12/02/2011 10:04 am ET Updated Dec 05, 2011

Clinton Townsend's ATM Fee Fix: Watch Ads Instead Of Paying Charge [UPDATE]

What if there was a simpler solution to avoiding an ATM fee than running all over town looking for an in-network machine? One Brooklyn, New York-based entrepreneur says he found it.

Instead of paying a fee to use an out-of-network ATM fee, Clinton Townsend, the founder of Free ATMs NYC, proposes consumers watch an ad, the New York Daily News reports. Townsend has already installed one of the free ATMs at a New York City music venue. Townsend's business plan may be coming at just the right time. Americans spent $7.1 billion in ATM fees in 2010, according to Oliver Wyman, a consulting firm.

(UPDATE: This post has been updated to include comments from Clinton Townsend. )

Towsend, whose company is independent from banks, said the ads don't hold customers up because it doesn't take any longer for his ATMs to process a transaction than it takes a bank to respond to a request. He added, that the company considers both whether a location will offer a good demographic for advertisers and consumers' safety before choosing a location.

But if consumers would prefer paying a fee to watching an advertisement, Townsend's ATMs give them the option to do so, he said. If they decide to pay the fee, ATM users have the option of donating part of it to a charity.

If past banking experiments are any indication, Townsend's idea may take off. JPMorgan Chase abandoned a test program where the bank charged non-Chase customers in a few states $4 or $5 to use the banks ATMs after just two months, according to CNNMoney.

The bank went back to charging its usual $3 fee for out of network customers after determining that the higher fees weren't generating enough revenue to justify expanding the program nationwide. Still, the $3 fee is higher than the average charge in the cities with the highest ATM fees, according to

But Chase's decision to just lower its ATM fee likely won't satisfy consumers. Seventy-Seven percent of respondents to a November Ally Bank survey said that they don't think it's okay for a bank to charge an ATM fee.

Consumers aren't the only ones complaining about high ATM fees. ATM operators filed a lawsuit against Visa and Mastercard in October, alleging that the credit card companies' rules prevent the operators from offering their services at a lower price.

Banks have been quietly boosting fees in recent months in an effort to recoup revenue lost due to new limits on swipe fees, overdraft fees and other charges that took effect as part of the Dodd-Frank financial regulations.

Bank of America announced in September that it would charge customers $5 to use their their debit card for purchases starting in 2012. But the bank and others ultimately abandoned plans to charge for debit card use after criticism came pouring in.



Here are the cities with the highest ATM fees:

Cities with the highest ATM fees: