Dispensing public transportation tickets, event tickets, gift certificates, and prepaid phone cards through ATMs has been officially sanctioned by the Office of the Comptroller of the Currency.
In an interpretive letter released last week, the OCC told an unnamed national bank that dispensing these products through ATMs is a "logical outgrowth of the recognized bill-payment and funds-transfer functions of national banks."
"It's a very clear signal from the OCC that these kinds of services are part of the business of banking, because they are simply means of transferring funds from one person to another," said James McLaughlin, director of regulatory and trust affairs at the American Bankers Association.
In a letter dated March 14, OCC senior attorney Christopher G. Sablich said national banks also are authorized to dispense through ATMs those advertising materials that would normally be stuffed into bank statements.
Among other things, postage stamps, travelers checks, money orders, and credit and debit cards also may be dispensed from ATMs, Mr. Sablich said.
Mr. Sablich noted that national banks are not selling these products or services. Instead, he said, institutions are dispensing "prepayment media" - similar to cash - which can be redeemed for goods and services.
In these transactions, the purchase amount is debited from a cardholder's deposit account and credited to a merchant's account. The customer receives a receipt that meets the disclosure requirements of the Federal Reserve's Regulation E, the letter said. In addition, national banks may charge fees to the cardholder or the merchant who offers the dispensed product.
The ruling is not the first time national banks have been allowed to dispense items other than cash through ATMs. In 1991, Seattle First National Bank became the first to offer postage stamps through its machines. Wells Fargo Bank followed suit in 1994, and some Bank of America ATMs dispense stamps, phone cards, transit passes, and gift certificates.
"Some national banks may be doing this already, but this is the first time we were expressly asked about this, and this is the first time we expressly came out with an opinion," Mr. Sablich said in an interview.
Bankers said the ruling will allow them to take full advantage of ATM technology.
"You have a machine here that has a lot of capacity to do a lot of things," said Lin Morison, president and chief executive of The First National Bank of Ipswich, Mass. "I'm in favor of anything allowing ATMs to be as functional and as profitable as possible."
