Tom Hannon has been in the ATM trenches since 1995. His Peachtree City, Ga.-based Hanco Systems, which he sold to eFunds earlier this year, managed machines in 40 states -- so he's a veteran of several surcharge skirmishes across the United States.

The issue has died down considerably in the States, with longtime surcharge holdout Iowa earlier this month losing a court battle to maintain its ban on the fees.

But it's still a hot-button issue in the UK, where Hannon's Hanco ATM Systems Ltd. just won a contract to place machines in Post Office branches.

The great fee debate

A recent report in the UK's Daily Telegraph newspaper quoted several consumers who were unhappy with the £1.25 user fee that will be collected at Hanco ATMs. Hanco will keep the bulk of the fee, although Consignia, the company that runs the Post Office system, and individual post office branches will also receive a cut.

Geoff O'Connell, a resident of Belford, Northumberland, in an interview with the Telegraph described the plan as "usury" and said farming communities still recovering from the damage caused by outbreaks of foot and mouth disease would not be able to afford the fees.

With a distinct "been there, done that" tone to his voice, Hannon said, "The gentleman in the article isn't speaking for the thousands of people using our ATMs. (The surcharge) is very well accepted over here now."

He added, "We're furnishing the machine, the installation, service and a 24-hour help desk. Many of these communities just cannot support a free ATM."

Indeed, the locations range from suburban London to remote villages in Scotland and Wales, with a wide range of transaction volumes. "In some areas it's not viable for banking institutions to put an ATM in because the usage isn't sufficiently high," said a Consignia spokeswoman. "It's a choice for consumers whether they want to use an ATM with a small charge or whether they don't want to use one."

Among the other deployers with ATMs at Post Office branches, Euronet Worldwide charges a £1.25 fee and Alliance & Leicester Bank charges noncustomers a fee in certain areas. Two other financial institutions, Nationwide Building Society and HBOS, do not collect fees.

At Oakington post office and stores in Cambridgeshire, the first to receive an ATM, postmistress Raj Sanghera told the Telegraph that users largely accepted the fee.

"A few customers have complained about the transaction fee, but overall people accept that there has to be a charge. I estimate it is used up to 25 times a day and it is bringing new business to my shop," she said.

Big deal

The Post Office contract is the single largest to date for Hanco ATM Systems, which deployed its first ATM in July of 2000, opened its headquarters near London in September and incorporated in January of 2001. Hanco was one of the first five independents to earn direct admittance into Link, the UK's national ATM network.

Hanco has about 1,750 ATMs currently under contract in the UK, and Hannon predicts strong growth in the year ahead. "I think we could end up with as many as 6,000," he said.

Consignia has awarded Hanco the right of first refusal on 7,500 new locations, although Hannon said that only about half of those are likely to be viable sites. Hanco, which is currently conducting site surveys, hopes to attain a countrywide average of 200 transactions a month across the Post Office network.

According to Hannon, the company has already installed about 150 machines - Triton 9600s, 9700s and a third undisclosed model - and intends to maintain a pace of about 300 new installations a month.

Cash concerns

The Telegraph article mentioned that some postmasters and postmistresses were concerned about security issues and did not want to load cash into the machines themselves, a requirement of Hanco's program.

Jane Woolley, a volunteer who helps run a sub post office in the village of Hambledon, Surrey, said, "We have looked into this proposal and decided against it. We already offer a limited banking service over the counter and cash-back at the till. A shop in a neighboring village was ram raided when it installed a machine. We are staffed by volunteers who are mainly ladies of a certain age and we feel the risk is too great."

However, Hannon said, "Once they understand the business model - that they take the cash out at night - there's no problem."

While he acknowledged that there had been recent "ram raids" in the UK, he said most had occurred right after the machines were visited by an armored car, which seemed to indicate that thieves had been monitoring an ATM's replenishment schedule.

"The criminals are beginning to understand that when they see a Hanco ATM sign, there's not going to be much cash in the machine," said Terry Turner, Hanco's managing director. "They're not stupid, and they're not going to risk five years in prison for a machine holding a couple of  £10 notes."

As in the U.S., merchants benefit by putting cash from their tills into the machines, because at least some of the cash dispensed from the ATM will likely be spent at the retail stores that adjoin many of the post office branches, Hannon said.

They also avoid the fee charged by many UK financial institutions - typically 50 pence per £100 - to accept funds. "Deposits are a profit center for the banks," Hannon said. "Why shouldn't the merchants give it back to their customers instead?"