While online banks excel at convenient services and free checking accounts, they are at a disadvantage in terms of accepting deposits. Initially, customers were limited to mailing in checks or wiring funds, with a few days’ wait for money to transfer. Many online banks now combat that issue by offering direct deposit, online transferring or remote PC and mobile deposit. None of these options properly deal with making cash deposits. Some online banks, however, allow customers to make deposits at ATMs.
This is usually a less promoted alternative, mostly due to the prolonged process. Bank customers these days are becoming accustomed to accessing their funds as soon as the deposit is made, but making an ATM deposit to an online bank typically takes three to five days. “We process customer ATM deposits when they make them, but it’s the slowest deposit method, so we discourage it,” said Kyle Psaty of PerkStreet Bank.
“Only specific ATMs on our network have deposit capabilities, so this doesn’t pose much of a customer service issue.” Similarly, First Internet Bank imposes a mandatory five-day hold on ATM deposits as the bank must wait for the ATMs, which they do not own, to transmit the data to its system.
Allowed, but not promoted
SmarterBank also allows ATM deposits, though you’d be hard-pressed to discover it, given that the option is hidden on the Help page. Customers can make deposits at Star ATMs. “Because the ATMs are independently owned, deposited funds may not be immediately available, and the customer does not know when the deposit will be processed by the ATM owner,” said Jan Jahosky, a SmarterBank representative. “It typically will take longer. For that reason, SmarterBank strongly recommends that customers use the free electronic funds transfer or mail in their checks.” Star representatives declined to comment.
In line with most Internet banks’ fee-free principles, customers are not charged a fee for making ATM deposits to their online banks. Everbank, which uses the Visa Plus ATM network, even offers to reimburse ATM fees imposed by other financial institutions for customers who maintain a daily balance of $5,000 or more. On both the Star and Plus ATM locators, customers can filter search results by checking “Shared Deposits.”
The uncommon usage of such services was emphasized by Executive Director of the ATM Industry Associates David Tente, who more commonly sees online banks using remote deposit services. “I am not aware of which, if any, online-only banks are offering deposit services through foreign (as in, not their own) ATMs,” he said.
For customers who are intent on making deposits at a physical location, online banks provide other alternatives. USAA‘s Easy Deposit lets customers make deposits at UPS stores, while PerkStreet customers can make cash deposits through MoneyGram locations, which can be found in many convenience and grocery stores.
As banking services move toward mobile and remote deposit, it might seem pointless for Internet banks to extend deposit services to ATMs as well. Considering the lack of public outcry (or even curiosity) about the subject, banks likely won’t change what they currently offer at the ATM.