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Free ATM access boosts profile of payroll cards

July 13, 2004

Payroll cards let employers distribute wages via a stored value card rather than a paper check or electronic deposit into a traditional banking account. They are a fast-growing business for card issuers.

According to a survey by Financial Insights, a Massachusetts market research firm, employee benefit and cost reduction were the two main factors driving interest in the cards. Both factors were mentioned by more than 2,000 respondents (who were allowed to name multiple factors).

Offering payroll cardholders access to their funds at surcharge-free ATMs may help boost acceptance of the cards. Genpass Inc. is one card provider that makes surcharge-free ATM access a key part of its payroll card programs.

Holders of the Genpass PayCard, which bears the MoneyPass logo, can withdraw funds from 6,000 ATMs in the MoneyPass network, which is owned and operated by Genpass. "We don't want our cardholders to have to pay a surcharge," said Bipin Shah, Genpass' chief executive.

Shah said the combination is popular with companies like Petro Express, a c-store chain with 54 stores in North and South Carolina. The chain's employees who receive compensation via the PayCard can use it at MoneyPass ATMs located at Petro Express. Other PayCard employers, including Hard Rock Cafes and the Rebel Oil c-store chain, also have MoneyPass ATMs at their locations.

In addition to offering ATM access to their own employees as a benefit, Shah said retailers with MoneyPass ATMs experience increased foot traffic, which translates into higher transaction volumes and store sales. ATM transactions have increased as much as fourfold at some MoneyPass locations, Shah said, and many of them are conducted by new customers.

"You're more than making up in interchange what you give up in surcharge," he said, "and the customers are maybe going to buy a bottle of water or a cup of coffee while they're there."

Like the big boys

More than 200 financial institutions have joined MoneyPass since its late October introduction, Shah said. Banks pay a small fee for each transaction conducted by their cardholders; Genpass shares the interchange with ATM site owners.

"Every ad you see for Bank of America talks about all of their ATMs. This (MoneyPass membership) allows me to say the same thing without all of the expense," said Mike Epps, executive vice president of $1.7 billion American State Bank, which owns 36 ATMs. "By giving my customers access to these ATMs, I can compete with the big boys."

Bill Connell is the general manager of ATM Merchant Systems, a Las Vegas-based ISO with about 100 machines in the MoneyPass program. Like Shah, he said that most site owners realize it makes sense to give up some surcharge revenue in exchange for increased transactions.

"We've got some of the MoneyPass machines at a casino," Connell said. "Foot traffic and branding are two buzzwords they really understand."