Surcharging at automated teller machines is one controversial way for banks to make a buck, but selling ATM advertising can help the cash machines pay off without causing a riot.

Many ATM owners are making extra income by charging local merchants for advertising, and offering discounts on, their wares - either onscreen or on the transaction receipts.

"We're definitely seeing a growing interest," said Michelle Patterson, a spokeswoman for Diebold Inc., the Canton, Ohio-based ATM manufacturer.

Once looked upon as a way to save money for banks by replacing human tellers, the ATM is fast becoming an income producer and communications tool. Popular new uses include selling stamps, phone cards, and tickets, printing statements, cashing checks to the penny, and disseminating information.

Fleet Financial Group Inc. recently purchased two financial institutions - Shawmut National Corp. and National Westminster Bancorp - that used ATM receipts to offer deals to consumers, such as discounts at Six Flag amusement parks.

A Fleet spokesman said the Boston-based bank is looking at adopting the strategy on a companywide basis. Whether the bank uses the receipts to push a home loan or to create partnerships with local merchants, he said, it "views that space as valuable."

Furthermore, he called it a way to be "environmentally conservative," reducing direct mailings and saving paper.

Many banks utilize the ATM screen to advertise bank products, like credit card offers or Web pages, or for public service announcements, but Union Federal Savings Bank, a $1.8 billion asset Indianapolis thrift, sells screen ads to local radio and television stations.

It also sells space on its receipts, "making quite good income," said Steven Pidgeon, assistant vice president, ATM services.

Of the thrift's 50 ATMs, 15 Diebold machines have the capability to advertise. Full color ads are flashed for 12 seconds as consumers conduct their business. Discount coupons - for Subway sandwiches, or $75 off on a Culligan water filtration system - are dispensed with cash.

Advertisers pay the bank $150 to $400 per month, based on transaction volume.

Mr. Pidgeon said the marketing technique allows Union Federal to avoid surcharging. "It's subsidizing our network so we don't have to charge customers."

One Valley Bancorporation of West Virginia decided to give retailers a break instead. In a three-month pilot, which started in March at its Martinsburg-based subsidiary, the $340 million-asset community bank chose three of its best customers - Dairy Queen, Domino's Pizza, and Barnhart's Supermarkets - and printed discount coupons on the bottom of its receipts.

The bank won't charge for the ads, as long as the retailer is a bank customer, said Terry W. Hess, senior vice president. "I think it will differentiate us, and get us more commercial business."

Charleston-based One Valley will introduce the service throughout the company, though individual affiliates can choose not to participate.

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