ARLINGTON, Va. - Now just over one-year old, Allpoint Network,the fledgling nationwide ATM Network that is surcharge free to ATMusers, has continued to grow and has begun to compete againstshared ATM networks, arguably the dominant ATM model among creditunions. "We don't mention CO-OP Network by name because we arearen't focusing on them," Allpoint President Ben Psillas said, "butthey are the big dog in this space and we make the case that creditunions should choose Allpoint over some shared networks, since bothpricing models have costs." The costs to which Psillas referred arethe different sorts of expenses that credit unions face whenoffering surcharge free ATM access to their members. Despite themisconceptions of many credit union ATM users, there are no trulysurcharge free ATM transactions, only transactions that aresurcharge free to the cardholder. If a transaction takes place atan ATM owned by the members' credit union, the costs includepurchasing and servicing the machine and the transaction. If atransaction takes place at an ATM the credit union does not own,the cost depends on the sorts of ATM arrangements the credit unionestablishes. If a CU opts to join a surcharge free network, such asCO-OP Network, those costs include the lost surcharge income thatthe credit union agrees to forego from cardholders of other networkmembers. If many cardholders from other network members use acredit union's ATMs, those costs can be substantial, but theygenerally fluctuate and represent lost income rather than cashoutlays. If a CU opts to join Allpoint, the costs include theper-card fee that the CU will negotiate to enroll its cards inAllpoint's network. Unlike shared branching costs, which couldfluctuate month to month, Allpoint's costs will be more or lessfixed over the life of the contract. Also, unlike shared networkcosts, the Allpoint fee represents cash outlays rather thanforegone income. But Psillas pointed out that, on a per transactionbasis, the credit unions that had joined Allpoint had found thatthe costs were very reasonable, especially when compared with themember satisfaction with the ATM access. "We have more than 25,000ATMs in our network," Psillas said. "That's more ATMs around thecountry than Bank of America. When a credit union joins Allpoint,the members use the ATMs as much as they want for one flat fee."Psillas pointed to a case study Allpoint had sponsored which foundthat ATM transactions by cardholders of four Allpoint members hadincreased by 500% in the first 10 months after the institutions hadjoined the network, all while the per-card fee for the accessremained fixed. Jim Hanisch, vice president with the CO-OPacknowledged that for some credit unions, Allpoint's pricing planand program might make sense, but maintained that CO-OP's researchsuggested it would remain too expensive for most credit unions. "Weare familiar with what Ben and Allpoint are trying to do and wewish them luck," Hanisch said. "But we really don't think thatpricing plan is to going to work for the great majority of creditunions." Hanisch also pointed to one of CO-OP's strong suits, theability of some of CO-OP's 17,000 machines across the country totake deposits, something that none of Allpoint's machines can do.Psillas conceded that Allpoint's machines lack the ability, butreported that CardTronics and E*Trade, Allpoints two largest ATMdeploying partners, have been getting more interested in theopportunities offered by Check 21 and check imaging. Allpoint'snewest five credit unions are the $700 million Andrews FCU,headquartered in Suitland, Maryland; the $80 million Genesis FCU,headquartered in Springfield, Virginia; the $425 million HanscomFCU, headquartered at Hanscom Air Force Base in Massachusetts; the$120 million Palisades FCU, headquartered in Pearl River, New York;and the $165 million Pegasus FCU, headquartered in Dallas. Theseadditional five brings the total number of financial institutionsparticipating in the network to 70, with the majority of thosecredit unions, Psillas said, adding that the network has morecredit unions "in the pipeline" for membership in the comingmonths. "We are finding a lot of interest and almost all by word ofmouth," Psillas said. "That's one of the biggest differencesbetween credit unions and banks, when credit unions hear about agood deal they tell other credit unions. Banks almost never dothat," Psillas explained. Psillas also explained that gettingbigger credit unions like Pentagon FCU to sign on has served toreassure others that, despite its youth, Allpoint is worth achance. "I have lost track of the number of credit unions that havetold us, `we like the idea,' `we're definitely interested' buthaven't been sure we would be around. The more credit unions thatsign on, the more familiar we become." -

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