PNC Bank Corp. has started selling AT&T prepaid telephone cards through some of its automated teller machines.
Several ATM deployers-most of them nonbanks-have experimented with noncash items, usually with modest results. PNC has become one of the few large commercial banking companies to commit itself to such a program.
"We had been looking for other ways to use the ATMs," said James S. Walker, vice president and manager of self-service banking. The ATM initiative could "increase our fee income," he said, and PNC as a whole is going after many fee opportunities.
During a pilot period, the AT&T cards are being sold at 10 branches in the Pittsburgh area. PNC-which has more than 2,700 ATMs, making it one of the top 15 bank deployers-said it plans to sell the cards from machines it owns in shopping malls, convenience stores, and "many" branches.
The cards cost $20 for 60 minutes of calling time, and the charge is debited from the customer's deposit account. ATM purchases are treated as point of sale transactions, so there is no surcharge.
PNC's machines require no retrofitting because the cards are the same size as dollar bills and can be dispensed the same way.
Prepaid phone cards are growing in popularity and are widely available at convenience stores. ATM industry executives say that the cards have had limited appeal in sales through banking machines and that postage stamps have proven more popular.
Some ATM deployers are dispensing gift certificates, movie tickets, and other items to generate revenue.
Electronic Data Systems Corp. of Plano, Tex., has been selling Sprint Corp. prepaid cards at some of its 4,500 ATMs since 1996.
"It just hasn't been a real strong ATM product," said Dale Dentlinger, senior vice president of electronic business at EDS. "Consumers don't expect them to be sold at ATMs."
On the other hand, ATM owners "need to supplement that revenue stream with new products, especially today when we've had an explosion of ATMs," Mr. Dentlinger said.
EDS continues to sell Sprint cards in the expectation that the U.S. market for telephone cards-still young when compared with Europe's-will blossom, Mr. Dentlinger said.
"Prepaid cards are becoming popular with more and more consumers," said Mark Evans, marketing and sales vice president for AT&T prepaid cards.
Domestic sales of prepaid telephone cards grew to $3.2 billion in 1998, from $40 million in 1994, according to the International Telecard Association.
Alanna Kellogg, president of Kellogg Group, an electronic banking consulting firm in St. Louis, said prepaid phone cards may not be wildly popular as ATM items but do not cost much to dispense.
"The margins may be high enough" to yield profits from selling "not so many of them," she said.