First Data and Allpoint Team Up to Offer Surcharge-Free ATM Access

Implications: The Allpoint Network (a subsidiary of Cardtronics) and the Star EFT Network (a First Data subsidiary) is offering a turnkey solution for banks and credit unions who want to gain a greater ATM presence and offer its customers surcharge-free ATM access. In the U.S. approximately 396,000 ATMs are deployed and the Allpoint Network operates one out of 12 ATMs or 33,000 surcharge-free ATMs in all 50 states. The Star Network wants to expand its geographical reach and fill some gaps in its EFT Network where competitors dominate and the deal with Allpoint will give STAR a competitive advantage. Since 2001 surcharge fees has increased from $1.45 to $1.75 in 2006 and banks and credit unions plan to increase surcharge fees by as much as $3.00 per transaction. More banks and credit unions are joining the Allpoint Network to offer customers surcharge-free ATM access and members of the Starsf Network agree not to surcharge each others customers when they use another network member's ATM. 

Analysis: Comments/Perspective:

The Allpoint Network (a subsidiary of Cardtronics) is the largest surcharge-free ATM network in the U.S. and provides greater access, convenience and savings to customers of financial institutions participating in First Data's Starsf EFT Network, who may have a limited ATM presence or for larger ATM owners who want to expand their ATM network and offer customers surcharge-free ATM transactions. In addition, the Allpoint Network provides financial institutions with the tools to compete more effectively for customers who are balking at ATM surcharges when they don't use their bank's ATM. Allpoint is also working with smaller credit unions and community banks to offer surcharge-free access as a competitive advantage over the big behemoth banks and credit unions who may not offer surcharge-free ATM access.

1.  As surcharge fees rise consumers are looking at financial institutions and credit unions who offer convenience and accessibility to their funds without a surcharge fee, whether they're shopping at a C-store, drugstore or retail store and may not want to look for their bank's branded ATM and the Allpoint Network offers the convenience, accessibility and geographic reach customers are seeking when conducting ATM transactions in the U.S.

2.  A few days ago I stopped at a C-store to get some cash from the ATM. I was in a hurry and the ATM was not my bank branded ATM. I opted to pay the $2.25 surcharge fee for a cash withdrawal and my bank charged me a $2.00 surcharge fee for not using their branded ATM. If my bank was a participating Starsf Member I wouldn't have paid $4.25 in surcharge fees for the cash withdrawal.

It was a painful reminder to use my bank branded ATMs or be prepared to pay a hefty surcharge fee.  Surcharge fees have been around since 1996 when Visa, MasterCard and the EFT networks decided to lift the ban on surcharging and although surcharge-free networks are gaining ground, it doesn't appear that surcharge fees are going away any time soon since banks and credit unions rely of these fees as a revenue stream.