Article

Surcharge-free ATM networks offer enhanced customer service

A pay-per-use model allows FIs to serve their customer base at a reasonable cost.  

July 20, 2011

Ninety percent of U.S. banks offer fee-free ATM use for their own customers, according to the American Bankers Association. The growing availability of surcharge-free ATMs means consumers are being trained to seek out no-cost transactions.

Small financial institutions, IADs and merchants could find themselves at a competitive disadvantage as predictable consumer behavior leads to lower transaction volumes. Joining a surcharge-free network could help ATM operators maintain a competitive standing in the marketplace.

“During the past couple of years, a great deal of our business has focused on working cooperatively with ATM deployers and retailers,” said Doug Miraglia, president of MoneyPass. “The 50 million cardholders that are part of the MoneyPass network already recognize the value of surcharge-free transactions and are actively seeking locations where this service is available."

By affiliating with a leading surcharge-free ATM network, FIs, IADs and merchants can take advantage of features such as enhanced customer service and marketing efforts that could potentially result in increased revenues.

Enhanced customer service, convenience

When Cherry Hill, N.J.-based Access to Money, a large non-bank ATM operator, wanted to extend surcharge-free ATM access to its network of more than 10,700 terminals under contract, the company signed with the MoneyPass network from Elan Financial Services, a provider of ATM services based in Pittsburgh.

Consumers can use ATMs in the Access to Money network located in Kangaroo Express convenience stores and Dunkin’ Donuts.

Stamford, Conn.-based First County Bank ($1.3 billion in assets) expanded its surcharge-free ATM offerings by participating in the Allpoint Network, operated by Houston-based ATM provider Cardtronics. Its customers have no-fee access to Allpoint ATMs in retailers such as 7-Eleven, Target and Walgreens, among others.

“Allpoint Network ATMs saturate all the right retail locations in Connecticut, meaning our customers are never far from surcharge-free cash access where they live, work and spend most of their time," said Rey Giallongo, president and chief operating officer of First County Bank.

Cost-efficient expansion

The Select-A-Branch ATM network, based in King of Prussia, Pa., offers ATM user recognition and automatically changes the ATM interface to the issuer’s brand identity.

SAB offers a pay-per-use model that allows FIs to serve their customer base at a reasonable cost. Pittsburgh-based PNC Bank ($264.3 billion in assets) signed up with Select-A-Branch to provide ATM coverage in the New York City area.

“With relatively few branches in New York City, we needed to improve our access to our existing and prospective customers in terms of branding and service,” said Jim Walker, PNC’s senior vice president of electronic banking. “This presented two very expensive options: fight for ATM locations and real estate in one of the most high-priced cities in the world, or seek to acquire a local institution with access to the market."

Under the pay-per-use model, the financial institution agrees to reimburse SAB for the
surcharge fees waived for their customers. This arrangement provides a measurable customer impact with no additional costs, according to Dan Stechow, chief operating officer for Select-A-Branch.

Boosting volume

In the early years of surcharge-free networks, the market was primarily driven by FIs, but now a variety of card issuers understand consumers’ desire to avoid fees.

Allpoint offers access to 43,000 ATMs in merchant locations around the world and MoneyPass offers 20,000 ATMs serving more than 1,100 financial institutions.

The scope of these networks allow ATM operators to boost volumes and fee incomes in a cost effective manner.

“As consumers become savvier and more cost-conscious, forward-thinking financial institutions can take advantage of the opportunity presented by MoneyPass and its accessible and convenient locations,” Miraglia said. “By participating in a growing surcharge free ATM network, ATM operators can increase cardholder satisfaction, attract new cardholders and expand the reach of their self-service capabilities without capital expenditure.”