TALLAHASSEE, Fla. -- Credit Union 24 has more than tripled the number of surcharge-free ATMs members of participating credit unions can use, making the network the largest in the country in terms of number of ATMs.
The agreement unites roughly 15,000 surcharge-free ATMs that Credit Union 24 previously made available through its CU HERE program with over 32,000 Allpoint ATMs.
It also merges two competing surcharge-free ATM models. In the cooperative approach, employed by CO-OP Financial Services' CO-OP Network and CU HERE, participating credit unions agree not to surcharge each other's members for ATM services. A potential downside to this approach is that participating credit unions must be willing to give up a measure of income in order for its members to access the network.
In contrast, the Allpoint approach offers a network of surcharge-free ATMs, which a participating credit union's members can access in exchange for a fee paid by the credit union. This model is really only "fee-free" to the cardholder.
The latest deal calls for credit unions wishing to gain access to Allpoint's ATM arrangement to participate in something of a hybrid between Allpoint's model and the cooperative approach. Participating credit union members pay no a fee for access to the 45,000 ATMs; neither will the credit unions themselves, at least for the first year.
"ATM surcharges have increased steadily over the past 10 years and we feel it's important that credit unions have control and self-determination over an important financial issue, for the benefit of both the credit unions and their members," said Jim Park, Credit Union 24 president/CEO. "This will enable our participating credit unions to offer their members national surcharge-free reach and expand their own markets while continuing to provide the benefits and economy of credit union membership."
CO-OP Financial Services, which up until this agreement had the largest surcharge-free ATM network in its CO-OP Network, said only time will tell whether the latest arrangement will be of real use to credit unions. CO-OP executives pointed out that Credit Union 24 has negotiated an aggregate, volume-based arrangement with Allpoint whereby Credit Union 24 will cover any surcharges but only for the first year, from February 2008 to February 2009.
"If the program is a success, we'll decide as a cooperative how to continue it and at what level of subsidy. Participation is voluntary, of course, and is available to CU HERE participating credit unions on an opt-in basis," the network said in a letter to its participating credit unions.
"As a former CEO of a pretty big credit union, I am not sure that's an offer I would take," said Stan Hollen, CEO of CO-OP Financial Services, parent CUSO of CO-OP Network, who wondered about "committing my credit union to something that might be a different price down the line."
Hollen observed that a credit union might get started with the Allpoint deal at a time when prices are very affordable. Members could easily become accustomed to it and then decide it is not such a good deal a year later. At that point, Hollen maintained, a credit union would be hard pressed to back away from the deal. "You don't do that to your members--tell them they can use something and then take it away."
Park countered that credit unions will most likely be eager to figure out the value and worth of the new network to its members as part of the decision process about whether or not to continue it.
"Whenever any new technology or system comes into place, credit unions need to evaluate it and determine how it helps them meet their goals. That's true with ATMs or software or anything else," he said. "We will start looking at how well this is working at about six months into it and start to get a good idea of how well it is helping credit unions serve their members."
This deal will provide yet one more way credit unions will continue to tailor and personalize their ATM strategies to meet their members' needs. Park pointed out that only 400 of Credit Union 24's 500 member credit unions had opted into to the CU HERE program because the remaining 100 had decided their members didn't need that much surcharge-free ATM access--perhaps because they mostly used only local ATMs.
Already there is a degree of overlap among the different networks, as some CUs are members of both CO-OP Network and Credit Union 24. Others are members of CO-OP Network and participants in Allpoint as well. "It's up for each credit union to decide what its members need from its ATM program and how best to meet those needs," Park said. "We believe we have given credit unions a very good advantage in doing that."