Published: November 13, 2006 12:00 am    by Mary Beth Mclaughlin , Scripps Howard, for Eagle-Tribune, North Andover, MA

Automated teller machines revolutionized the banking business when they were introduced nearly 40 years ago, but today's customers are proving to be fickle.

A growing reliance on debit cards for such everyday purchases as a fast-food lunch, coupled with the ease of online banking to track balances, means use of the machines in dollar terms has declined locally and nationally.

But rather than abandon the machines, banks are seeking new places for them and are experimenting with sophisticated equipment to make transactions easier.

"People still want them and they still want them where they need them," said Paul Meinerding, senior vice president of KeyBank in Toledo. Ohio.

The bank service is big business. The United States had 396,000 terminals last year, up from 324,000 five years earlier, according to ATM & Debit News. But, the trade publication said, the value of transactions handled by the machines dropped 23 percent to $877 million last year from the amount in 2000.

"What we're hearing is that clients are getting cash back at the supermarket and using their debit cards for purchases, so they have less cash needs," said Mark Swinehart, vice president of electronic banking for Sky Financial Group in Bowling Green, Ohio.

Volume is flat at Sky Bank's 70 ATMs in northwest Ohio and southeast Michigan, he added.

Still, Elias Awad, banking professor emeritus at the University of Virginia who has expertise in the machines, said banks will never give up on the machines.

"I think the trend is bound to be growing because customers continue to demand convenience," he said.

Phil Talmage, group product manager for National City Bank, which has 35 ATMs in the Toledo area, said, "If it hadn't been for debit cards and online banking, we would definitely see growth in transactions.

"But more and more merchants are accepting small-value sales, like McDonald's, so that customers don't have to pull out cash."

The cost of ATMs was once as high as $70,000, but the newest, smaller models cost about $7,500, said industry sources.

In a survey of owners of gas stations and convenience stores, 44 percent reported that the average number of ATM transactions per month, per store, is 201 to 400.

One sticking point with customers is the fee a bank charges for using another bank's ATM. The "foreign" bank charges a fee and the user's home bank usually charges a fee of $2 to $2.50 per transaction. Some banks offer waivers of those fees.

Not all financial institutions are convinced ATM use is on the wane.

Joe McCool, operations manager for CU-up LLC, which is owned by four Toledo-area credit unions, said his group had a 6 percent increase in the number of ATM transactions last year, with cash withdrawals up 9 percent.

The company has heavily promoted the machines, which likely has helped keep use levels high, McCool said.