As a bank customer, I am trained to avoid fees at all costs. I diligently maintain a minimum balance in my accounts, pay my credit card bills weeks ahead of time and plan my day around getting to a bank-owned ATM to avoid surcharges.
And I am certainly not the target market for Cardtronics' ATMpass, which asks consumers to pay up to $10 a month up-front for unlimited access to 5,000 of the company's machines. But there is a market for this offering, and it's a big one. It's the same people who pay a monthly fee for prepaid cards rather than get a free checking account, or pay fees to check-cashing stores rather than get shocked by NSF charges when they overdraw their bank account.
This kind of logic rarely makes sense to the traditional "banked" customer, but it does make sense: A certain segment of consumers would rather pay a larger fee to a nonbank than be surprised at the end of the month by the fees their bank assesses.
The trouble with marketing to this segment is the products are so often doomed by mainstream media commentary offered by reporters who are mainstream bank customers. Suze Orman's "Approved Card" died a slow death after commentators blasted it for daring to charge any fees at all. The Kardashian Kard, which charged monthly fees in line with its competitors, was harshly criticized for charging those fees in six-month bundles and was killed off almost as soon as it launched.
The Kardashian Kard's failure is particularly frustrating because the product was vilified for being honest about its costs. Many called it predatory, but it was really ahead of its time. Even today, the Consumer Financial Protection Bureau is not satisfied with the state of prepaid card disclosures, and recently launched an inquiry into the relationships prepaid card marketers have with colleges.
ATMpass borrows a lot from the Netflix model. It offers a free trial and even an option to buy gift subscriptions. Just as Netflix offers users personalized recommendations as soon as they sign in, the ATMpass website detects a visitor's location and creates a personalized map of nearby ATMpass machines.
ATMpass also seems to borrow a lot from services designed for the underbanked. It is clear about what it covers (ATM operator fees) and what it does not cover (banks' foreign ATM fees), and the tradeoffs users make for different tiers of membership.
Of course, there's a sales pitch in how it presents its subscription pricing. Its chart emphasizes how much users save in a year, not how much they spend in a year. And the pitch continues even after users sign up; the ATMpass site tracks each customer's activity and provides a record of how much the user saved in ATM fees over time.
And there is still a risk that Cardtronics might suffer a Kardashian Kard-like "Katastrophe" by being a bit too honest about how much its ATMs cost to use. Even if $10 a month is a huge savings, some people might prefer to pretend that they can keep their ATM use in check to come in under that figure by paying per transaction.
Whether or not ATMpass generates a following, it is a fascinating experiment. There are other experiments like this happening in banking, such as Regions Bank's move to charge varying fees for mobile check deposit (a service that most bank customers use for free).
In the case of Regions, there was indeed backlash on social media and in app store reviews, but that ran its course very quickly and the service's actual users were much more upbeat. The bank likened its model to Amazon Prime, which has a long following of e-commerce customers who pay an annual fee to get faster shipping on any purchase they make, even though Amazon has a free shipping option. To Regions' customers, the tradeoff is worth it, even if they can get the same service for free by switching banks.
Daniel Wolfe is editor in chief at PaymentsSource and a contributing editor at American Banker.