Advertisements on ATMs

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So there might be advertising on ATMs. See here. Customers using a ‘foreign ATM’ can avoid the fee by volunteering to watch an advertisement. It will be interesting to see how this plays out. The implicit rate of pay ($2 saved for a 30 second advertisement is an effective wage of $120 per hour) is pretty damn good. So a lot of customers may be tempted. But there is a negative externality here. If I watch an advertisement for 30 seconds, I hold up anyone queuing behind me. They lose 30 seconds of time for no reward.

What will the outcome be? Well ATM reform has led to a significant increase in awareness of ATM fees but direct competition has been muted (see here). ATM providers use a variety of ways to tell customers about their location (e.g. smart phone apps) but there is not a lot of direct advertising (“Don’t use ‘Quickcash’. At ‘Moneyfast’ ATMs you only pay $1”). This may reflect that the fee of $2 is small but annoying so consumers like to avoid it over time, but do not worry so much on a transaction-by-transaction basis. But advertisements may change that.

The other factor is cultural. In Australia we are big on queuing and taking turns. Anyone who has travelled overseas quickly realises that Australians are a lot more particular about queuing than the citizens of most countries. And we tend to feel guilty about making people wait. So advertisements may place consumers in a dilemma they prefer to avoid. Do I save the $2 and feel guilty about making others wait, or do I pay the $2? The end result may be that people shun the ATMs with advertisements – not wanting to be faced with an uncomfortable choice!

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