A company that introduced in April what it says is the first nationwide surcharge-free automated teller machine network seems to be picking up steam, with deals announced last week to add new banks, including a division of Citigroup Inc.
The network, called Allpoint, is owned by ATM National LLC, which says it now has 25,000 ATMs in its program. Members include two of the largest ATM deployers, E-Trade Group Inc. and Cardtronics, the latter of which recently bought 1,000 ATMs from American Express Co.
On Wednesday, Allpoint announced that four companies that issue payroll or prepaid debit cards had signed deals to join the network: Citicorp Electronic Financial Services, which issues payroll cards exclusively; and Money Network, iWire Inc., and NetSpend Corp., which all issue prepaid debit.
The deal with Citicorp opens Citibank's network of 3,000 ATMs only to consumers who carry payroll debit cards that are issued by an Allpoint member, but one of ATM National's top executives said the deal nonetheless helped give his firm credibility.
"It's significant to us as a company to bring on Citicorp EFS to our roster of clients," said Ben Psillas, the president and founder of ATM National, of Washington. "Employers recognize it's very expensive for a lot of their hourly workers to go out and get their checks cashed. This is a very cost-effective alternative, and to add in surcharge-free access just complements that even more for them."
Mr. Psillas said Allpoint aims to bring its ATM network to 35,000 ATMs over the next year, "which would put us at a point where you could say in the marketplace, one out of every 10 ATMs in the country is an Allpoint ATM, and a surcharge-free ATM."
Mr. Psillas is an entrepreneur whose last venture was a short-lived Internet-only bank, Effinity, which was sold to Countrywide Credit Industries. The chairman and chief executive officer of ATM National, John R. Soderlund, is a former managing director of First Annapolis Consulting, the card industry specialist, who went on to run Partners First Holding LLC, the credit card venture that First Annapolis, the former BankBoston Corp., and Bank of Montreal and its Harris Bank subsidiary put together to manage a shared pool of credit card loans. Partners First was sold to Wachovia in early 2000.
The Allpoint network is designed for community banks and credit unions, which appreciate being able to offer their customers fee-free access to a large number of ATMs, the way bigger institutions can usually do more easily.
But the payroll card business appears to be heating up, and by adding the network to its marketing effort, Citicorp EFS, of Chicago, could "differentiate itself from other providers in the marketplace to be able to go out and say, 'We have free access,' " Mr. Psillas said. Allpoint charges its members based on their number of cards in force, not by transaction volume.
For Citi, which is trying to build a national business in payroll cards, the Allpoint network is a selling point for potential customers whose businesses are not in the Northeast, where Citi's ATMs are concentrated, said David Koopman, the senior director of business development for the private sector at Citicorp EFS.
"The whole purpose of this is to make the [payroll] card a very attractive financial product to employees who don't have traditional bank accounts, and certainly to make it grow faster than it is right now," Mr. Koopman said. "The product is really in the early stages of its life cycle. And you have a number of early adopters that are taking a look, testing it out. We're not yet into the growth stage of the product. But early on the feedback has been very strong."
Citicorp has a deal with Coca-Cola Co., which markets the payroll cards to its corporate clients, among them Dairy Queen Corp. and Subway Restaurants.
Mr. Psillas of ATM National says he has his eye on expanding the relationship with Citi to include electronic benefits transfer cards. Citi is by far the largest EBT provider, and he expressed optimism that the banking company would "migrate" its EBT program to Allpoint, which would bring considerable volume to the network and ease complaints from benefits recipients that they could not find a surcharge-free ATM.
Mr. Koopman from Citi said the idea of adding its EBT cards to the Allpoint network had not fully been explored yet. "This is still very new, and right now limited to the payroll cards," he said.
