A fledgling ATM cooperative aims to give smaller banks and credit unions a national, fee-free network to help retain customers.
ATM National Inc. was founded specifically to establish such a network, which it calls Allpoint. ATM National said Wednesday that it had signed up two large deployers of automated teller machines - Cardtronics LP and E-Trade Group's E-Trade Access Inc. - to give customers of group members access to 23,000 machines nationwide.
Allpoint has started up with five financial institution customers, ATM National said.
Under the Allpoint system, customers of member institutions can use any of the universal ATMs, plus those at their own bank or credit union, without paying a surcharge. Using another member's ATM would incur a fee, however - a key difference from other such networks.
Fee-free networks emerged after MasterCard International and Visa U.S.A. began to allow surcharging at ATMs on their networks, Cirrus and Plus, in 1996.
Many smaller institutions lack extensive networks, so customers often must either pay a service fee or search for an ATM owned by their institution.
Ben Psillas, the president and founder of the Bethesda, Md.-based ATM National, said his intention was to give banks - and their customers - another option.
Allpoint members provide convenience to their customers - a key retention factor - in lieu of the potential revenue from ATM fees, which Mr. Psillas said "provides a significant financial boost to institutions."
Customers consistently say account access is one of the most important factors in choosing a bank - or switching from one to another, Mr. Psillas said.
Frank Pollack could not agree more.
"DDA accounts are all about convenience," said Mr. Pollack, the president and chief operating officer of Pentagon Federal Credit Union, one of Allpoint's five initial clients. Pentagon, with 500,000 customers and just 60 ATMs nationwide, has lost "a lot" of customers to larger banks with bigger networks, he said.
"Twenty-three thousand surcharge-free ATMs - that's what we see as the advantage" to Allpoint, he said. "We think this is going to be a home run product for us."
Ken Kerr, a senior research analyst at the Stamford, Conn., market research house Gartner Inc., said Pentagon - with customers nationwide and few branches - is an excellent fit for Allpoint.
Echoing Mr. Psillas, he said people weigh the availability of services in retaining and changing banks. So, Mr. Kerr said, must banks weigh ATM fee losses against keeping depositors.
Banks that join Allpoint "will be able to justify this program if they feel it will help them retain customers," he said.
Allpoint's four other clients have a total of 150,000 customers. They are OBA Bank, of Germantown, Md.; Skylight Financial Inc. of Atlanta; Healthcare Employees Federal Credit Union of Princeton, N.J.; and the University of Pennsylvania Student Employees Credit Union of Philadelphia.
They pay a monthly fee to give their customers free access to the participating ATMs. The fee, which varies according to the institution's size, is divided among ATM National and the machines' owners.
Allpoint has ATMs in all 50 states, and 90% are in major metropolitan areas. The machines cannot accept deposits but perform all other ATM-based transactions.
"We have a thundering total of eight ATMs at our four branches," said Warren Low, the president and chief executive of OBA Bank. "This is a nice way to give our customers the opportunity to use their ATM cards hither and yon, without fees."
Competition from big banks and other ATM networks is fierce.
The SUM surcharge-free coalition in the Northeast, which is run by First Data Corp.'s NYCE network, was started in late 1998 and now has about 3,000 ATMs and 500 participating institutions. Two other electronic funds transfer networks, Pulse EFT Association of Houston and Shazam Inc. of Johnston, Iowa, also operate thriving surcharge-free groups.
Two years ago some large banks - including Bank of America Corp. and KeyCorp - set up surcharge-free groups of their own.
Mr. Psillas said different banks may offer comparable products and prices, but, when it comes to access, the smaller institutions simply cannot contend with giant banks that have thousands of ATMs.
"This will enable the banks to compete more efficiently for customers," he said.
