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Why TD Ended Free-For-All Service

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TD Bank, which bills itself as "America's Most Convenient Bank," just became a little less convenient-at least for noncustomers.

In early November, TD started charging those who don't have an account a 6 percent fee to use its "Penny Arcade" coin-counting machines.

For the last 10 years, the machines-first deployed by Commerce Bancorp-provided free coin-counting to all, regardless of whether they had accounts at the bank. (TD, the U.S. unit of Canada's Toronto-Dominion Bank, acquired Cherry Hill, N.J.-based Commerce in 2008.)

Fred Graziano, head of TD's retail bank division, says it discontinued the service because customers and employees were complaining that noncustomer use of the machines was negatively impacting service. "We took a look at it and decided on this change," says Graziano. "We are in the business of 'wowing' our existing customer base."

But some consumer advocates and industry consultants are critical of TD's decision.

Consumer Reports' Money & Shopping blog, which first reported the news, lamented: "Unfortunately, TD Bank has now put the kibosh on another outstanding Commerce-created perk."

The blog also noted that after TD took over, it cut the "stellar" Commerce Platinum Visa card, which had no fees, even if customers exceeded their credit limit, and no interest on new purchases, even if customers carried a balance.

That was "a rarity in the banking world," the blog said.

Charles Wendel, president of Financial Institutions Consulting in New York, says TD's decision to charge noncustomers for coin-counting is "shortsighted and unfortunate." Commerce had the right approach by allowing noncustomers to use the machines for free as a way of drawing more foot traffic-and new accounts-into branches, he says.

But did the machines really attract that many new customers?

Vernon Hill, the founder and former chief executive of Commerce, says they did. Hill was the driving force behind offering extended and weekend branch hours along with free coin-counting.

Though Commerce did not measure the number of new accounts attributable to the machines, he notes that in 2006 alone, they were used 6 million times.

He also says that J.D. Power and Associates consistently named Commerce highest in customer satisfaction for retail banks in the Mid-Atlantic region. "We would say the coin machines were all part of the experience."

In its 2010 retail banking study, J.D. Power rated TD four out of a possible five for overall satisfaction.

Graziano stresses that TD wants to grow its customer base, but not at the expense of alienating existing customers. He points out that many banks don't offer free coin-counting at all, even to their customers. "Why aren't other banks providing the same experience to their customers?" he asks.

Hill says one bank still offering free coin-counting for all is Metro Bancorp in Harrisburg, Pa. Formerly called Pennsylvania Commerce, the $2 billion-asset bank once had a franchise agreement with Commerce in New Jersey, but had to rebrand itself after its namesake sold to TD.

Perhaps not surprisingly, Hill is one of Metro's largest shareholders.

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