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Canada banking industry fights back against NDP ATM fee motion

A man withdraws money from an ATM machine outside of a bank in Cairo, December 31, 2013. Almost half of a sample of Middle East-based fund managers expect to raise equity allocations to Egypt in the next three months, according to the latest monthly Reuters survey of leading fund managers in the region. REUTERS/Stringer (EGYPT - Tags: BUSINESS) (REUTERS)

Paying money to access your own hard-earned cash is frustrating. No question.

But are we ready for politicians to step in and put a limit on Automated Teller Machine fees charged by banks?

The federal New Democrats are banking on enough Canadians answering “yes” to that question to score the party some much-needed political points and put an end to what it calls an “unfair” banking practice resulting from an uncompetitive marketplace.

“No one should have to pay $2 or $3 to withdraw their own money from a bank machine,” said NDP consumer affairs critic Glenn Thibeault in a media release issued by the opposition party on the eve of Monday’s debate on the issue in the House of Commons.

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The party is seeking to cap the dreaded fee at $0.50, arguing it costs the banks only $0.36 to process each transaction.

Armed with statistics of their own, the banks shot back Monday saying how much and how often ATM fees are charged is entirely under a customer’s control.

According to the Canadian Bankers Association (CBA), 75 per cent of banking customers deliberately use ATMs operated by their own financial institution to avoid what the banks refer to as “convenience” fees.

Most banks allow free ATM withdrawals for their customers on a limited or unlimited basis, depending on an individual’s account plan.

Of course, you don’t have to be a customer of a particular bank to access funds through an ATM, and that’s where most of us get stung.

Data supplied by the Financial Consumer Agency of Canada (FCAC) indicates it can cost anywhere from $1.50 per transaction to use an ATM that is not owned by your financial institution to $7.90 at a privately-operated machine.

The CBA, in an email to Yahoo Canada Finance, said fees charged by banks to non-customers are typically in the range of $1.50 to $2 per transaction. The fees are made clear at the outset and it’s up to a customer to go ahead with a transaction.

“This is no different than buying milk at a convenience store rather than a grocery store. Customers know that they will pay more at a convenience store but make the choice of paying for that convenience,” the organization wrote.

As for that 36-cent transaction-cost figure cited by the NDP, the association said:

“The cost would be difficult to calculate and could vary by bank. When you’re looking at costs, you have to factor in the cost of buying an ABM, installation and repairs, keeping the software updated and loading it with cash."

The battle against banking fees has been on the NDP’s agenda since 2007 when Jack Layton was at the helm. The issue has been a primary focus for current party leader Thomas Mulcair in recent weeks as he toured the country to talk about “affordability.”

The FCAC offers several tips on its website for those of us who want to avoid incurring ATM transaction fees.

Among them, the agency recommends we ask for cash back at a store.

“Some merchants do offer that – some at no costs, others may charge a fee,” said agency spokeswoman Julie Hauser.

The CBA said increasing access to debit-payment options at restaurants, grocery stores and bars has reduced demand for ATM cash withdrawals by almost 100 million over five years.