Banks should waive ATM fees for benefit programs
America’s poorest people are paying millions of dollars a year in fees just to access government benefits they are supposed to be receiving for free.
More than 40 million Americans rely on state-administered Electronic Benefits Transfer programs to receive food stamps, supplemental nutrition and cash transfer payments. Benefits are accessed through a card used by the recipient to pay for food and access cash at bank ATMs.
For recipients who depend on EBT programs to survive, the hidden cost of these free benefits has always been in the fees they pay while using ATMs. The average EBT cardholder receives $125 a month in supplemental food benefits, which works out to about $1.40 a meal. The average ATM withdrawal is now more than $3.00, meaning that a single ATM visit costs the equivalent of two meals.
Financial institutions that participate in state-administered EBT programs have a unique opportunity to put more money in the pockets of the nation’s neediest by eliminating surcharge fees on their ATMs.
This is already happening in California, where a coalition of community groups and social service providers — known as the EBT Avengers — came together to encourage banks to provide free ATM access to low-income families who receive EBT benefits through the state. In that state, EBT card users were paying more than $20 million per year on ATM access fees according to the California Reinvestment Coalition.
Seven of the top 10 banks in California — also including Bank of the West, Comerica, Rabobank and Citibank — will now provide the state’s EBT cardholders with statewide, surcharge-free ATMs.
While banks play a critical role in ensuring surcharge-free ATM access for benefits recipients, state governments have an important role as well.
When California was seeking a new EBT administrator in 2016, it made it a requirement that the winning company provide surcharge-free access through two major ATM networks.
The pioneering work of these forward-looking states, financial institutions and community groups is creating nationwide momentum for surcharge-free ATM access for citizens who are in need. It’s part of a broader movement globally around financial inclusion and ensuring that everyone has access to useful and affordable financial products.
We hope that more banks will join this cause and continue the momentum. It’s the right thing to do.