Effective Aug. 1, the Co-op’s ATM machines started charging a $1-per-transaction fee.
Whew. OK, now that I’ve gotten the hard part out of the way, some back story:
We have a habit around here of surprising our vendors. Teeny-tiny stores like ours don’t typically generate the kind of sales ours do (about $22 million total last year). This kind of volume means suppliers have to send larger trucks, or deliver more frequently, than they originally expected they would.
The same turns out to be true with our ATMs. And I bet some of you didn’t even know we had cash ATMs!
We do, in both Mt. Airy and Chestnut Hill. They’ve been there since January 2014, and we’ll have one in Ambler when we open.
Our ATMs are popular: A staggering $1.2 million in cash flows out of the Mt. Airy machine every year. In Chestnut Hill, where there are other ATMs within a few blocks, ours dispenses about $600,000 a year.
When we installed the ATMs, we were determined that they would be “free,” in that we wouldn’t charge a transaction fee (though most people’s banks tend to charge them a back-end fee). So we worked out a deal with the ATM company to rent the machines. The Co-op pays the ATM company every month, the company services the machines and keeps them stocked with cash and Weavers Way customers use the machines for nothing.
Perfect. While it lasted.
Last month the ATM guy called. Thanks to their ridiculously high volume, our machines are expensive to maintain. Too many service calls and too many trips to keep cash in them.
Typically, the ATM guy’s model is to charge a transaction fee rather than rent — $1.50 is his standard. The business where the ATM is located usually tacks on a fee too. Often that’s also $1.50, so the customer gets hit for $3, which is split between the business owner and the ATM operator.
As a result, our guy has ATMs that are dispensing far less cash than ours and making him a lot more money. He told us he’d be better off taking the machines out of our stores and installing them in some beer distributor or hoagie shop.
Something had to give.
We were faced with two options. To keep the ATM transaction free, our cost to rent the units would skyrocket. Currently we pay $600 a month for our two machines. Keeping them transaction-fee-free would mean a new rent of $1,500 a month. Things are pretty tight right now, so this kind of rental increase didn’t strike us as something we could take on.
Our other option was to allow the ATM company to start charging. A $1.50 transaction fee would allow them to make their money entirely based on transactions. The Co-op would no longer have to pay to rent the machines.
Neither of these options were particularly attractive. The new rental terms were unacceptable and the $1.50-per-transaction fee seemed a bit too much. So our final conclusion was to agree to allow the ATM company to charge $1 per transaction, 100 percent of which goes to the ATM company. The Co-op doesn’t get a dime of those fees. Meanwhile, we will continue to pay the same rent for the machines that we’ve been paying, offsetting the extra 50 cents the ATM company would have made in a typical transaction.
It is disappointing that the Co-op’s ATMs are no longer free. This service has proven popular with members, and I know it’s cold comfort that a $1 transaction fee is low compared to what most other ATMs charge.
Then there’s Wawa, which continues to offer free ATMs. With over 600 stores in the Philadelphia region — most of them with multiple ATMs — Wawa does three times the amount of ATM transactions as all banks in the region combined.
Wawa’s ATMs are administered by PNC. I wish I was privy to the terms of their arrangement, as I’d welcome the chance to replicate it with one of the local credit unions, like Police & Fire Federal Credit or TruMark.
For us, that’s the next step in this saga. Hopefully we can develop a partnership with a credit union that allows us to bring back free ATMs in the near future. We’re not done with this issue yet, so please stay tuned.
See you around the Co-op.