In Australia, interchange fees on shared ATM transactions have been recently removed and replaced by usage fees directly set and received by ATM owners. We develop a model to study how entry of independent ATM deployers (IADs) affects welfare under the “direct charging scheme.” We show that...

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

We compare the effects on welfare of the three most common regimes for pricing shared ATM transactions: (i) free usage, (ii) foreign fees, and (iii) foreign fees and surcharges. Paradoxically, banks' profits decrease each time banks set an additional fee while consumers' welfare is higher when...

We develop a model to study the deployment of shared automated teller machines (ATMs) by banks when an interchange system compensates them for processing foreign withdrawals. The interchange fee is chosen collectively by banks and it is paid by the withdrawer's bank to the ATM-owning bank. We...