Automated teller machines traditionally have been one-way machines. While consumers could use the devices to withdraw cash from their accounts, they could not use them to send money. Now they can.
The world's largest money-transfer company, Western Union, a subsidiary of Greenwood Village, Colo.-based First Data Corp., in February began offering ATM-to-ATM money transfers on 4,000 ATMs in hopes that the machines will become key access points for the company's growing money-transfer business.
Debit card holders purchase transfer amounts from a menu item on the ATM screen. Recipients of the transferred funds do not need a card. They just key in a password provided to them by the sender, supplied by Western Union.
The transfer policies are similar to those applied to typical ATM transactions. For example, Western Union has set a $500 transfer limit. There is no such limit for transfers involving live agents. Moreover, transfers only can be made in $20 increments to avoid the problem of ATMs having to dispense odd amounts and change.
Frank Lockridge, director of the new Western Union ATM network, would not say specifically how the transaction activity is faring thus far other than to say "it is going well." The ATMs mostly are in 7-Eleven convenience stores. 7-Eleven has an agent relationship with Western Union.
The transfers can only take place on ATMs in which Western Union has installed special processing software. Notably, there are no surcharges applied to the transactions, and the card issuer does not pay interchange to the ATM acquirer.
"It never leaves our network, so there's no interchange," Lockridge says.
Lockridge declines to say how much Western Union charges for the ATM transfers. Company executives previously told CCM sister publication ATM&Debit News that buyers of transfers would be charged a fee similar to that charged when agents handle the transaction, which is about 10% of the value of the transfer.
Western Union pays fees to the ATM acquirer and the operator of the dispensing ATM.
Western Union views the 7-Eleven ATM transfers as just a beginning of expected greater use of ATMs for transfers, says Lockridge.
"We do have a top-25 bank signed," he says, declining to identify the bank. "I feel comfortable with saying we will have over 6,000 ATMs by year-end."
Executives involved in another major money-transfer service, Traveler's Express' MoneyGram, also are keenly interested in offering ATM-to-ATM money transfers. But their efforts to achieve that goal seem stalled.
MoneyGram last year partnered with the Star electronic funds transfer network to offer ATM-to-ATM transfers. But that effort has been put on hold indefinitely, says Barbara Span, a Star vice president.
The Star/MoneyGram system would be significantly different from the Western Union system because the Star switch would process the transactions. But like the Western Union model, the cardholder would relay a special password to the receiver.
Unlike the Western Union model, though, the Star/MoneyGram model envisions issuing special authorization cards to the receiver for use in the dispensing ATMs.
That system would not require the installation of special software in MoneyGram/Star ATMs, and it would open use of the product by operators of more than 95,000 ATMs driven by Star's owner, Memphis, Tenn.-based Concord EFS Inc.
But the pending purchase of Concord by First Data may kill the Star/MoneyGram product, as First Data views Western Union as a prized, profit-producing business that is expanding globally. First Data Chief Executive Charles T. Fote told analysts recently that he has high hopes for Western Union's ATM transfer product.
"(Money-transfer customers) have checking accounts-they must have ATM cards," he says. "It just fits that (transfers) should be an electronic transaction."
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