Business Models and Pricing Strategies in the Market for ATM Withdrawals

Automated Teller Machines (ATMs) play a crucial role in retail banking as they represent the primary cash access points for customers. However, the ongoing digitalization of retail payments has put pressure on the ATM industry, raising concerns about its sustainability. We describe the main business models adopted in Europe by ATM service providers, with a special focus on their pricing strategies. We then estimate the price elasticity of the demand for cash withdrawals with a partial adjustment model using data on a panel of Italian banks from 2015 to 2020. Our results show that an increase in disloyalty fees would reduce withdrawals from other banks, leaving the overall demand essentially unchanged. This outcome may reflect a potential shift of consumers towards withdrawals from their own bank as well as cheaper alternative distribution channels