Do Japanese ATMs Price Discriminate?

In Japan, there is an extra charge of ?100 (about $1.20) if you withdraw cash from an ATM evenings or weekends. One wise-guy friend suggested that perhaps this is to give the capital equipment the same overtime pay as received by workers. Seriously, though, the only possible cost-based justification for this price discrimination in ATM usage is that workers might have to make sure the machines don’t run out of cash at those times, and their labor requires overtime pay. But surely the same thing is true in the U.S. and Europe, and I don’t see this ATM surcharge there. A more likely explanation is demand-based price discrimination – the banks realize that people have fewer alternatives (no bank tellers available) at those times and price accordingly. Maybe – but the biggest cost to banks is tellers’ time, so I should think that they would do anything to encourage ATM usage, regardless of time of day or week.


In my experience, American banks simply let ATMs run out of money on the weekend. Perhaps the Japanese are increasing the price based on limited supply?


"I should think that they would do anything to encourage ATM usage, regardless of time of day or week"

Don't look at this as an extra charge during the nights/weekends, look at it as the normal charge, but to push people to use the ATM instead of the more expensive teller they give an ATM discount during the day.

Ian Kemmish

In Europe the presence or absence of surcharges is based on location, rather than time. And sometimes which card you stick into the machine. The justification for the surcharges is usually "interbank charges" but these are just as arbitrary as time-based surcharges - as long as the EU didn't sue them for operating a cartel the banks could just get together and agree to waive them on the grounds that they average out to zero in the long term.

As so often, one suspects that economists will be left scratching their heads until they accept that "whatever the market will bear" is a valid pricing principle in business....


It may be a reflection of the population using ATMs at any given time.

Those most insensitive to the fee (i.e. those with more disposable income) are the salary men and women who work during the day and are therefore not using ATMs -- at least not nearly as frequently as they do in the evenings and on weekends.

Long hours at your desk means you're not out making purchases that require a trip to pick up extra cash.


I always figured that banks will do anything to attract users in the US, free cash for signing up, special discounts for referring a friend, etc.

Here in Europe, Spain specifically, I was surprised to learn that many banks charge a monthly fee for service. !?



Its more a matter of having a late night ATM is a relatively new thing. Brought about by Citi bank, if I remember my business class correctly. There was a strong fight to keep ATMs closed on nights and weekends and to this day in the country a lot of them are closed. There was a argument in the Diet about how people shouldn't need them 24 hours and someone said something along the lines of his mother doesn't need a teller that late at night. If you live anywhere except a large city you have to be prepared for a long holiday like Golden Week where the banks will only be open one day in seven. Many a new exchange student has had to bum money from friends to get them through those times as credit cards & debit cards aren't as widely used as they are here.

Imad Qureshi

"the banks realize that people have fewer alternatives (no bank tellers available) at those times and price accordingly"

combine your above observation with your following analysis

" but the biggest cost to banks is tellers' time, so I should think that they would do anything to encourage ATM usage, regardless of time of day or week."

Now, yes they have a strong incentive to encourage people to use ATM's but that's just during weekdays when staff is there. Not on weekends and evening. That's when they can charge a higher fee due to fewer alternatives the customer have.


@Ian Kemmish

"the banks could just get together and agree to waive them on the grounds that they average out to zero in the long term"

Banks wouldn't want to do waive these if competition (for attracting new customers) doesn't force them to.

If I go to your bank's ATM I pay an extra couple bucks; if you go to my bank's ATM you pay an extra couple bucks. If you calculate that as a two party transaction then yes, it equals out... however when you include all four parties in the calculation you'll realize that the only things equal here are that you and I are each equally a couple bucks poorer and the banks are each equally a couple bucks richer.


Even harder to understand is that most ATMs in Japan close every day. Sometimes as early as 7:00 PM. To this day, I have never heard a logical reason why an Automated Teller Machine would ever need to be "closed".

JY David

This is indeed offer and demand but not moral or ethical. It is about people being forced by lifestyle (work vs. off-work hours) or being careless (lowered resistance to economic exploitation due to lateness, drunkeness) to surrender to convenience irrespective of the high cost (the illusion is that it is not a large amount marginally to the individual). More service from your friendly banker. Take it from me: I used to work for a Japanese bank in Japan. But, to be fair, pretty much, the vast majority of banks, no - make that corporations - anywhere will play a variation of that hand. Of course, there is a growing disconnect between customer need and corporate greed. The momentum is building everywhere, not just in Japan. Entropy is upon us, consumers, and it will get much worse, no doubt.


Price discrimination means different prices from the same provider, does it?

Who is/are NOT discriminated by the same bank when using ATM at weekend in Tokyo?


I found that many Japanese ATMs actually closed at around 7pm! This astonished me, since the main use of ATMs seemed for me to be 24-hour access. The machines themselves tended to be very advanced (compared with the ones I'm familiar with in Ireland). No good if they're closed, though!

It was especially puzzling considering the very widespread use of public vending machines. In the middle of night I could buy booze from vending machines on the street, but sometimes not find any open ATM to get money to do so.


I think it's a lot simpler than that.

Because they can.


They are shifting some demand from evenings to workhours. This means they need to leave less money overnight. Money left overnight has a (security) risk and an opportunity cost. But these are so minimal that the charge isn't justified. Most customers won't go into the maths to figure that out, so banks don't care if a few get angry.

Another possible explanation is that this is a "new" and "unusual" service so people there don't take it for granted, so banks can get away with charging more in the beginning using whatever reasons (like eg night buses in London). THis will be until one of the banks will try to get a bit more market share and start offering it for free.


Per 6 above and others, I think the answer is some notion of public morality. You shouldn't be getting cash at 2AM, is the thinking, you should be home sleeping, and if you do need cash it's probably for drugs or sex or something similarly unseemly.


To talomown:

It's price discrimination in that the same product (access to your cash) is given different prices at different times-- during business hours or after hours.

The same way that matinee movies are typically priced cheaper than evening movies. You're consuming the same product.

Carol Anne

Years ago, a launderette in Seattle had a change machine that charged five cents to break a dollar. Put in a dollar bill and get 95 cents back. I learned to save my quarters!

Steven Miller

Time based pricing is an idea whose time is coming. I see grocery and other self-service stores increasing prices during prime time, say 3-6 PM, and discounting them at other times. This can easily be done by using networked electronic on-shelf signage and existing scanners. The purpose is to level load employee requirements, reduce congestion and manage margins. The differential doesn't have to be much. Harried prime time shoppers are not looking at price, and off time shoppers can enjoy a small discount. The store runs more efficiently and can micromanage item margins. When buyers are under pressure, prices can be increased slightly with little or no loss of volume.


The surcharge is probably a vestige of the situation that prevailed until quite recently in which the ATMs of Japanese banks did not operate at all on evenings and weekends. The only ATMs that were typically available 24/7 were those at local Citibank branches and the occasional HSBC, if you happened to live near one.

Furthermore, many of the Japanese banks did not provide access to other banks' accounts through the internationally-recognized networks like Star, Plus and Interlink, as do Citibank and most other international banks. (Oddly enough, Japan Post Office ATMs started to offer this service before any of the Japanese banks, if I recall correctly.)

The Japanese banks were probably prodded to provide 24/7 ATM service not so much by Citibank, which is limited in Japan both geographically and in its customer base, but by the creation of ubiquitous 24/7 ATMs in 7-Eleven and other convenience stores.


Ethan Liu

I have been to Japan a couple of times. I remember that I had to withdraw money on the weekend and ATM was out of money. If banks always make sure enough money in ATM and people check it regularly, it will be reasonable for charging extra money in the evenings or on the weekends. $1.20 is not much money if they offer good services, just like tips in the restaurant. The coin counting machines in the states also charge extra money when you want to convert your coins to paper money and there is no one helping you do that. they offer us a serivce which make the life more convenient. Of course, they charge a little for the service.