Exit AmEx, Enter 7-Eleven

  7-Eleven Stores Inc.'s August announcement that it would acquire some 5,483 automated teller machines deployed in its convenience stores is another sign that off-premise ATM programs are undergoing a significant shift, as one-time big players are exiting the business. The convenience-store giant is buying the ATMs, and all contractual obligations, from American Express Co. for $44 million in cash.
  The sale by AmEx parallels New York-based E*Trade Financial Corp.'s sale of 12,000 off-premise ATM contracts to the Houston-based Cardtronics Inc. ATM independent sales organization in July. E*Trade and AmEx bought their ATM portfolios in the late 1990s. At the time, both financial companies cited providing remote access for their Internet-banking customers and securing strategic retail connections as reasons for building their off-premise ATM fleets.
  Use of added functions on the ATMs, though, never gained traction. And off-premise ATM revenues and profit margins slipped in recent years as consumers became wary of off-premise ATMs that impose surcharges ("Plenty of Cash, Little Profit," August).
  A 7-Eleven spokesperson says AmEx had put the ATM fleet up for sale, and 7-Eleven decided that it wanted more flexibility on a range of ATM-related services. "We can better control our destiny by owning them," says the spokesperson.
  American Express owned 7,100 ATMs as recently as 2003, good for No. 5 among the ranks of ATM owners, but has been reducing its market presence since then. The 7-Eleven sale takes the travel-and-entertainment giant entirely out of the business of owning ATMs.
  "Essentially 7-Eleven made an attractive offer for the remaining portion of our ATM portfolio, and at this time we believe that there are attractive investment opportunities that are more core to our business," says a spokesperson for New York City-based AmEx.
  Besides the machines, 7-Eleven purchased all the contractual commitments to service them, says the 7-Eleven spokesperson. Ed Moneypenny, 7-Eleven's chief executive, said in a statement that the purchase complements 7-Eleven's strategy of offering more financial services in its stores.
  "With our significant customer traffic and convenient locations, control of the ATMs will allow us to better integrate this valuable service into our overall merchandising efforts within the store," said Moneypenny.
  7-Eleven has some experience operating ATMs of its own. The company has deployed about 1,000 Vcom multifunction machines that support a variety of payment services, including check cashing and money-order dispensing, in addition to traditional ATM cash withdrawals. The 7-Eleven spokesperson says existing vendors, including the Brookfield, Wis.-based processor Fiserv Inc., would continue servicing the ATMs, and 7-Eleven has no plans to take any services such as processing in house.
  However, 7-Eleven will have more branding flexibility with the ATMs, which AmEx branded with its Axis ATM brand, and is considering negotiating with financial institutions to brand some of the machines with local bank brands, says the spokesperson.