Cardtronics Inc. is crediting its Allpoint surcharge-free ATM network for the company's recent rise in profits.
In September, MasterCard Inc. and Cardtronics announced a partnership to offer surcharge-free automated teller machine access to MasterCard's prepaid card issuers and program partners. Cardtronics said then that ATM withdrawals made with prepaid cards were a small part of the network's business that it planned to expand.
"Prepaid cards continue to flourish and prosper, and we continue to believe our Allpoint network is a very valuable asset in the prepaid world," Steve Rathgaber, Cardtronics' chief executive, told analysts during a conference call Tuesday.
The Houston ATM independent sales organization reported the same day that net income rose 172%, to $17.4 million for the third quarter from a year earlier. Revenue rose 6.2%, to $136.6 million.
Christopher Shutler, an analyst for William Blair & Co., said he does not believe prepaid deals will add significant revenue, but the MasterCard agreement speaks to the value Cardtronics can add in that market.
Cardtronics is set to expand to Australia through a pact with Customers Ltd., that country's largest ATM owner and operator. The accord puts Cardtronics "on the right side of a possible early trend in several countries that seem to be moving toward more surcharge-friendly environments," Rathgaber said.
Cardtronics cautioned investors that next year it expects to lose $4 million in the U.K. because of changes the country's Link ATM network made to per-transaction interchange rates. Card issuers pay ATM acquirers interchange.
Link has announced an eight-cent interchange-fee reduction for cash withdrawals effective Jan. 1. Cardtronics, however, does not view the change as a long-term problem. "As interest rates inevitably rise over time, under Link's methodology, interchange in the U.K. will also rise," Chris Brewster, Cardtronics' chief financial officer, said.