ANZ Bank NZ and Westpac are dropping charges customers have to pay when they use another bank's automatic teller machines.

ANZ's customers don't pay any automatic teller machines (ATM) fees to use an ANZ machine, but they are charged a $1 fee for using those of another bank.

The changes will come into effect from March 26 and remove fees from almost 8 million transactions a year.

"In recent times we've been getting more and more feedback from our customers that they don't think this type of fee is fair because even though they're using another bank's ATM they're still accessing their money," said Antonia Watson, ANZ New Zealand managing director retail and business banking.

"We've decided to respond to that feedback and will absorb the cost of those transactions levied to us by other banks.

"Banking is a competitive business and we want to ensure customers continue to choose us because they know we're committed to doing the right thing by them."

ANZ New Zealand chief executive David Hisco said the bank would progressively remove, reduce or simplify a series of other fees and charges throughout the year.

"When we merged The National Bank and ANZ, one of the aims was to create a simpler and more efficient bank for our customers," Hisco said.

"The merger has been highly successful because we've improved our core technology system, reduced the number of products offered from almost 350 to fewer than 90, removed a lot of bureaucracy and kept our costs down," he said.

"All of that, plus the growth in our market share and scale due to our improved customer offerings, has meant we're now in a position to absorb the ATM fees and continue to work on reducing our other fees."

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Westpac NZ said it was removing fees for customers when they use automatic teller machines (ATMs) in New Zealand owned by other major New Zealand banks, effective from April 1.

The fee, which banks charged each other, would be absorbed by Westpac, the bank said.

Westpac NZ general manager of consumer banking and wealth, Simon Power, said: "We want to give customers the freedom to use our competitors' ATMs without worrying about what sort of fee they might be charged."

"We're always looking for ways to better meet the needs of our customers and to help them to grow financially. For example, we removed or reduced 11 banking fees last year, and we think this one will help make a difference as well."

Consumer NZ said last year it had called on ANZ, ASB, BNZ, Kiwibank, The Cooperative Bank and Westpac to remove the fees.

Sue Chetwin, Consumer NZ chief executive, said it was a great outcome and hoped other banks would follow.