Corporate America Discovers Payments - Digital Transactions

COMPONENTSDecember 2009 digitaltransactionsSelect-A-BranchBranches outPeter LucasWhile many ATM networks are struggling to grow volume, Select-A-Branch has been working feverishly to buck that trend by signingsome sizable deals.It’s been a busy year for Select-A-Branch ATM Network LLC. Theprivately held network distinguishesitself with multibranded machines thatnonetheless give the user the experienceof using his or her own bank’sATM. Select-A-Branch has been signinga host of deals to expand its installedbase, and more are on the way.In July, the King of Prussia, Pa.-based surcharge-free network signedan agreement with Milwaukee-basedMetavante Corp.’s NYCE electronicfunds transfer network under whichthe 500 banks and credit unions inNYCE’s SUM surcharge-free ATMnetwork would join Select-A-Branch.Initially, SUM members will haveaccess to an undisclosed portion ofSelect-A-Branch’s ATMs in the Northeast,but Select-A-Branch expects tosteadily expand SUM members’ accessto the network. (Processor FidelityNational Information Services Inc.bought Metavante in October.)In November 2008, Select-A-Branch signed an exclusive distributionagreement-in-principle pact withthe Access To Money network, givingit potential access to about 3,000 ATMsin convenience stores and other retaillocations throughout the country. Andearlier Select-A-Branch completedinstallation of 10 machines in MassachusettsBay Transportation Authoritysubway stations in the Boston area.Other deals in the works include apilot with a major convenience-storechain and ongoing talks with a Top 10bank to become a member, accordingto Daniel Stechow, chief operating officerfor Select-A-Branch. SUM memberswill be participating in the pilot.“We’ve got about a half dozengame-changing opportunities toexpand our network that we are pursuing,”says Stechow.Attractive FeesSelect-A-Branch has about 520 participatingfinancial institutions and 225ATMs in its network, up from about17 members and 200 ATMs in October2008. Its membership includessome sizable banks, including PNCFinancial Services Group Inc. and TDBank Financial Group, but is mostlycommunity banks and credit unions.Many of the credit unions don’t havea single ATM. While Select-A-Branchdeclines to reveal transaction volume,it does say volume is growingthroughout all of its locations.Select-A-Branch’s expansion comesat a time when surcharge-free ATM networksare enjoying substantial growth.Networks such as Minneapolis-basedU.S. Bancorp’s MoneyPass, Co-OpFinancial Services, and CardtronicsInc.’s Allpoint are luring new membersthat want to offer ATM services andkeep the business of customers tryingto avoid surcharges (“No-SurchargeNetworks: Back to the ‘80s,” September,2008). Most ATM owners imposea surcharge fee when non-customersuse their machines.The growth of no-surcharge networkscontrasts with years of lowgrowth or even per-machine transactiondeclines in the broader industryas ATMs battle market saturation andcompetition from retailers that acceptPIN-debit cards and give cash back atthe point of sale for no fee.“A lot of consumers don’t like payingsurcharges, but they don’t necessarilybank with financial institutionsthat have a large proprietary ATM network,”says Kate Monahan, an analystfor Boston-based Aite Group LLC.“Surcharge-free networks appeal tothese types of consumers, and whatdifferentiates Select-A-Branch fromother surcharge-free networks is itsbusiness model.”That business model is based onfees charged to participating banksand credit unions, and the customerexperience Select-A-Branch deliverson its own machines. Unlike competingsurcharge-free networks thatcharge an annual or monthly membershipfee, participating financial insti-digital35