Allpoint, the nation's largest surcharge-free ATM network, should experience more growth in transaction withdrawal volume as a result of an agreement between Cardtronics Inc. and MasterCard Worldwide.
Cardtronics, Allpoint's Houston-based parent company, and MasterCard signed a contract recently that gives MasterCard-branded prepaid cardholders surcharge-free access to Allpoint's ATM network. Allpoint operates more than 32,000 ATMs nationwide. The company's machines are deployed in numerous locations, including 7-Eleven, Target and Costco stores.
"This is an exclusive agreement with Allpoint," said Sarah Ely, a MasterCard spokesperson. "It applies to the U.S. only, and it is available to current and prospective MasterCard prepaid card issuers."
Neither Ely nor Ben Psillas, president of Allpoint, would discuss the contract’s terms. But Neil Dugan, MasterCard’s vice president of U.S. Markets, said the agreement would help MasterCard’s prepaid card partners to "cost effectively expand their ATM footprints."
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Banks that are members of the Allpoint Network pay Allpoint a regular fee to enable surcharge-free access for their customers so they do not have to withdraw funds from out-of-network ATMs. Out-of-network ATM surcharge fees can range from $1 to $2.50 per transaction, said Terry Maher, general counsel for the Network Branded Prepaid Card Association. Some national banks charge non-bank customers a $3 per transaction surcharge fee.
Cardtronics' agreement with MasterCard also helps Allpoint in another area, where it is thriving.
Allpoint already is benefiting from the growing replacement of paper checks with prepaid cards. Cardtronics executives have noted during quarterly conference calls that Allpoint has reported increases in withdrawals as a result of the growth of government-issued, stored-value cards.
The cards pay federal and state benefits, including unemployment compensation, aid to dependent children, child support and tax refunds. Allpoint also has benefited from the replacement of paychecks with payroll cards for the unbanked and underbanked. The growth of general purpose reloadable prepaid cards also has boosted transactions at Allpoint ATMs.
"It is an emerging market for us," Psillas said about government-issued prepaid cards and payroll cards. "Our ATMs provide access to the unbanked and the underbanked."
MasterCard will benefit from its relationship with Allpoint because owners of MasterCard-branded prepaid cards will keep the cards longer, Psillas said.
Cardholders keep reloadable prepaid cards eight months to 10 months, Maher said. Owners of MasterCard-branded prepaid cards may keep their cards a year because they have surcharge-free access to an ATM network with a national footprint, Maher said.
MasterCard is targeting federal and state program managers who are responsible for paying government benefits to consumers.
"Program managers can issue either Visa-, MasterCard- or Discover-branded prepaid cards, but MasterCard’s agreement with Allpoint may tip things in favor of MasterCard, and that’s what they are hoping," Maher said.
MasterCard and Allpoint agree program managers are one of their targets.
"Providing an extensive surcharge-free ATM network is increasingly important to winning new business across consumer, commercial and public sector segments," Dugan said.
