NYCE Corp. will inaugurate a service in Massachusetts next week designed to make it easy for member financial institutions to join a surcharge-free alliance.

The regional automated teller machine network amended its operating rules in May to allow selective surcharging. NYCE will provide a processing service that frees its members from having to hash out multiple nonsurcharge agreements with other institutions.

Members of the alliance, called Sum, would agree not to charge the extra fee to customers of other institutions at some of its ATMs.

"We tried to do something to make it appealing" to members, said Susan A. Zawodniak, vice president and executive director of NYCE. "Based on our reception in Massachusetts, it looks pretty promising."

NYCE acted amid a hot political controversy over the ATM fees. In July a bill banning surcharges died in the Massachusetts House Ways and Means Committee. That paved the way for the surcharges that BankBoston Corp. and Fleet Financial Group began imposing this month.

BankBoston is charging noncustomers $1, Fleet 75 cents. BankBoston said its surcharge income would help cover a reduction in "foreign ATM" transaction fees for its customers to $1.50 from $2.

The Massachusetts Bankers Association, which opposed the ban, started shopping around for a network or processor to provide a selective surcharging framework for its members, mostly smaller banks.

"We did not want to see a legislative solution, but rather a market response," said Daniel Forte, president of the association.

Advocates of selective surcharging say smaller financial institutions can have the best of both worlds. They can prevent account flight by providing a sizable number of surcharge-free ATMs for their customers. Meanwhile, they can still collect some surcharge revenue.

So far, 85 institutions-representing more than 600 ATMs-have signed up for Sum.

The NYCE service comes with brand recognition, a reasonable price, and frees the association from having to organize an alliance, Mr. Forte said. The association currently offers Sam, which is essentially a pledge by participants not to surcharge anyone.

The NYCE program is similar to other selective no-surcharge alliances such as Avail, an offering of Honor Technologies Inc. of Maitland, Fla., and Intercept Switch Inc., a program of Intercept Group of Norcross, Ga.

NYCE said Sum participants in Massachusetts that issue cards and own ATMs are required to pay a $250 initial fee, plus $75 a month. Institutions that only issue ATM cards will pay $500 to start up and then $150 a month.

NYCE also has an eye on expanding the program to other states next year. "It's a value-added service for our participants to go beyond what we're already doing," Ms. Zawodniak said.

u

WILMINGTON, Del.-Electronic Payment Services Inc., owner of the MAC automated teller machine network, said it will allow selective surcharging by its members, starting Nov. 1.

The rule change permits MAC members to form surcharge alliances with other institutions in the network.

"Our intent is to let network participants expand the number of no- surcharge ATMs available to MAC cardholders," said Philip Valvardi, president of MAC. "This policy change is consistent with recent ATM surcharging trends and gives our members the flexibility they need to compete."

Cash Station Inc. of Chicago said this month it also will allow selective surcharging. Other networks that have similarly amended their so- called nondiscrimination rules over the past year include Pulse EFT Association, NYCE Corp., and Honor Technologies Inc.

Nondiscrimination rules have become the subject of a Justice Department probe examining several networks on selective surcharging.

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.