How CardTronics Is Leveraging Co-Branding to Make ATMs Pay

At a time when new ATM deployment has been slow, one independent deployer of the machines has found a big payoff from a novel approach to cobranding ATMs with banks. Since announcing its cobranding deal about 18 months ago, Houston-based Cardtronics Inc. has been able to get more than 800 new devices deployed in large retail chains. Banks that Cardtronics has deals with include Chase, PNC, and Commerce Bank. The cobranded ATMs have been deployed in major retail chains including Exxon, Walgreen's, and CVS. The way the deal works is that Cardtronics owns, operates, and collects the interchange revenue from the devices. Banks pay Cardtronics a small branding fee for putting their names on the devices. In addition to the marketing exposure that the banks get from having their names on the machines, the banks' customers are allowed to use the ATMs without paying surcharge fees. Keith Myers, Cardtronics executive vice president of financial services, explains that retailers are more receptive to having Cardtronics' ATMs in their stores because they like being guaranteed that a certain percentage of the banks' customers will come into their stores to use the ATMs. Meanwhile, the banks benefit from being able to expand their service area without the expense of purchasing and maintaining the ATMs. “Most banks are finding that they do not make any money from off-site ATM deployment. The only benefit of having ATMs in stores is that it is a great customer service. This allows them to service their customers without having to invest in the machines and pay to maintain them,” Myers says. For its part, while Cardtronics does not collect any revenue from the banks' customers. It benefits from being able to attract better retail locations where other customers will pay to use the machines. Myers says that Cardtronics is working primarily with the top 50 banks in the U.S. “The banks give us a list of market areas where they want to increase their customer service and then we match those areas up with locations owned by our retail partners,” he says. Some banks are especially interested in finding retail locations near where they are building new branches as a way to gain instant exposure in the new markets, he says. Currently, all the cobranded machines deployed only dispense cash. The machines are capable of accepting deposits with some enhancements, Myers says. Cardtronics is talking to a few banks about piloting deposit acceptance, including possibly testing technology that shows the check being deposited on the ATM screen, Myers says. However, he notes that for now cash dispensing is the banks' primary interest.