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Three of the nation's largest surcharge free ATM networks that primarily serve
credit unions and small banks announced Monday they have expanded or will expand in the near future.
The networks made their announcements at a time when much of the financial community is fixated on headline-grabbing mergers between large banks. These mergers have created national ATM networks in the wake of some banks' financial failures.
The surcharge-free networks–Allpoint, Co-op Financial and MoneyPass–, however,
have gone about their expansions quietly without government assistance through an astute reading of the market, their top executives said at SourceMedia's ATM, Debit & Prepaid Forum in Chandler, Ariz.
Though their presentation called "The Battle of the Surcharge Free Networks,"
James Hanisch, executive vice president of Co-op Network, which is based in Rancho Cucamonga, Calif., said the title was misleading. The three networks often work together, serving the same clients–credit unions, small banks and in some instances large national banks–to help the financial institutions expand their ATM networks' geographic reach, he says.
For example, Bethesda, Md.-based Allpoint recently signed a 2 1/2-year contract
with Tallahassee, Fla.-based Credit Union 24 to form the nation's largest surcharge-
free ATM network for credit unions (ADN, 8/17). The alliance, called CU Here Premium, has a network of 50,000 ATMs nationwide.
Minneapolis-based MoneyPass, which operates more than 13,000 ATMs, also has
committed its machines to CU Here Premium. U.S. Bank Corp., which is based
in Minneapolis, owns MoneyPass through its Elan Financial Services subsidiary.
Hanisch announced that Co-op Network now has over 28,000 ATMs, up from 25,000.
"We have simply grown," Hanisch said in response to a question. Douglas P. Miraglia, president of the MoneyPass and Ben Psillas, president and founder of the Allpoint joined Hanisch in the panel discussion.
MoneyPass will add 3,000 additional ATMs in December when the InterCept surcharge-free ATM network joins MoneyPass. Jacksonville, Fla.-based Fidelity Information Services owns InterCept. MoneyPass also announced it signed an
agreement with Seaucus, N.J.-based NYCE Payments Network EFT's SUM selective surcharging program.
NYCE's SUM network enables cardholders of participating financial institutions
to make surcharge-free withdrawals at nearly 2,950 designated ATMs.
Milwaukee-based Metavante Corp. owns NYCE.
Financial institutions that are SUM members can decide whether they want to
join MoneyPass, but SUM will provide an Internet link to MoneyPass to gather information about the product, Miraglia says. Allpoint, the nation's largest surchargefree ATM network with 35,000 ATMs, is now moving overseas.
Psillas told attendees Allpoint will expand to the United Kingdom in November with 2,500 surcharge- free ATMs.
Allpoint, which is owned by Cardtronics Inc., the world's largest ISO
based on the 32,801 ATMs it owns and manages, will rely on the ATMs of its sister
company, Bank Machine Ltd., which is based in Hatfield Hertfordshire, England.
There are a myriad of reasons why community banks, credit unions and sometimes
large banks join surcharge-free ATM networks. The biggest reason appears to be
economy. "Bank of America overnight raised its surcharge fee to $3 from $2 for nonbank customers," Psillas says. "Consumers are very conscious of being nickled-and dimed to death."
Large surcharge-free ATM networks also can compete with large bank-owned
networks, such as Bank of America Corp., which owns 18,531 ATMs, or JPMorgan
Chase & Co., owner of 14,272 ATMs. Surcharge-free networks also provide marketing muscle. Community banks and credit unions can include the information
about their national geographic reach in sales pitches to retain customers and
attract new ones.
In addition, the networks enable small banks and credit unions to effectively market
their services to Gen-Xers and Gen- Yers, says Jim Gowan, executive vice president and chief operating officer of Credit Union24. The average age of credit-union members is 47, and credit unions want to appeal to young consumers by offering them access to nationwide network of ATMs.
Co-op Network only offers surchargecharge- free access to credit unions.
Allpoint and MoneyPass serve community banks, credit unions and some very large
financial institutions. "Citibank and Navy Federal Credit Union are members of MoneyPass," Miraglia says. Navy Federal is the world's largest credit union with $35 billion in assets and 3 million members. New York based Citi operates the nation's eighth largest bank-owned ATM network with 3,188 ATMs.
National banks also join surcharge-free ATM networks in addition to the ones they
operate as a defensive measure. They offer ATM services to customers in areas, in
which the bank does not have branches. All three networks offer nationwide coverage to member financial institutions that usually pay a monthly fee to the networks.
Psillas displayed a map of the United States with red dots, showing where
Allpoint ATMs can be found. Except for a few white areas in the Midwest, the entire
country was covered in red dots.
MoneyPass mostly offers nationwide coverage. "We're in 48 states, except Hawaii
and New Hampshire, and I am not sure why we are not in New Hampshire,"
Miraglia said.
