Electronic Data Systems Corp. plans to launch a money transfer service this fall that executives hope will make its huge network of automated teller machines more profitable.
The service will allow ATM cardholders to send money anywhere in the country to anyone they designate - whether or not the intended recipient has an ATM card.
Still in the planning stages and known internally as "Z-Cash," the wire facility is EDS' latest attempt to enhance what it and many other industry observers see as underutilized cash-dispensing equipment.
"The ATM is a useful little tool for delivering all sorts of services," said Dale Dentlinger, vice president of retail terminal services for EDS in Morris Plains, N.J.
"Fund wire services - where you can actually make the ATM provide the same type of wire transfer services you get from Western Union or American Express MoneyGram - are a perfect example," said Mr. Dentlinger, who works in the electronic funds transfer group of EDS' electronic commerce division.
"It's a logical service, since you've got the network of dispensing devices already in place," said William Adcock, chairman of Synergistics Research Corp., an Atlanta-based consumer research firm.
"I think the fee will be the biggest question in how interested consumers will be," added Mr. Adcock. "I think there will be a fair amount of price sensitivity. Certainly, (EDS) will not be able to get away with charging more than Western Union does."
Both Western Union and American Express MoneyGram - the latter is operated by First Data Corp. - charge variable fees depending on the amount of money being wired. For example, a $200 MoneyGram domestic transmission would cost $15, Western Union $22.
EDS, which considers its product still in the development stage, has not released pricing details. An EDS spokesman said banks that offer the service through their ATMs would be free to set any price they like.
Here is how it works, as explained by EDS officials: A consumer visits an ATM, inserts her card, and selects the Z-Cash send option. After selecting the amount of money to be wired, she punches in a 10-digit numerical code, such as a phone number, that will be known to the intended recipient. The ATM then prints a receipt that includes a randomly generated, four-digit numerical code, which the recipient also must know to get the funds.
The money would be immediately available to the recipient, who would find an ATM and select the Z-Cash receive option - which does not require insertion of a card. After both the 10-digit and four-digit codes are punched in, the cash is disbursed.
The Z-Cash concept is both similar to and different from a service rolled out by Wells Fargo Bank late last year. That service, dubbed the ATM Remittance account, allows California customers of the bank to deposit money into a special account that is accessible by ATM card to friends or relatives in the Philippines, at a fee of $8 per transaction. While the Wells and EDS services both rely on ATM systems, Wells requires recipients to have cards and EDS does not.
"ATM-to-ATM transfers are just the first round," said Neil P. Marcous, vice president and general manager of the EDS electronic funds transfer business. "Eventually, we could add PC and phone access for the senders."
EDS has a Z-Cash prototype in its Morris Plains office and has demonstrated the concept to about 20 banks as well as network executives, consultants, and vendors.
"We will be rolling out Z-Cash with a dog-and-pony show in September," Mr. Marcous said.
By then, he predicted, at least some of the more than 5,000 ATMs deployed by EDS would be retrofitted to offer the service, but he declined to cite a specific number. He said that by the summer of 1996, the service would be available throughout EDS' ATM network as well as at ATMs deployed by banks wishing to add the option.
The EDS officials said they are intent on enhancing banks' ATM services and not necessarily on profiting through license fees.
"We are working with the banks," said Mr. Marcous. "Banks find products like this attractive because these products are not available anywhere else. A product like this brings fee revenue potential back to the bank."
