NationsBank Corp. said it has won one of the largest installation contracts ever for automated teller machines - a 661-machine network for Stop-N-Go convenience stores in Texas.
The deal will make Stop-N-Go, a unit of National Convenience Stores, the latest of several leaders in that sector of retailing to put ATMs in hundreds of locations.
And it will vault NationsBank into second place among banks - about 300 ahead of Citibank's 2,600, but still a considerable distance behind Bank of America's 5,600 - in total ATMs.
ATM industry observers expect the BankAmerica Corp. unit will soon be surpassed by Electronic Data Systems Corp. in total ATMs, on the strength of EDS's 4,000-machine contract with the 7-Eleven chain.
With another nonbank, Affiliated Computer Services Inc. of Dallas, at 3,400 and climbing fast, the NationsBank/Stop-N-Go deal shifts a bit of momentum back to the banks.
The 661 Stop-N-Go ATMs, whose installation will begin in December, will bring NationsBank of Texas to 1,013 machines and the $184 billion-asset NationsBank Corp. as a whole to 2,868.
The Texas subsidiary of Charlotte, N.C.-based NationsBank Corp. said the Stop-N-Go machines will raise convenience levels for the bank's customers and for shoppers in general. But NationsBank customers get a bonus: Their transactions will be free, while others are subject to a 50-cent surcharge - a pricing practice common on ATMs away from bank premises.
NationsBank, the largest commercial bank in Texas, has issued 1.2 million ATM cards and has emphasized electronic services and other remote conveniences such as a 24-hour telephone facility and home banking via personal computer.
Stop-N-Go estimates the ATMs will account for more than 21 million customer visits to its stores annually. The bank is expecting some 3,000 transactions per ATM per month.
All 661 ATMs are scheduled to be operating by June 1996, with 398 in Houston, 94 in the Dallas/Fort Worth area, 141 in San Antonio, and 28 Austin.
The contract with NationsBank guarantees Stop-N-Go $16.5 million over six years. The bank said it will spend $15 million to deploy the machines.
Richard Robida, senior executive vice president of Speer & Associates, an Atlanta-based consulting firm, said NationsBank of Texas was probably expecting at least a 20% return on its investment.
NationsBank will decide on its ATM supplier in the next few weeks, and officials did not disclose the candidates. The ATMs will offer cash dispensing, balance transfer, and account inquiry services. Because they will not take deposits, the machines will cost about one-third less than full-service ATMs and servicing expenses will also be lower.
Mark Ricci, senior vice president of customer access and information at NationsBank in Charlotte, said the limited-service ATMs will handle 95% of consumer usage demands, since deposits make up less than 5% of ATM transactions.
Mr. Ricci said ATM traffic has been growing in Texas and throughout NationsBank's nine-state territory. As consumers demand greater access to their accounts, "we wanted to match that trend with deployment and distribution (of ATMs in) high-energy centers" like convenience stores, gas stations, strip malls, airports, and workplaces.
In addition to its more than 1,000 ATMs in Texas, NationsBank has 281 branches and 12 banking centers in Kroger and Albertson's supermarkets.
NationsBank said it is negotiating other ATM deals with an undisclosed number of retailers in several markets. "We are studying advanced-function customer services (through ATMs), such as check imaging and deposit with cash back," Mr. Ricci added.
Mr. Ricci said even though nonbanks such as EDS and ACS have taken a big chunk of the off-premises ATM market in the past couple of years, "our brand and customers are a major draw to these retailers."
He said many nonbank ATMs involve fees per transaction, and some customers find they are paying both their own banks and the ATM owners. "If EDS charges a dollar and NationsBank is free," he said, "where do you think they're gonna go?"
"EDS is fast becoming the largest ATM owner in the country," said Robert P. Barone, chairman and chief executive officer of the Electronic Funds Transfer Association in Herndon, Va. "I think this says NationsBank recognizes the importance and potential revenue opportunities in that marketplace."
He said the remote ATM trend will "help get people out of branches," making it "less costly for the bank to provide those services."
Indeed, NationsBank plans to reduce its number of branches over the next several years.
Mr. Robida of Speer & Associates suggested that NationsBank might have benefited more from point of sale terminals than automated tellers. ATMs at retailing sites are "nothing new. Debit POS would have been an equally attractive alternative and a better break for the consumer," he said.
