Citigroup Inc. joined a surcharge-free automated teller machine network partly in reaction to the expansion of Bank of America Corp.’s network, Citi’s head of deposit products said.
B of A has “broader distribution” since buying FleetBoston Financial Corp., said Wayne Malone, a vice president, in an interview Thursday.
The New York company has only 2,600 ATMs in this country. B of A, of Charlotte, has nearly 17,000, in 29 states and the District of Columbia. More than 3,200 of them belonged to Fleet, which it bought in April.
Citi is also outpaced in U.S. ATMs by its New York rival J.P. Morgan Chase & Co. The July purchase of Bank One Corp. enlarged its fleet to 6,500, in 19 states.
On Oct. 4, Citi announced that it had joined the MoneyPass EFT Network, which has more than 8,000 ATMs in 50 states. Membership made Citi more competitive with B of A and Chase in this country, Mr. Malone said.
(His company is at less of a disadvantage internationally; it has about 10,000 ATMs in 50 countries. It would also get more than 100 additional ATMs in this country with the acquisition, expected to close early next year, of First American Bank of Bryan, Tex.)
Many surveys have found that convenient ATM access is one of the most important concerns for bank consumers. But it is usually community banks that join surcharge-free networks, which first appeared several years ago. Customers of member banks can use any ATM in the network without paying an access fee.
Mr. Malone said Citi considered joining a number of such networks, including the national Allpoint Network of about 31,000 merchant ATMs. “But for our purposes, MoneyPass was a better fit,” he said.
It did not hurt that MoneyPass is owned by Genpass Inc. of Fort Washington, Pa., which is owned by the Chicago private investment firm GTCR Golder Rauner LLC. Genpass has been managing Citi’s 250 to 300 in-store ATMs for the past five years.
Bipin C. Shah, Genpass’ chief executive officer, said the deal with Citi will be a major boost for MoneyPass, which he created last fall by combining the two electronic funds transfer networks Genpass owned — the MoneyMaker network in Texas and MoneyBelt in Tennessee.
Until Citi joined, Mr. Shah said, MoneyPass had enough ATMs but not enough cards. “Now we have 6 million cards,” he said.
“We have a very heavy concentration [of ATMs] in Florida where Citibank customers go, and the Northeast, where Citibank customers live,” Mr. Shah said. “And a very heavy concentration in California, where Citibank owns banks.” Citi bought Golden State Bancorp, the holding company for California Federal Bank, in 2002.
About 30% to 35% of MoneyPass’ ATMs are at bank and credit union offices. The rest are in stores.
Tim Sloane, the director for debit advisory services for Mercator Advisory Group Inc. in Shrewsbury, Mass., said Citi’s merchant ATMs had “a very small footprint and didn’t provide much value to their customers.”
In-store ATMs are costly and have low profit margins, Mr. Sloane said. “The right way to do it is to go into these surcharge free networks.”
