With Boston on Board, Select-A-Branch Plans Further Expansion

Select-A-Branch, the multibranded surcharge-free ATM network, reported on Tuesday that it has completed installation of 10 machines in Massachusetts Bay Transportation Authority subway stations, but its growth train won't stop in Boston. “Look for us in some major airports,” Dan Stechow, chief operating officer of King of Prussia, Pa.-based Select-A-Branch ATM Network LLC, tells Digital Transactions News without revealing which ones. He adds that Select A Branch also is talking with some major retail chains and highway and toll-road authorities about possible deployment sites. Select-A-Branch is an independent sales organization that deploys cash dispensers that cardholders of the network's entire financial-institution membership can use without being surcharged. The network's ATMs, made by Dover Corp.'s Triton subsidiary and equipped with Microsoft Corp.'s Windows operating system, sport the Select-A-Branch logo. The screens, however, show the members' individual logos, colors, and related graphics electronically. Users see three advertisements from their own bank or credit union during a transaction, and that institution's logo is printed on the receipt. The network has 17 members so far, ranging from a number of small and regional credit unions to some sizable banks such as PNC Financial Service Group Inc. and TD Commerce Bank, the U.S. unit of Toronto-based TD Bank Financial Group. The newest member is Philadelphia Federal Credit Union, which joined just this week. Select-A-Branch helps members develop marketing materials and maps so they can inform customers about ATM locations. The network's approximately 150 ATMs can be found from five U.S. Postal Service FCU sites in the Washington, D.C. and Baltimore areas to plazas along the Pennsylvania Turnpike to dozens of McDonald's Corp. restaurants in New York City, and now Boston. Stechow expects to have about 200 ATMs deployed by year's end because of the addition of even more McDonald's locations in New York. As with its other locations, Select-A-Branch in Boston sought busy sites in order to generate high transaction volumes. Under a five-year contract with the MBTA announced in January, Select-A-Branch is paying a total of $264,400 in the first year for deployments in 10 stations in and around Boston. Annual payments will rise in step with the Consumer Price Index, but not less than 2.5%. The MBTA also chose two other deployers for other stations: TD Banknorth, predecessor to TD Commerce Bank, was the winning bidder on eight locations for $132,000, and Bank of America Corp. bid $30,000 in the first year for one location. The transportation authority said the contracts would more than double the $200,000 in annual non-fare revenue it received through a lease with its former bank partner for 10 sites. Select-A-Branch's contract implies that each ATM needs to generate $2,203 in average monthly revenue just for the MBTA. Stechow would not disclose privately-held Select-A-Branch's financials, but says transaction numbers are running far above the 400 to 500 a month he says is the national average for off-premise ATMs. Member financial institutions pay Select-A-Branch $2 per transaction when one of their cardholders uses a machine. Consumers who don't belong to any member are surcharged $2. “We, unlike the financial institution, receive revenues on 100% of our transactions,” he says. The Boston deal's high visibility should help attract more network members, according to Stechow. “Obviously, with more locations up in Boston, that gives us greater ability to leverage with global and big banks, as well as the local institutions,” he says. Stechow adds that Select-A-Branch is talking with more financial institutions, but he wouldn't name them. Although per-machine counts for the industry are trending down because of ATM market saturation and competition from merchants, such as grocery stores, that accept PIN-debit cards and give cash back at the point of sale, every new member will help Select-A-Branch defy that trend, according to Stechow. “The magic of our model is that with each and every financial institution that we sign, we can anticipate transaction volume increasing, not decreasing.”