Allpoint Acquisition Boosts Cardtronics

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Cardtronics, the nation's largest ATM company, continued to make major inroads into the credit union movement last week with an announcement it has acquired Allpoint, the growing, surcharge-free ATM network popular among credit unions.

The deal will give Cardtronics, operator of 26,400 ATMs, access to members of as many as 130 credit unions that are members of Allpoint, the three-year-old network that was started up by Cardtronics, Fiserv, Diebold and several private investors. Allpoint claims a total of 275 financial institution members.

Among the credit unions signed on to Allpoint are Pentagon FCU, Delta Community CU, State Employees CU (Maryland), Hudson Valley FCU, Eastman CU, IBM Southeast Employees FCU, ORNL FCU, Andrews FCU, Hanscom FCU, Pegasus CU, Genesis FCU and Palisades FCU.

'Cutting Out The Middleman'

Ben Psillas, president and founder of Allpoint, said they agreed to sell the fledgling network, which uses mostly Cardtronics machines, in order to "cut out the middleman"-that is Allpoint, and give member institutions direct access to their ATM provider.

"It was a strategic fit that made the most sense. What were hearing in the industry from credit unions was 'I'm kind of gambling that the ATMs are going to be around for a few years,'" explained Psillas, referring to the rapid change in the ATM marketplace.

A direct relationship with the nation's largest ATM chain will give credit union members more control over their ATM operations, he suggested. "One of the risks was we didn't have control over the ATMs."

Over the last six months Allpoint has added dozens of new credit union members through endorsement deals with state credit union leagues in Maryland, Pennsylvania, New Jersey and Delaware, and Psillas said he is talking with several other leagues about similar deals. "Credit unions are a significant portion of our business and that will remain our focus," said Psillas, who will continue to run the Allpoint subsidiary of Cardtronics.

Cardtronics, which is owned by Boston investment partnership TA Associates, operates the largest fleet of ATMs in the country, owning almost half of the 26,400 machines. The largest fleet of ATMs is operated by Bank of America.

Most of the Cardtronics machines are located in retailers such as Target, Walgreens, Circle K, Costco, CVS Pharmacy, Duane Reade, Amerada Hess, BP Amoco, Chevron, ExxonMobil, Mills Malls and Sunoco.

Under the deal detailed in a Securities and Exchange Commission filing, Cardtronics will pay total consideration of $5.7 million for ATM National, the Bethesda, Md., parent of Allpoint. That will consist of $2.6 million in cash, 21,111 Cardtronics shares and $1.3 million of assumed liabilities, as well as as many as 10,000 Cardtronics shares down the road if the network meets certain financial goals.

Cardtronics had planned to go public last year in an initial public offering but withdrew the offering. The company is expected to go public in the near future.

The Allpoint deal deepens Cardtronics penetration into the credit union market, which already included the Allpoint's use of Cardtronics machines. Last year, the Credit Union 24 network signed a deal to gain access to credit union members to Cardtronics ATMs. Psillas notes that Credit Union 24 does not include surcharge-free use of the machines, as Allpoint does. And Cardtronics is also believed to be negotiating with the CO-OP Network to fill a void that will be created later this month when the credit union-owned network cuts 5,000 ATMs owned by TRM Corp. from its system.

Pricing To Remain The Same

Psillas said pricing will remain the same under Cardtronics' ownership and credit unions and their members should see no difference in operations. Among the only changes will be that now credit union members will be able to put their brand and logo on local machines. The broader resources of Cardtronics, he said, should enable Allpoint to expand products and services down the road.

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