Using ATMs as an Income Producing Opportunity

Arlington Federal Credit Union, a community-based credit union in Texas with $38 million in assets and 10,000 members, had an opportunity to place an ATM in a local convention facility. The City of Arlington, which is a SEG of the credit union, owns the facility and wished to provide cash access for convention participants who were using an adjacent hotel ATM for cash access at high surcharge rates.

 
 

A case study of case study of Arlington Federal Credit Union

Arlington Federal Credit Union, a community-based credit union in Texas with $38 million in assets and 10,000 members, had an opportunity to place an ATM in a local convention facility. The City of Arlington, which is a SEG of the credit union, owns the facility and wished to provide cash access for convention participants who were using an adjacent hotel ATM for cash access at high surcharge rates.

In assessing the placement opportunity, the credit union believed the capital cost and recurring operating and human resource time in managing a machine, especially one with irregular transaction volumes, would be a challenge. However, the credit union was able to achieve a successful outcome with a turn-key ATM program provided by Mobile Express Capital Corporation (MECC). The site has proved to be a cost-effective ATM placement, due to income generated from surcharges and increases in transaction volume during peak convention times.

"It's a win-win, " says Jim Merritt vice president of Arlington Federal Credit Union, "we are able to serve our members, and the convention center customers benefit from paying lower transaction fees." The convention center had received complaints regarding the $5.00 transaction fee charged at the other site. This program eliminated the capital outlay for the ATM, reducing management time and balancing of the ATMs provider. "We looked at it both ways," explains Merritt, "and we determined itÕs a better deal to let MECC handle this ATM." MECC actively manages the ATM currency utilizing customized software and stays in continual contact with the facility manager to stay abreast of upcoming events. "We have a real good working relationship," says Merritt, "the convention center gives Mobile Express the convention center calendar for the year. MECC monitors usage to determine if the ATM needs more cash, without having to contact me directly." The company also does not require the credit union to supply vault cash for the ATM, thereby reducing credit union risk of loss and regulatory scrutiny.

AFCU took advantage of an MECC option to keep 100% of the surcharge income from this location for a slightly higher fee. The surcharge income from foreign transactions subsidizes usage for credit union members, who pay no fees for using this ATM. The surcharge income may not have covered operating costs and time and effort had the credit union operated the machine internally. According to Merritt, "It's a neat fit because the convention center visitors now have access to cash on-site, offering greater convenience with only a $2.00 fee. Our members, the convention center employees, are better served as well."

 

 

 

July 1, 2002


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