What are ATM networks and how do they work?

Quick insights

• ATM networks are groups of ATMs owned and operated by one or more financial institutions, sometimes with low- or no-fee transactions for customers of that institution.
• Using in-network ATMs can help keep your transaction fees to a minimum.
• Most banks make it easy to find in-network ATMs using their website or app.

If you have a bank debit card or credit card, you may have withdrawn money at an ATM once or twice—or perhaps it’s an everyday activity. You may be wondering why the ATM at your local bank branch is free, while one at your nearest gas station charges a fee. In this article, we’ll describe how ATM networks work, where ATM fees come from and ways you can keep transaction costs in check.

The introduction of ATMs as “automated tellers”

ATMs were invented in the late 1960s. Before that, the only way to deposit and withdraw money from your bank account it was by interacting directly with a bank teller. This practice became harder for banks to maintain as the economy surged, and consumers needed banking services more frequently. As a result, banks looked to embrace new technologies, and it wasn't long before networks of “Automatic Teller Machines” (ATMs) went online.

What is an ATM network?

Modern ATMs belong to a limited number of different “networks,” which are owned and operated by financial institutions. Those could be large individual banks, groups of banks, dedicated payment processing companies and other kinds of financial institutions. It can be costly for banks to implement and manage ATM activities; Participating in an ATM network is one way for a bank to reduce operational costs and manage risks.

How bank ATMs work

When you open a bank account and receive your card, your card is typically compatible with a specific ATM network. It can have anywhere from a few dozen to several thousand associated ATMs. When customers from one bank visit an ATM from another, the customer’s bank may have to pay a small fee for the transaction. That fee is passed on to the customer in the form of an out-of-network fee, making in-network withdrawals generally more cost-effective.

How much are ATM fees?

It is common for out-of-network ATMs to charge a flat fee for withdrawals, often ranging from $1.50 to $3.50, and sometimes even higher, with the average total cost reaching around $4.73. Because networks vary in size, you may find that some banks advertise the size of their ATM network as a major selling point for their accounts. As a customer, more in-network ATMs nearby can help you keep costs low, especially if you don’t live near a brick-and-mortar branch location where you can conduct business with a live teller.

ATM fee reimbursements

Some banks waive ATM fees or offer reimbursements up to a certain amount. This is often the case with digital banks and credit unions, which may have few or zero in-person branches where you can transact for free. These features may be clearly advertised in your account, but it’s important to read the terms and conditions for full understanding and practices.

Using ATMs internationally

ATM fees are generally much higher when you use an ATM outside of your home country. Out-of-network ATM fees are often more expensive due to the increased operational costs and risks between international banks. You may also have to pay other fees, such as a foreign transaction fee or currency conversion charge.

To keep these costs low, you may want to withdraw cash and convert your currency at a bank branch in your home country before traveling. You can also check to see if your bank waives international fees or offers reimbursements.

How to find ATMs in your network

Many banks make it very easy to identify which nearby ATMs are in your network using their website or mobile app. You may also come across ATMs that are visibly branded for your bank out in the wild. Bank ATMs can be placed almost anywhere, including:

• Bank branches
• Grocery stores
• Gas stations
• Transportation hubs
• Entertainment venues

Businesses generally welcome the addition of an ATM as a source of revenue (they may take a percentage of transaction fees) as well as increased foot traffic. Keep in mind that ATMs in unmonitored locations have a higher risk of tampering by fraudsters; transacting with a contactless card is one way to help avoid skimming devices.

In conclusion

ATM networks are essential to providing consumers with quick and consistent access to their money. Regardless of where you bank, it’s important to read all terms and conditions related to your account to keep network-related fees to a minimum.