Though Citibank is using television ads to tout the user-friendly card-reading devices found on its automated teller machines, other banks have shunned the technology.

Citibank's custom-designed ATMs, which have been cited as among the most innovative, are the only cash machines installed on a large scale that let the bank card remain in the customer's hand during a transaction.

To initiate a transaction, a Citibank customer dips the card into the reader device. The reader need not ingest a card in order to read its magnetic strip.

Neverous Customers

Industry experts say ATM customers get uneasy when their bank cards disappear into a machine, sometimes never to reappear.

Because bankers are trying any number of other strategies to please electronic-banking customers - including dispensing stamps and printing complete account statements through ATMs - many industry experts find the reluctance to adopt the dip-in card reader perplexing.

"Normally the industry has a herd mentality regarding these types of things," said Linda Fenner Zimmer, an independent ATM researcher. "So it is interesting to note that despite "Citi's successful ATM program, other banks did not act like sheep in this instance."

Nearly 80% of Citibank banking transactions are handled by ATMs or some other electronic banking device. That is twice the industry average. And though Citibank does not disclose transaction volume, bank officials said those numbers are above industry averages as well.

Other Features

The dip-in card reader is just one of the ATM's features. The machine, assembled by Transaction Technology Inc., a Citicorp subsidiary based in Santa Monica, Calif., accepts commands using touch-sensitive displays and can respond to customer requests faster than other ATMs.

But in television advertising and other marketing, Citibank has repeatedly pointed to the dip-in card reader as a major reason for customer satisfaction with its self-service banking products.

And, according to Citibank officials, customer satisfaction is what stimulates usage.

"If they like the way the machine looks and responds, customers are going to use the more - it's that simple," said Anne Slattery, managing director of Citibank's Northeast branch network.

Card Trauma

Asked what role the dip-in card technology plays in customers' opinion of Citibank ATMs, Ms. Slattery commented, "If you want to see trauma, just watch the face of Citi customers as their cards disappear" into another bank's ATM.

Why then haven't more U.S. financial institutions bought ATMs that let customer keep their bank cards at all times?

One reason might be the limited availability of the devices. All three of the major ATM manufacturers - American Telephone and Telegraph Co.'s NCR Corp., based in Dayton, Ohio; InterBold, in North Canton, Ohio; and Fujitsu Systems of America, San Diego - offer some variation of the dip-in card technology. But the don't make as many of these ATMs or market them as aggressively as other models.

Also, dip-in card readers are hard to add to machines already installed in banks, vendors said.

Retaining Control

In addition, Ms. Fenner Zimmer suggested that many institutions feel the need to maintain a certain amount of control over the cards that they have issued. Others noted that ATMs able to gobble cards can help reduce fraud losses.

Most teller machines can confiscate stolen and out-of-date cards, Ms. Fenner Zimmer said. "Think of how many cards are captured for legitimate reasons each year," she said. "On that score, I'd have to give the advantage" to banks that don't use dip-in card readers.

Despite these problems, though, some experts still expect dip-in technology to come to more banks.

"The technology itself appears to be simpler, and it seems to please customers," said Richard P. Yanak, president of the Wallingford, Conn.-based Yankee 24 ATM network, owned by New England Network Inc. Dip-in readers are therefore likely to be installed as cash machines are retrofitted to dispense a wider variety of products, he said.

"I cannot understand why more banks are not doing it."

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.