Tax Every ATM Transaction? That's Your Solution?

Can you imagine being taxed on every transaction you perform at an ATM?  You deposit checks or cash into your account at an ATM – charge!  You withdraw money at an ATM – charge!  You transfer money at an ATM – charge!  This seems to be the policy of the day, where developing economies are taxing their citizens to use an ATM to perform a transaction on their own money.  Recently such a tax was approved in Jamaica.  In addition, Cypress and Brazil have passed enacted their own ATM taxes.  A similar 1% ATM transaction tax was proposed recently in the U.S., but wasn’t approved.  

Todd Nuttall, CEO of Better ATM Services and author of this article writes, “No, cash isn't going away — and given events such as Jamaica's new tax, it could be responsible for some interesting new scenarios. What is clear is that the ever-changing climate has created many unique needs and behaviors that are yet to be understood and explored.  ” The thought of such a tax makes one’s head spin a bit. Certainly implementing such a tax would change the way people would think about using ATMs.  Consumers would certainly reduce their dependence on ATMs for cash access – and bank branches would once again become the mainstay for getting cash.  Better yet, consumers would turn away from ATMs and increase their usage of debit, prepaid and credit cards.  In a period where the government is trying to encourage savings, this policy would tempt the consumer to move to more digital payments, with a likelihood of increased spend and decreased savings.  Legislators need to think very carefully about the law of unintended consequences. 

Overview by Ron Mazursky, Senior Analyst, Debit AdvisoryServices 

Read the full story at ATM Marketplace.