If you conduct your finances through an online bank, there’s one transaction that you’ve never done before: deposit cash. One ATM network is helping to change that online-banking reality by introducing a new way for its partnered financial institutions to accept check and cash deposits at its ATMs.

TheMOX / Flickr | http://www.flickr.com/photos/20790907@N06/9557201279

TheMOX / Flickr source

The Allpoint ATM network, which touts a fleet of 43,000 ATMs in the U.S., will begin to roll out deposit-taking capabilities at more than 2,500 of these machines by the end of the year. Many of the ATMs are located in popular U.S. retailers such as 7-Eleven, Target, CVS, Costco and more.

“With the introduction of this deposit capability, Allpoint adds even more value to these surcharge-free ATMs, meeting consumers in retail stores that are part of their daily routine,” said Bill Knoll, an executive vice president at Cardtronics, the parent company of Allpoint.

Online banks lack the physical presence that their brick-and-mortar competitors have in place — it’s one major edge that big banks have over online bank. To stay competitive with these megabanks, online banks partner with ATM networks to offer more low-cost ATM access to customers.

Typically, when you use an out-of-network ATM, a bank will charge a fee and the operator of the out-of-network ATM will add on another fee. Just like that, you forked over $5 to access your own money.

Online banks may not impose an out-of-network ATM fee, but the ATM operator will still tack on a surcharge. Some of these online banks may partner with ATM networks, like the Allpoint ATM network, to eliminate this surcharge for customers.

Capital One 360 (formerly ING Direct) is one popular online bank that works with the Allpoint ATM network. BBVA Compass, a large regional bank, also works with Allpoint to provide expanded surcharge-free access to customers of five BBVA checking accounts.

However, customers of most online banks have never been able to deposit checks or cash through these partnered ATM networks because the technology just wasn’t there, yet.

There have been alternative deposit methods for checks: paper mail and remote check deposit.

Depositing a check through mail takes several days and there’s always the risk that the check is lost.

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Mobile check deposit has been extremely beneficial to customers of online banks — and all other financial institutions — since checks can deposited from wherever their phones have an Internet connection. Additionally, some online banks also allow customers to upload photos (such as scanned images) of checks to deposit remotely.

Ally Bank is one online bank that lets customers mail in checks, scan check images and use their smartphones for mobile check deposits.

Cash, on the other hand, has always been a problem point for financial institutions that lack physical locations.

The new deposit-taking functionality means that Allpoint’s partnered financial institutions will be able accept checks and cash deposits through more traditional means. Allpoint says that the deposits will not require deposit slips or envelopes.

A better case for online banks, community banks, credit unions

Although it may not be the most common ATM transaction in today’s digitally-focused world, cash deposits are still a reality in consumer banking. Offering the ability to deposit cash will further blur the lines that separate online banking and traditional banking.

If you’ve been holding back from switching to an online bank solely because you want to be able to deposit cash, then Allpoint’s new announcement will make you reconsider the transition.

Deposit-taking capabilities through the Allpoint ATM network doesn’t just mark an evolution in online banking, it also affects Americans who conduct their finances with small community banks and credit unions.

While community banks and credit unions do have some of their own branches and ATMs, these physical locations are not as far-reaching as the networks of major national banks. Therefore, some of them also rely on partnerships with ATM networks to offer more convenience for customers and members.

The positive implication of deposit-taking functionality at these ATM networks for online banks also extends to community banks and credit unions.

Allpoint is not the only major ATM network to allow customers of partnered financial institutions to deposit cash. The MoneyPass ATM network, which has 24,000 ATMs nationwide, also offers deposit-taking capabilities (called “Shared Deposits”). Nearly 5,000 credit union branches make up the CO-OP ATM network, which allows members of partnered credit unions to make deposits at any of the network’s ATMs for free.

Will it cost anything?

If you’ve been watching the banking industry, you may have become sensitive to fees. With every new feature, you’re worried that your bank will find a reason to slap you with a new charge. The new deposit capabilities at Allpoint’s ATMs raises similar concerns.

But, in line with it’s surcharge-free policy, check and cash deposits through the Allpoint ATM network will also be free of charge — something that you definitely cannot complain about.

It remains unclear on which partnered financial institutions will accept deposits through Allpoint ATMs (Allpoint has 1,200 members). It wouldn’t be too surprising if some banks opted out of this functionality due to systems-integration difficulties or security concerns.

“While it’s a bit premature to share the names of our pilot partners, we at Allpoint are pleased with the early response to Allpoint Deposits,” said Nick Pappathopoulos, a Cardtronics spokesperson. “Every bank or credit union needs to consider its own market and how this capability would fit in with its current offerings and assessment of consumer needs, but we think it’s a strong offering that will be attractive to a number of financial institutions.”

However, we believe that banks will welcome this added feature with open arms — especially if large participating banks like Capital One 360 and BBVA Compass Bank lead the way. It is far too convenient of a feature to not offer to customers when a third-party company is doing the brunt of the work.

If you happen to conduct your finances with a bank or credit union that is partnered with the Allpoint ATM networks, here’s some good news: USAA Bank, one of the pioneers of mobile check deposit, already accepts deposits through partnered ATM networks that include those operated by Allpoint, MoneyPass and PNC Bank. As one of the nation’s largest banks with only a handful of brick-and-mortar financial centers, USAA is an example of how partnerships with deposit-taking ATM networks are expanding customer service without building more physical branches.

  • http://thewalletdoctor.com/ Leonard Carter

    This sounds like a great opportunity for online banks. I do think that given the majority of individuals comfortable with online banking are most likely comfortable with mobile check deposit, it may not be revolutionary. However, it may broaden the number of people willing to do online banking.

    • http://www.mybanktracker.com Simon Zhen

      Agreed. Additionally, I’d like to see more online banks jump onboard the Allpoint network (and other ATM networks) that now accept deposits.

    • Shawn

      “check and cash deposits through the Allpoint ATM network will also be free of charge” – this is great! A hit with online banks imo. I also agree with you in regards to it not being revolutionary but surely convenient.

  • Christina

    Where are these atm located . The ones that accept cash/check deposits. All point ATMs.. I have capitalone 360 but I don’t live near a branch . Only thing we have around here are the allpoint. Which are a lot of them. But which ones accept this transaction

    • http://www.mybanktracker.com Simon Zhen

      At this moment, Allpoint is working on a gradual rollout of this ATM feature. Unfortunately, there is no detailed list of locations that currently offer this feature. They also haven’t disclosed which financial institutions are working with Allpoint to offer this feature. We’ll be sure to update this story once we get more news on the rollout’s progress.

      • Lea Ann Irick Williams

        is this option available yet?

        • http://www.mybanktracker.com Simon Zhen

          Lea Ann, I have not spotted any news of any financial institutions that are testing/offering deposit-taking capabilities via the Allpoint ATM network.

          However, I know that some other banks are already partnered with other ATM networks that do offer deposit-taking functionality. One example is Radius Bank, which is working with the NYCE ATM network for fee-free cash and check deposits.

          More info on one of Radius Bank’s better accounts: http://www.mybanktracker.com/news/radius-bank-new-best-online-checking-account