Fee-free ATMs firing up bank wars

Provident joins Citibank, others in a network that expands customer options

Friday, June 23, 2006

As competition among banks heats up, many are sweetening the deal by expanding their ATM network, eliminating fees and even paying customers for debit card transactions.

Provident Bank of Baltimore recently joined Genpass, a Dallas-area subsidiary of Minneapolis banking giant U.S. Bancorp that maintains a surcharge-free national ATM network. That means that Provident’s commercial and individual customers will have fee-free access to some 11,500 ATMs across the nation, up from about 1,500 just in the mid-Atlantic region, said John King, Provident’s executive vice president of consumer banking and president of its greater Baltimore region.

In Maryland, the number of ATMs that Provident customers can now use for free about doubled to 240, King said.

‘‘It’s a big benefit to us,” he said. ‘‘We hear from customers that when they go on a vacation or a business trip across the country they don’t want to be charged for ATM usage.”

The fee to join Genpass was a ‘‘minor expense,” and Provident is marketing the greatly expanded ATM network to attract and retain customers, King said. ‘‘We can offer the same products as a large bank like Bank of America,” he said.

ATM fees rise Americans paid $4.3 billion in ATM fees in 2005, up from $3.8 billion in 2004, according to a survey by Bankrate.com. The average fee for using a bank’s ATM outside the network rose to a record $2.91 in 2005. Some 96 percent of banks charge non-network customers for using their ATMs, while 87 percent charge their own customers for using another bank’s machine. Allpoint, a Bethesda ATM network, has the most machines among surcharge-free companies with more than 32,000, according to ATM and Debit News.

Provident, with $6.4 billion in assets, has branches and ATMs in Maryland, Washington, D.C., Virginia, Pennsylvania and New Jersey. Bank of America of Charlotte, N.C., Maryland’s largest bank in market share, has greater assets than Provident with $1.4 trillion, but the ATM gap has closed significantly as a result of the Genpass deal. Bank of America has almost 17,000 ATMs in the United States.

Genpass earns revenue through charging participating banks, credit unions and other financial institutions a fee for each transaction. U.S. Bancorp’s fee-based revenue rose 9.5 percent to $6 billion in fiscal 2005, the company said.

Besides Provident, clients include New York financial services giant Citibank. The Maryland Bankers Association has also signed a referral relationship with Genpass.

Provident could see some increased revenue through Genpass customers being able to use Provident’s ATMs, King said. Fees for such outside customers will still apply, he said.

Some banks are covering part or all of customers’ ATM fees paid to banks outside the network. For instance, TD Banknorth of Portland, Maine, this month introduced a no-fee ATM card to customers in New Jersey, Pennsylvania, Connecticut and parts of New York.

Sheetz, a convenience store chain, and its ATM operator, M&T Bank, have also stopped charging a $1.50-per-withdrawal surcharge on ATMs in Sheetz stores, including in Maryland.

Earlier this year, Washington Mutual, a Seattle banking and home loan company, even began paying customers 3 cents for each debit card transaction. The checking accounts also require no minimum balance to avoid a monthly fee.

Washington Mutual still earns part of the fee all banks earn from the merchant network for each debit card transaction, said Derek Aney, a company spokesman. ‘‘Most banks decide to keep all of that income for themselves,” Aney said. ‘‘We decided to give some of it back to customers to show that we appreciate their business.”

Washington Mutual has no bank branches in Maryland but does have some home loan centers in the state, he said. The company does not plan to open bank branches in Maryland in the near future, but individuals and business officials can open no-ATM fee checking accounts online, Aney said.

SunTrust Bank of Atlanta, which has many branches in the mid-Atlantic, has opened another front in the bank wars by offering a product to ease customers’ identity theft worries.

SunTrust last month launched a free identity theft protection and credit-monitoring program from Equifax Inc., a major provider of` consumer credit information services. SunTrust, according to its information, became the first major bank in the nation to provide Equifax’s ‘‘Silver” credit protection product for free to select personal checking clients; Equifax normally charges $49.95 per year for the service.

Gene Kirby, SunTrust corporate executive vice president, said in a statement, ‘‘Industry reports suggest that identity theft costs Americans more than $5 billion annually, claiming a new victim every 79 seconds.” He said that, beyond ‘‘merely offering tips,” SunTrust’s effort is ‘‘to make identity theft protection a free and integral part of our preferred checking accounts.”