Visa U.S.A., which helped usher in the ATM surcharging era in 1996 by letting banks on its Plus network charge fees to noncustomers, is poised to announce today a surcharge-free option for community banks.
It has several goals for the Plus No Surcharge Alliance, which is now accepting enrollments from banks and credit unions. As much as it aims to help its smaller members, which benefit when their customers can use more automated teller machines without incurring fees, Visa also wants to raise the Plus network's profile and boost its ATM transaction volumes.
Rather than lead this time around, it is in many ways following a trend that now appears to be fairly well established.
There are already about a half-dozen thriving no-surcharge networks in the United States, most of them fairly small and local. For that reason, one industry consultant said Visa's entry into the market might not make much of a splash but could help Plus gain volume and recognition.
"It is good they are offering more options to their members, but the reality is that there are already a panoply of options," said Tony Hayes, the managing director for financial services for Dove Consulting Group Inc. in Boston. "This is not a dramatic change for anybody."
A spokesman for MasterCard International called Visa's decision to set up a no-surcharge network a "me-too" sort of move. MasterCard announced new rules in May that permit its members to make agreements not to surcharge one another's customers.
Within the last year Visa has been busy touting Plus, which handles ATM transactions, as well as its Interlink network, which processes point of sale debit cards. MasterCard has been conducting similar campaigns for its Cirrus and Maestro networks. Both companies are trying to compete more vigorously with the regional electronic funds transfer networks for bank processing contracts.
A Visa executive involved in the rollout of the surcharge-free network said the goal is to call more attention to Plus and its 364,000 ATMs. Though the machines will be free for customers, member banks will pay $50 a month and 5 cents per transaction to join the alliance, as well as a one-time $200 setup fee.
"We are positioning our networks as an alternative or a primary network solution for our members if that is what they want to do," said John Brinnon, the vice president of ATM card products at Visa, of San Francisco.
It has created a distinct logo for the Plus No Surcharge Alliance to get the name to stick in consumers' minds. People do not usually pay much attention to whether their ATM or debit card has a Plus logo, but under this program it will make a difference to customers of participating financial institutions.
"Consumers would look for the Plus Alliance on the ATM to identify it as an ATM they can use without a fee," Mr. Brinnon said.
Institutions that sign up for the alliance will receive a starter kit with stickers they can put on their ATMs and some ideas on educating customers about the service. One lesson will be that not all Plus ATMs will be free - only those that belong to alliance members. Mr. Brinnon said the service will be marketed primarily to community banks and credit unions that do not have a large number of ATMs.
"With cardholders increasingly more mobile, we believe the Plus No Surcharge Alliance will enable both cardholders and financial institutions to receive the superior value that they have come to expect from Visa," Stacey Pinkerd, its senior vice president for debit and prepaid products, said in a press release.
The first no-surcharge network was set up in 1996, after Visa and MasterCard lifted their bans on surcharging for Plus and Cirrus. Operated by the regional EFT network Shazam of Johnston, Iowa, the group now boasts 997 financial institutions and 2,700 ATMs.
"In the big picture, certainly Plus is looking to bolster ATM transaction counts, which have declined," said Richard S. Jenkins, Shazam's senior vice president and corporate counsel.
The Visa offering likely will not siphon much business away from the regional networks, Mr. Jenkins said. "It is more of a secondary routing opportunity for transactions that would otherwise not work for regional networks. Plus and Cirrus serve as a national umbrella" for transactions that cannot be completed within a regional network.
Another large no-surcharge network is the SUM program run by NYCE, the EFT network that is majority-owned by one of Visa's processing rivals, First Data Corp. SUM, which began in 1998, now has 490 financial institution members. Around 2,850 of the 120,000 ATMs in the NYCE network participate.
"The market has responded to the need or desire to have this service for those that want it," said William K. Peirce, the director of network services for NYCE Corp. "It is reflective of the maturation of the market."
Cindy Ballard, an executive vice president of Pulse EFT Association, agreed that the new alliances were not likely to generate new transaction volume. Surcharge-free networks "appeal to a certain segment, but not across the board," said Ms. Ballard, whose company operates a fee-free network called Select ATM. "People are not jumping on the bandwagon. I don't see it as a real volume generator."
Brad Adrian, a senior analyst at Gartner Inc., called Visa's new alliance a good way to hang on to community banks. "Visa won't generate millions and millions from this. They want to align institutions with them, keep them happy, and make sure they don't look to other providers."
