MasterCard Worldwide is throwing more muscle behind its prepaid growth strategy by offering surcharge-free ATM access to its issuers and program partners.
By partnering with Cardtronics Inc.’s Allpoint Network, the payments company could compete better for business with prepaid card issuers and program managers, which consider surcharge-free access to ATMs an important tool to attract customers, analysts say.
“It’s a great opportunity for prepaid companies that are looking to differentiate, are looking for ways to provide value for their cardholders, looking to continue progress in the evolution of their products and the way they are going to market,” says Neil Dugan, MasterCard vice president and head of U.S. markets, prepaid product management.
The agreement, made Thursday, also is a coup for Allpoint, which has 32,000 surcharge-free ATMs in the United States located primarily at retail stores such as Target Corp., Costco Wholesale Corp. and 7-Eleven Inc.
ATM withdrawals made with prepaid cards are a small part of the network’s business, but the company wants to boost that volume, says Ben Psillas, Allpoint president.
“We’re trying to leverage our infrastructure as a financial kiosk leader to sell more products and services to this growing segment,” Psillas says.
The ability to offer access to surcharge-free ATMs is important for prepaid card issuers and program managers to compete for cardholders, says Tim Sloane, director of the prepaid advisory service at Mercator Advisory Group in Maynard, Mass.
“Consumers who have a general-purpose reloadable card need access to cash, and the more convenient that you can make that, the better off you are,” Sloane says.
Some state laws also require payroll and other programs to provide users access to their funds at no cost, Sloane adds.
MasterCard does not have any prepaid card issuers or program managers that have agreed to use the Allpoint network, Dugan says, but some have expressed interest.
Traditionally banks and other customers pay Allpoint a flat monthly fee based on the number of cards that have access to its ATMs, Psillas says. Neither he nor Dugan would discuss the financial arrangement of MasterCard’s agreement.
By going through MasterCard to connect to Allpoint, issuers and program managers receive a price benefit, Dugan says.
“We believe that our partnership provides a simplified process for our members and partners to be able to provide access to Allpoint ATMs for their cardholders and to be able to do that at a lower price,” he says.
