As many large financial institutions begin to see income from automated teller machines for the first time, companies that run ATM coupon programs say they are noting an increased demand for their services.
In the last six months, several of the nation's largest financial institutions have committed to new coupon programs, in which ATM receipts feature coupons for small prizes or retail discounts. These institutions include Banc One Corp., Nations-Bank, and Boatmen's Bancshares. Others, such as Norwest Corp., are considering programs.
Many banks are attracted to the programs by the promise of increased ATM transaction volume, which translates into increased fee income.
Effect on Volume Unclear
Financial institutions typically experience transaction increases of between 1% and 4% after starting coupon programs, according to an executive at Atlanta-based provider of coupon services, EFT Promotions Inc.
Bankers who have been involved for years in ATM coupons are hesitant to confirm or refute these numbers because they say other factors cloud the measurement of the coupons' effect on ATM transaction volume.
"We've never been able to quantify increases in ATM traffic volume [from the coupons], though our original thought was that we could," said Daniel Engel, vice president and network director of Express Teller, which is a division of Minneapolis-based TCF Bank Minnesota.
TCF Bank, a subsidiary of the $5 billion TCF Financial Corp., has been operating ATM coupon programs for more than four years.
"Our main objective is to get someone to pay for our receipts," Mr. Engel said. "Anything after that is gravy."
Mr. Engel said that the ATM coupon program saves TCF Bank about $60,000 a year in receipt-related costs.
These costs, as well as those associated with printing full color coupons on the receipts and promoting the program in local print media and radio, are assumed by the provider of the program -- in this case, EFT Promotions Inc.
Advertisers Willing to Pay
EFT Promotions and other similar providers are able to fund such programs because the companies whose names appear on the coupons view the exposure as a form of advertising and are willing to pay for the opportunity to reach consumers when they have cash in hand.
"We function almost as a marketing extension of the banks we work with," said Peter Severens, president of EFT Promotions Inc., which has been running promotions for banks since November.
"We pay for the printing of the coupons, the implementation of the program, and the advertising necessary to get the promotion off the ground."
Mr. Engel said that the bank does recognize some intangible benefits from coupons. For instance, he believes ATMs that dispense coupons tend to differentiate TCF ATMs from other terminals in the area.
"[The coupons] sure don't hurt traffic, and they dress up the receipt, which makes us look a little different from the others in this market," Mr. Engel said.
As part of the bank's effort to use the coupons to distinguish its receipts, Mr. Engel said TCF has moved to put more useful coupons on its receipts.
A few years ago, the coupons issued by TCF ATMs were for mainly local businesses.
While useful to some customers, these coupons were often meaningless to ATM users from out of state and to those who lived far away from the businesses represented on the coupons.
In addition, the local coupons created logistical problems, such as ensuring that coupons for one supermarket were not dispensed by the ATM in a competitor's store.
To avoid these problems, Mr. Engel said TCF now demands that their provider furnish coupons from companies that are present virtually everywhere.
These include Coca-Cola, Burger King, and Blockbuster Video.
"If the consumer uses the coupon," said Mr. Engel, "he's more likely to remember where he got it."