ARLINGTON, Va. - Now just over one-year old, Allpoint Network, the fledgling nationwide ATM Network that is surcharge free to ATM users, has continued to grow and has begun to compete against shared ATM networks, arguably the dominant ATM model among credit unions. "We don't mention CO-OP Network by name because we are aren't focusing on them," Allpoint President Ben Psillas said, "but they are the big dog in this space and we make the case that credit unions should choose Allpoint over some shared networks, since both pricing models have costs." The costs to which Psillas referred are the different sorts of expenses that credit unions face when offering surcharge free ATM access to their members. Despite the misconceptions of many credit union ATM users, there are no truly surcharge free ATM transactions, only transactions that are surcharge free to the cardholder. If a transaction takes place at an ATM owned by the members' credit union, the costs include purchasing and servicing the machine and the transaction. If a transaction takes place at an ATM the credit union does not own, the cost depends on the sorts of ATM arrangements the credit union establishes. If a CU opts to join a surcharge free network, such as CO-OP Network, those costs include the lost surcharge income that the credit union agrees to forego from cardholders of other network members. If many cardholders from other network members use a credit union's ATMs, those costs can be substantial, but they generally fluctuate and represent lost income rather than cash outlays. If a CU opts to join Allpoint, the costs include the per-card fee that the CU will negotiate to enroll its cards in Allpoint's network. Unlike shared branching costs, which could fluctuate month to month, Allpoint's costs will be more or less fixed over the life of the contract. Also, unlike shared network costs, the Allpoint fee represents cash outlays rather than foregone income. But Psillas pointed out that, on a per transaction basis, the credit unions that had joined Allpoint had found that the costs were very reasonable, especially when compared with the member satisfaction with the ATM access. "We have more than 25,000 ATMs in our network," Psillas said. "That's more ATMs around the country 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 found that ATM transactions by cardholders of four Allpoint members had increased by 500% in the first 10 months after the institutions had joined the network, all while the per-card fee for the access remained fixed. Jim Hanisch, vice president with the CO-OP acknowledged that for some credit unions, Allpoint's pricing plan and program might make sense, but maintained that CO-OP's research suggested it would remain too expensive for most credit unions. "We are familiar with what Ben and Allpoint are trying to do and we wish them luck," Hanisch said. "But we really don't think that pricing plan is to going to work for the great majority of credit unions." Hanisch also pointed to one of CO-OP's strong suits, the ability of some of CO-OP's 17,000 machines across the country to take deposits, something that none of Allpoint's machines can do. Psillas conceded that Allpoint's machines lack the ability, but reported that CardTronics and E*Trade, Allpoints two largest ATM deploying partners, have been getting more interested in the opportunities offered by Check 21 and check imaging. Allpoint's newest 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 Hanscom FCU, 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. These additional five brings the total number of financial institutions participating in the network to 70, with the majority of those credit unions, Psillas said, adding that the network has more credit unions "in the pipeline" for membership in the coming months. "We are finding a lot of interest and almost all by word of mouth," Psillas said. "That's one of the biggest differences between credit unions and banks, when credit unions hear about a good deal they tell other credit unions. Banks almost never do that," Psillas explained. Psillas also explained that getting bigger credit unions like Pentagon FCU to sign on has served to reassure others that, despite its youth, Allpoint is worth a chance. "I have lost track of the number of credit unions that have told us, `we like the idea,' `we're definitely interested' but haven't been sure we would be around. The more credit unions that sign on, the more familiar we become." -

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