Article

Driving kiosk traffic through mass transit

While public transportation is usually seen as a way to reduce traffic, some New York City banks are hoping it will increase traffic to their ATMs and financial kiosks. Though selling fare cards to commuters is not necessarily a moneymaker for them, it may offer a way to earn customer service points.

May 27, 2002

Distributing public transportation fare cards at ATMs and financial kiosks may give transaction volumes a boost -- and more importantly engender goodwill -- for financial institutions doing so in the New York City area.

According to New York City Transit Authority spokesperson Deirdre Parker, 51 ATMs currently dispense the authority's MetroCards, which can be used to ride the city's subway or bus systems. The cards are also sold at subway stations, at standalone MetroCard vending machines and at various merchant locations such as newsstands and pharmacies.

Noting that the cards are sold at about 3,000 non-Transit Authority locations, Parker said the authority is "always open to new ways of getting MetroCards to our customers."

ATMs and financial kiosks offer consumers the option of conducting other banking business while purchasing their fare cards, Parker said. However, she added, the vending machines offer more payment options -- cash, credit card or ATM/debit card -- and also allow consumers to load value onto cards and purchase the cards in a variety of denominations ($3 to $80), while only one denomination ($15) is available at ATMs.

Kristen Batteria, a spokesperson for JP Morgan Chase, said Chase has been dispensing the cards from about 20 ATMs -- all near Metro Stations -- for about a year-and-a-half. While she didn't offer specifics about sales, she said "demand was not high," so the program wasn't likely to expand beyond existing sites.

Tom Burns, vice president of retail bank operations for Carver Federal Savings, which dispenses the cards from nine of its 11 ATMs, was more positive about the program. After about five months of offering the cards, he said customer reaction has been highly favorable. So favorable, in fact, that Carver is in the process of upgrading its remaining two machines.

Fujitsu hopes to convince some of its financial institution clients in New York to dispense public transportation fare cards from 8000 Series ATMs like this one.

"We've gotten a wonderful response," Burns said, "especially from senior citizens, who tell us they feel safer getting their MetroCards at an ATM rather than at the station."

The bank has promoted the service through statement inserts, on signage at the ATMs and especially through word-of-mouth, Burns said. "Our employees pride themselves on really listening to their customers. If they think a customer might be interested (in the MetroCard), they'll tell them how they can get cards from the ATM, sometimes even walk them over to the machine and show them," he said.

Burns said the only drawback -- and it's a minor one -- is that cassette space must be sacrificed to dispense the cards. "It's not a big issue because our machines have four cassettes," he said. "You just have to replenish your cash a little more frequently and manage your money a little better."

The Carver ATMs are all located at branches in Manhattan, Brooklyn, and Queens, Burns added, so cash replenishment costs are not high.

In addition to JP Morgan Chase and Carver Federal Savings, the cards are sold at ATMs owned by Commercial Bank of New York and American Express, according to the Transit Authority's Parker.

Carver and other participating financial institutions buy $15 MetroCards from the Transit Authority at a discounted rate of $14.55. (The cards are worth $16.50; customers receive a free $1.50 fare for purchasing the cards from an ATM rather than from a Transit Authority employee.) The 45 cents they make on each MetroCard transaction helps cover the costs of offering the cards. This is important since the card dispense is treated as a point-of-sale rather than a transaction, with no surcharging allowed.

Selling the cards through ATM/financial kiosks is "a service, not a moneymaker," Burns said, adding that Carver offers stamps for the same reason.

Manufacturer Fujitsu made a minor change to the cassette in its 8000 Series ATMs so they could more easily dispense MetroCards and recently completed a round of testing, repeatedly running the cards through dispensers, to ensure that the machine would not damage the cards.

Two Fujitsu clients, a bank with ATMs in Manhattan and another with machines in New York and New Jersey, are interested in offering MetroCards, said Fujitsu sales executive Marc Moskowitz.

Moskowitz called the MetroCard program a win for all involved. The Metro Authority can leverage the already existing installed base of ATMs rather than installing more single-function ticket-dispensing machines, an incentive that he thinks would appeal to any public transit organization.

"It's not like smart cards where technology has to be retrofitted to accept the card," he said, referring to pilot programs with smart cards undertaken by several cities, including San Francisco and Chicago.

Most consumers are already comfortable with an ATM interface, Moskowitz said, but may not be familiar with a ticketing kiosk. (Indeed, the Transit Authority Web site includes a set of instructions on using MetroCard vending machines, complete with a detailed diagram.)

The program also provides an opportunity for financial institutions to boost transactions at their ATMs, especially those by foreign customers, Moskowitz said.

"It's been a big struggle to maintain foreign volumes since the surcharge came out," he said. "Banks are asking themselves how they can get people who are not their customers to frequent their ATMs. Offering this kind of a value-added service is one way to do it."

To make the MetroCard program work, Moskowitz opined, banks must heavily promote the service and offer it at most, if not all, of their ATMs so that customers won't be disappointed when looking for the cards.