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TRM Corp. says its deal to deploy automated teller machines that can bear the brands of multiple banks will help it compete against its largest rival, Cardtronics Inc.
TRM, of Portland, Ore., struck a deal last week to install ATMs with technology developed by Select-A-Branch ATM Network LLC that lets ATMs recognize customers of its bank clients.
Select-A-Branch, of King of Prussia, Pa., has 19 such clients, including two it announced last week, PNC Financial Services Group Inc. and Toronto-Dominion's TD Bank.
ATMs with its technology have a generic screen, but when customers of a client bank insert their ATM cards, the screen changes to display the bank's logo. The ATMs also feature a 19-inch LCD sign that features the logos of all its clients, one after another.
Select-A-Branch's clients say the technology is a cost-effective way to expand their ATM presence without installing more ATMs.
At PNC, "we look at it as a way to extend our free choices for our customers," and that can be less expensive than an exclusive-branding deal, Jim Walker, the senior vice president of PNC's ATM banking group, said in an interview last week.
PNC went with Select-A-Branch because the Pittsburgh company needed more coverage in New York City to serve commuters who use its branches in New Jersey but visit New York often, he said.
"PNC is a huge company, so in terms of ATMs, we have some gaps in certain areas," he said. PNC also has exclusive-branding deals with Cardtronics in places such as the District of Columbia. Under these agreements, Cardtronics puts the brand of a single bank client on some of its ATMs.
Select-A-Branch's bank clients pay it a $2 transaction fee when one of their customers uses the former's ATMs; customers of other banks must pay the fee themselves.
Doug Falcone, the chief operating officer of TRM's Access To Money unit, said that because banks pay the ATM fee for Select-A-Branch transactions, the machines essentially become a surcharge-free network, something its rival Cardtronics already has through its 2005 purchase of Allpoint. Cardtronics, of Houston, operates 33,106 ATMs, according to its third-quarter results. It did not return a call last week.
"Cardtronics is the 800-pound gorilla," Mr. Falcone said. "Their Allpoint network has certainly been successful."
Select-A-Branch, which Mr. Falcone said has agreed to provide its technology exclusively to TRM, "gives us an avenue to have a surcharge-free network, as they do, and that's important. Without that, we couldn't compete with them."
Mr. Falcone said his company will split the $2 fee with Select-A-Branch, with most of the fee going to TRM.
TRM operates about 12,000 ATMs, but few of them can use the Select-A-Branch technology because it requires new hardware — notably the LCD panel on the top that displays a scrolling ticker of participating bank brands when the machine is idle — as well as Microsoft Corp.'s Windows XP operating system. Most of TRM's fleet runs the older Windows CE operating system.
Select-A-Branch also operates its own ATMs. Dan Stechow, its chief operating officer, said the company has ATMs set up or in deployment in seven Northeast states. The TRM deal, which he said is expected to close by Tuesday, would take his system nationwide.
Select-A-Branch has fewer than 200 machines deployed today, and a substantial portion of them are in New York City McDonald's Corp. franchises.
Merchants like his company's system, Mr. Stechow said, because it draws in customers who bank with several financial companies. "We know that the Select-A-Branch model works, that customers will seek out surcharge-free transactions," he said.
Nicole Sturgill, the research director for delivery channels at TowerGroup Inc., an independent research firm owned by MasterCard Inc., agreed that the Select-A-Branch technology could attract more people to retail locations.
Customers "will come to my ATM versus going to someone else's, where they're going to have to pay the surcharge," she said. For the banks, "you're sharing the cost of branding" with other banks.
"I can see the benefit of it, and I can see from a TRM standpoint it is a good way for them to compete with Cardtronics," Ms. Sturgill said.
