Star Fills in Some ATM Gaps With Its New Allpoint Connection

Processor First Data Corp.'s Star electronic funds transfer network on Tuesday announced a deal with the Bethesda, Md.-based Allpoint ATM network that Star expects will fill in some geographic gaps in its nearly nationwide ATM coverage. Under the arrangement, financial-institution users of Star's Starsf service will be able to offer their debit card holders surcharge-free access to Allpoint's 32,000 ATMs located mostly in stores. The deal potentially brings to Allpoint relationships with hundreds or even thousands of new banks and credit unions. “The biggest gain here for us is that Star is providing a group of financial institutions all at once,” Allpoint President Ben Psillas tells Digital Transactions News. “Sales efficiency is probably the biggest bang for us.” Star has 5,400 bank and credit-union members. An undisclosed number are enrolled in Starsf, in which participants agree not to surcharge each other's customers when they use another network member's ATM. Star launched Starsf some years ago as it expanded nationwide by buying up a host of regional EFT networks. That expansion continues?in April Star bought Well Fargo & Co.'s Instant Cash Network. Despite gains throughout the country that have brought its ATM count to 315,000, Star still had some geographic thin spots in its coverage, according to Kirk Ergang, senior vice president of Star network administration. Most were in areas where long-established rivals themselves have bought up other networks or been acquired by deep-pocketed processors. Ergang cites the Northeast, where the dominant NYCE network is now owned by bank processor Metavante Corp., and Texas, home of Houston-based Pulse, which is now owned by Discover Financial Services LLC. Allpoint, a unit of Houston-based ATM operator Cardtronics Inc., has machines in all 50 states. “We were looking for a partner to give us national coverage,” he says, adding. “Allpoint was looking for a partner that can provide a number of financial institutions at the same time, instead of doing a one-off.” Allpoint's average surcharge is $1.50 to $1.75 per transaction for customers of non-network financial institutions who use its ATMs, according to Psillas. By pairing up, Star can sell its members on the expanded surcharge-free ATM utility they bring to customers. Psillas says that will more than compensate for the fee in lieu of the surcharge that members will pay. One of the main attractions of a bank or credit union to customers is the breadth of its ATM network, and the better coverage, the more business the customer's relationship generates, Psillas maintains. “That is more deposits, more assets into that financial institution, probably deposits and assets they were not able to make before,” he says. “There is a multiple reward to cost in this scenario.” Under the arrangement, transactions will be switched by Starsf and routed over Star's electronic rails, according to Ergang. Neither Star nor Allpoint would discuss pricing, which will be set between Star and its members. The deal becomes effective in early December, Ergang says. While its ATMs can be found in many retail locations, some of Allpoint's more notable locations include Target Corp. stores, Exxon Mobil Corp. convenience stores/gas stations, and Costco Wholesale Corp. warehouse stores.