American Express Co. is taking a new route to the financial services consumer-through automated teller machines.

Until now a modest deployer of the machines as a convenience for its travel-and-entertainment cardmembers, American Express has just gone on a shopping spree. With a network approaching 3,000 ATMs, Amex will be competing against banks and others that have been responsible for an explosion of installations at convenience stores, shopping malls, airports, and other public places.

Amex will put its brand name on the machines and plans to charge relatively high transaction fees. The ATMs will serve as distribution points for American Express products and could make the services more competitive with those of bank cards.

"Getting into ATMs moves them toward a position of ubiquity," said Alan Bergstrom, president and chief executive officer of the Brand Consultancy of Atlanta. "They are doing some things very smartly to move toward being a mass-market card and financial services provider."

Altering its more exclusively upscale traditions, American Express in recent years has aimed cards at college students and young adults and boosted brand visibility through comarketing programs with Delta Airlines, Hilton Hotels Corp., and others.

An ATM network lets Amex reach out to consumers in new places and ways. "It's about expanding our relationships with our merchants and adding value for our cardmembers" said Steve Squeri, senior vice president, network development at American Express.

Last week the company made an announcement enumerating its purchases over three months: 2,000 ATMs from Electronic Data Systems Corp. of Plano, Tex., 650 from Americash of New York, and 140 from Zions Bancorp. of Salt Lake City.

American Express is hoping not to stumble the way Bank One Corp. did. Especially ambitious among those lured by the prospect of fee income and greater access to customers, Bank One set a goal a few years ago to deploy 20,000 machines, a number comparable to some of the larger multibank regional networks.

Bank One scaled back this year when anticipated transaction volumes and income failed to materialize. Executives responsible for the "RapidCash" strategy left and Chicago-based Bank One said last week that it will be taking an ATM-related charge to fourth-quarter earnings.

Similarly, Zions Bancorp., in selling to American Express the bulk of its network away from bank premises, acknowledged that the profitability of these locations had declined.

"There are just too many ATMs at off-site locations now," said William Hall, the bank's senior vice president of electronic delivery. "Volumes are decreasing because of the number of ATMs installed."

The heightened competition has also prompted Electronic Data Systems to get more focused on core processing businesses. With 4,200 machines, EDS is still the largest nonbank ATM owner and expects to continue supporting the ATMs it sold to Amex.

In a maturing market, "there are partners like Amex that have more value in (terminal) ownership than we do," said Paul Rudolph, president of EDS' electronic business unit.

Amid such reassessments, American Express is not the only company eager to expand. Citibank announced an agreement in May to install 3,000 machines at Blockbuster Entertainment stores, for example. First Union Corp. and Card Capture Services of Portland, Ore., are jointly pursuing the off- premises market, deploying "CCSExpress" 500 machines owned by the bank and serviced by CCS.

Those in the deployment game-banks and merchant processors known as independent sales organizations-seek to lock up high-volume, cash-oriented sites like convenience stores and supermarkets.

"Amex can leverage other relationships with its merchants," said Michael A. Strada, a consultant and president of Electronic Commerce Strategies Inc., Atlanta. "People are starting to realize there is saturation, and volume is going down. You have to find a way to reduce costs or increase volumes. Amex may be able to do both."

Some of the machines Amex bought are in K-Mart and Target stores, Shell Oil and Circle K convenience stores, and Giant Foods supermarkets.

American Express wants to use the machines to cross-sell both its and retailing partners' products. The ATMs will feature video advertising, text messages, and discount coupons, the company said.

Until these network purchases, American Express had owned just 165 ATMs, 80 of them in the United States, primarily at American Express Travel Service offices, airports, train stations, hotels, and restaurants.

There could be debit card implications in American Express' new ATM aggressiveness. The company has expressed interest in issuing debit cards, which would presumably have to be tied to deposits accounts at banks that Amex would market or cobrand with.

If the Department of Justice prevails in its antitrust lawsuit against the MasterCard and Visa associations, rules preventing American Express from that kind of cooperative marketing would be overturned and the ATMs could also be used to enhance jointly marketed or cobranded credit card programs.

"The ATM issue is certainly a move in the direction of becoming a real card player, as opposed to a just a credit card issuer," Mr. Bergstrom said.

In 1997, Visa International's share of worldwide card volume was 53%; MasterCard International's was 29%, and American Express' was 14%, said The Nilson Report, a newsletter based in Oxnard, Calif.

Though American Express cards are accepted at more than 120,000 ATMs domestically and 200,000 worldwide, the company does not control the routing of the transactions. It gets that control with machines it owns and can charge whatever surcharges it likes.

For now, that means a 2% service fee, with a $2.50 minimum and a $20 maximum, to its own cardmembers. Non-Amex cardholders pay that plus $1 to $2.50, which is similar to the ATM surcharges that machine owners levy on noncustomers.

"It's a matter of convenience and broadening of their acceptance network," said Jerry D. Craft, president and chief executive officer of Inficorp Holdings Inc., Atlanta. "Amex will have a larger control of the point of sale."

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