WASHINGTON – Amid the growing arguments from the U.S. Public Interest Research Group accusing banks of gouging consumers with ATM fees and consumer concerns over the economy, ATM National President Ben Psillas wants to offer an oasis in the form of a new surcharge-free, deposit-taking national ATM network. Psillas plans to market ATM National to credit unions, community banks, Internet banks and other financial services providers with limited access to ATM networks. In the works since May 2000, Psillas claims that now is the right time for such a network. "Actually this idea came through my own pain and suffering of paying surcharges for such a long time," said Psillas. "And I actually called my bank and said, `How much do I pay in surcharges in a year?' And it was over $200. So I was thinking that was just for me. If you multiply that by all the other consumers I realized there is a need now for this." Here is how it works. For a flat monthly fee cardholders of ATM National network participants will have surcharge-free access to all the network's machines for cash and deposits. Bank deployer membership will be on a regionally exclusive basis, with one or two major deployers participating in each region of the country. According to Psillas, the network's bundled pricing strategy allows participants to replace surcharge revenue with a greater fixed monthly revenue stream. "Let's face it, big banks are not going to be a part of a surcharge-free network if it does not provide them with more money today," said Psillas. "That is why we made sure to create a different pricing structure that guarantees a monthly revenue stream. A lot of major banks are experiencing declining transaction volumes and revenue streams from ATM networks as more consumers choose to use their own financial institution's ATMs or debit cards to withdraw larger amounts from POS transactions." In a partnership with Diebold, Inc. and EDS, ATM National hopes to have 30,000 ATMs on the network by the end of 2002. The first come first served carving up of the country with geographic exclusivity is just part of economic reasoning says Psillas. "If other major banks are in the same area then the access fee would have to be some gigantic number because they represent so much of each other's area it wouldn't make sense for them to participate." So while targeting the top 25 regional banks, the whole premise of the network is to in a way aggregate the financial institutions that have little or no ATM presence since they only represent a small portion of that foreign volume, so the major banks are not giving up a whole lot in surcharge revenue. Credit unions with more than four ATMs are excluded as the focus is more on the card issuing side. "This is giving credit unions a huge distribution channel at a fraction of the cost of building one themselves," said Psillas. No new ATM machine software is required for participants. With the card's bank identification number, transactions are automatically routed through the ATM National network. Cardholders would identify participants by the network's logo on ATMs and newly issued cards of member financial institutions would also have the logo. "It is a win-win for everyone," said Psillas. "So there is no new software, no new technology, and no new cards. The card that's in the wallet today, works tomorrow." A nationwide surcharge-free network has been a long-time dream in credit union-land and no network has come closer to making it a reality than Ontario, California-based CO-OP Network. As the fourth largest network and the only one exclusively for credit unions, after 11 years CO-OP has more than 12,000 ATMs in 49 states and Canada through more than 778 member credit unions. CO-OP Network President/CEO Robert Rose is not worried about the fledgling network and is in fact intrigued by the possibilities. "It is an interesting time to attempt to develop something of that nature," said Rose. "It seems to counter what larger banks are doing. For example, Bank of America and U.S. Bank have dropped network affiliation over the past two years and those are large banks with ATMs. They've got a big hill to climb but we'll see how it plays out." According to Rose, the consolidation in the ATM industry as well as consolidation elsewhere could also hamper ATM National's chances to find institutions willing to participate in this venture. The past decade has seen a swell of 100 ATM networks reduced to less than 50 with only approximately 10 considered viable. Aware of the CO-OP's success, Psillas views his network not as a competitor but a supplement to credit unions. "The credit unions are a very tight group and have been successful with their own alliances," said Psillas. "ATM National is more of a complement to their alliances so now their members could also use the banks to conduct their surcharge-free transactions." The privately funded company will not model its network on the more traditional EFT networks. Wanting to be viewed as a vendor, there will be no ownership by the member banks. Member financial institutions will pay access fees for the services they want. EDS and Diebold will both be resellers of ATM National network and their sales people will also be promoting the network. EDS' consumer network services division will provide the switching, settlement, and data collection services. According to EDS Consumer Network Services General Manager Tony Catalfano, while depositing checks at foreign ATMs has never been popular because it doesn't generate a significant amount of revenue, "we know there is a strong demand for a reliable and comprehensive surcharge-free and deposit-taking network so incentives will be offered by ATM National to encourage member banks to accept those deposits." Psillas remains optimistic and says to expect announcements in the next few months about which credit unions, banks and other financial institutions have signed up for the network, which should be up by mid-2002. "Our greatest challenge is the big banks; they move slowly and take baby steps," said Psillas. "And we've been working at this since May of last year making sure this is a win for banks, a win for credit unions and a bigger win for consumers. Now it is time to get it up and running." Rose wishes Psillas well and says it is too early to tell what might develop but either way he doesn't consider the latest player a threat. "Who knows, it could even turn out to be a positive if they are successful – after all they are talking about what we do very well today," said Rose. [email protected]

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