from San Francisco Business Times
Friday, January 18, 2008

By Mark Calvey

Bank of America 's decision to boost the surcharge for non-customers using its branch ATMs is prompting smaller rivals to join surcharge-free ATM networks.

Several community banks -- and even larger players such as First Republic Bank and Charles Schwab -- offer services that include free use of other banks' ATMs worldwide. It's a quick way for them to compete against the big banks' broad ATM networks, but an increasingly costly one.

BofA boosted competitors' cost of eating those surcharges when it boosted the charge to $3 from $2 for non-customers taking cash out of a machine at ATMs located at a BofA branch. When California's biggest bank adopted the higher fee last summer, BofA said it was trying to give its own customers better access to its branch-based ATMs. Many observers considered the real motivation was to end the subsidized ride rival banks were enjoying. After all, BofA's ATM network of more than 17,000 machines is a costly proposition: The typical ATM costs $30,000 to $50,000 to purchase and $1,000 to $2,000 a month to operate. Other major banks, such as Wachovia , U.S. Bank and Chase , followed BofA CEO Ken Lewis' decision to to increase the non-customer ATM fee in select marekts.

With the higher surcharges, bankers are turning to services such as Allpoint, a surcharge-free ATM network of 32,000 ATMs coast to coast. Allpoint is owned by Cardtronics , which places machines in restaurants, corner stores and major retailers. Participating bankers pay a flat fee for participating in the Allpoint network whether the financial institutions' customers use an ATM network once or 10,000 times during the month.

mcalvey@bizjournals.com / (415) 288-4950