foreign fee and a surcharge. Paradoxically, when banks set an...

We show that regulating the interchange fee at cost reduces banks’ incentives to deploy free ATMs over time. Simultaneously, more and more pay-to-use ATMs are deployed by independent ATM deployers. These results are consistent with the recent evolution of the British ATM market.