News

It's in the cards

December 2, 2004

ATMmarketplace.com senior editor Ann All recently sat down for a discussion with Bipin Shah, the CEO of Genpass. Shah, a founder of the MAC network, has a well-deserved reputation as an industry visionary and provocative thinker. During his tenure at MAC, he helped create and develop the market for point-of-sale debit transactions at gas stations and supermarkets in the late 1980s. His most recent work involves stored-value cards. Following are some highlights from the dialogue.

Shah said he is not a big believer in the surcharge. It makes little sense for banks, many of which charge no fees for visits to the teller line and minimal, if any, fees for check usage, to levy a fee for foreign ATM visits - especially since they receive interchange from card issuers for such visits.

Instead, Shah said, banks should consider offering an account that would encompass all products and services - including ATM usage - for a flat monthly fee.

This story and all the great free content on ATM Marketplace is supported by: MoneyPass

Shah's relative disdain of the surcharge led him to establish MoneyPass, a national surcharge-free network managed by Genpass. Since its debut in November 2003, MoneyPass has signed banks with a combined total of several million cardholders, including customers of Citibank, which joined the network in October.

According to Shah, the issuers hold all the cards - both literally and figuratively.

Like others in the industry, Shah sees enormous potential in stored-value cards like Genpass' PayCard, which is used for dispensing funds from paychecks. Shah uses the split deposit option on several of the cards himself, for monthly disbursements to his 15-year-old daughter and to send money to his brother in India.

Stored-value cards are the "most exciting development of the past decade," Shah said, because "so many different kinds of payments can be made with these kinds of cards."

Genpass developed the Flex Convenience card for insurer MBIA. Employees with flexible spending accounts deposit tax-free dollars on the cards and use them to pay doctor bills and other medical expenses. Clients include Citibank, which has provided some 45,000 of the cards to employees since last October.

Eventually, Shah believes, all payment accounts will be consolidated on a single card.

Shah also foresees continued consolidation in the transaction processing arena. The cost of processing has dropped to just pennies per transaction, he said, and major remaining players, including Genpass, can absorb twice the volume without any added cost.

Few ATM owners will continue to drive their ATMs in-house, Shah predicts.

He also believes ATM transaction volumes will remain flat for the foreseeable future and will not experience much growth from value-added transactions such as prepaid phone top-ups.

Although Genpass currently offers Western Union money transfers on about 600 ATMs and phone top-ups on about 100 machines, Shah said, there has been little consumer demand for the services.

"We'll probably never find a product or service other than cash that's going to cause someone to visit the ATM three to five times a month," he said.