KEVIN KILEY
Florida deal gives ‘boost’
Since its inception a few years ago, the surcharge-free SUM network has proven to be a success, according to most participating financial institutions in the commonwealth. Now, consumers in Massachusetts whose bank or credit union is part of the surcharge-free network are seeing SUM’s reach expand.
According to Will Peirce, vice president of network services for the NYCE network, which administers the SUM program, an agreement has been reached between NYCE and the Publix Supermarket chain, which has almost 900 locations, approximately 700 of which are in Florida. The ATMs in the supermarket chain, called Presto!, currently charge a $1 surcharge, Peirce said. NYCE has a relationship with the chain and signed an agreement in July to allow SUM bank customers to use the ATMs without being surcharged.
“It is a tremendous boost to the industry and [SUM] participants,” said Kevin Kiley, chief operating officer and executive vice president of legislative and regulatory policy for the Massachusetts Bankers Association.
The initiative is currently in effect and SUM member banks can sign up with NYCE to allow for surcharge-free use of Presto! machines.
MBA and NYCE unveiled the initiative to bankers last week during an industry meeting designed to discuss the future direction of the SUM program.
NYCE is one of the leading electronic funds transfer companies in the United States, with 2,200 financial institution participants and 55 million cardholders who have access to more than 120,000 ATMs in the NYCE network.
The Publix Supermarket Presto! ATMs are not truly part of the SUM network, which is designed for financial institutions only. But in exchange for not surcharging SUM customers, the supermarket will not be charged a fee from NYCE for gaining access to a customer’s checking account when they use their debit card to purchase items at the supermarket.
In Massachusetts, merchants are charged approximately 17 cents by a bank when a customer uses their debit card.
Kiley said the additional ATMs in Florida will benefit the many consumers who leave New England and head south for the winter months.
The SUM network was introduced in October 1998 after smaller institutions became concerned about larger institutions surcharging their customers for ATM use. Created by the Massachusetts Bankers Association as a way to provide more options to consumers and bankers, SUM is a selective surcharge program offered and administered by the NYCE network. According to the SUM Web site, cardholders of financial institutions that have chosen to join SUM can make withdrawals at ATMs owned by other SUM program member financial institutions without paying a surcharge.
According to a late October 2004 SUM program participant summary, 328 banks in Massachusetts are part of the program, with a total of 1,770 SUM ATMs in the network.
Trailing behind Massachusetts is Connecticut with 85 total participants and 366 available ATMs.
Selling Point
Bankers in the Bay State said the SUM network has been successful and customers are receptive to the program.
“The program has worked and worked well,” James C. Lively, president and chief executive officer at Bridgewater Savings Bank.
Lively said it has kept community banks competitive with their larger counterparts.
“We can network together as a group,” Lively said.
Kiley said the program has allowed community banks to compete with institutions that have widespread ATM networks.
“It moderated industry and consumer concern,” said Kiley.
Gary Coltin, senior vice president of retail banking at Eastern Bank, said the network has allowed community banks to give their customers more ATM options.
“The vast majority of institutions don’t have an expansive reach of ATMs,” Coltin said.
Bridgewater Savings Bank has a total of eight ATMs, five of which are in the SUM network. Lively explained that the three machines not in the program are in non-bank locations. Because of this, the bank incurs costs for security and rent payments to the landowner and therefore charges a fee for use of the off-site ATMs.
“It is a balance you have to strike,” Lively said.
Lively said he supports the initiative to partner with Publix Supermarkets in the south.
“People [going] out of state are concerned about paying fees,” said Lively.
Some of the community banks have used SUM as a marketing tool to lure consumers to their bank. Gerard Lavoie, executive vice president of Dedham Institution for Savings, said the SUM program has been “extremely beneficial” to the bank. He said the institution does use the network as a selling point to customers.
“When surcharging became a popular thing for banks to do, we were concerned,” Lavoie said.
Dedham Institution for Savings has a total of 10 ATMs, all in the SUM network.
“I don’t know what we would do without it,” Lavoie said.
According to Coltin, the SUM program also has worked well for Eastern Bank.
“It has been highly beneficial for Eastern Bank to participate in the SUM program,” Coltin said.
Eastern Bank has a total of 62 ATMs with all but two machines in the network.
Citizens Bank is also a participant in the SUM program and touts the largest number of SUM ATMs in the network. According to Melodie Jackson, spokeswoman for Citizens Bank, the institution offers 250 ATMs with the SUM logo.
“We are the leading provider,” said Jackson.
Jackson said the bank has not used SUM as a marketing tool as many smaller banks have done because the institution has so many of its own ATMs in the area.
Kiley said banks are not required to have all their ATMs in the SUM network. A bank with 100 ATMs may only have 40 percent of the machines in the program, he explained.
“It is up to the individual bank,” Kiley said.
Kiley said not requiring banks to include all their machines is intended to provide the larger banks with some flexibility for their participation since they incur more costs for their locations.
A “vast majority” of banks in the program contribute most, if not all, of their ATMs to the program, Kiley said.
The cost to banks participating in the SUM program is “nominal,” Kiley said. The institutions pay a small charge to NYCE, as well as an annual advertising fee.
According to the MBA, the SUM program has been advertised on television in the form of an animated walking and talking ATM. The 30-second commercial aired on cable stations in the Bay State. Advertisements were also placed on Massachusetts-based Web sites.
Coltin said the advertisements have helped SUM and its participating banks gain visibility in recent years.
As the years pass, SUM is still gaining members. There have been 21 new participants this year. There are a total of 496 financial institutions in the SUM network nationwide.
Other New England states have joined the SUM network in recent years. New Hampshire has a total of 108 SUM ATMs, Maine and Vermont have 13 SUM machines each and Rhode Island offers 118 ATMs.
Kiley said the SUM Advisory Committee will continue to look at expanding access to the program. Coltin has also suggested that transactions should be reviewed over SUM’s lifespan to determine how much money consumers have saved from not being surcharged.
