Americans need cash less and less when they travel, a development that may soon make it more difficult to find ATMs in the nation's airports.
Executives at the Minneapolis-St. Paul International Airport are coming to grips with the change after struggling in recent months to drum up interest from the nation's largest financial companies to place ATMs in the airport.
For now, Minneapolis-based U.S. Bank operates 17 of the 24 ATMs at MSP, but its long-term lease expired last fall and it has been operating under a month-to-month contract while the airport explores alternatives. The bank pulled out of negotiations when it realized it would lose hundreds of thousands of dollars a year on the machines.
The losses are hardly crippling to the nation's fifth-largest bank, which posted a $5.8 billion profit in 2014, but they reflect a long-running shift in how customers pay for travel.
Many people use Uber to get to the airport, which doesn't even require them to open their wallet. Airline ticket desks don't take cash and neither do flight attendants selling food and drinks on planes. Now, the airport's main terminal has restaurants where travelers swipe their cards on an iPad to pay for a meal, made possible by innovators like Square. The emergence of tap-to-pay terminals, able to accept payments from Apple Pay for instance, is next.
"The travel experience is quite unique, I think, in that there really is not a whole lot of need for cash," said Gareth Gaston, U.S. Bank's head of omnichannel, which is all non-branch banking including ATMs, call centers and websites and mobile apps. "The airport is almost like a little microclimate in itself."
Under the agreement, U.S. Bank pays the airport $636,000 per year and $1.50 of each $3 fee charged to a non-U.S. Bank customer who uses one of the machines to get cash.
The bank told airport staff that it lost $2.5 million over the past five years on the deal and asked if it could reduce the number of ATMs at the airport. The staff said no and put the contract out for bid. Nobody bit except U.S. Bank, but it later also backed out, saying it would probably lose $2.8 million in the next deal.
A June 29 memo from an airport commission committee asked the larger commission to let staff reopen direct negotiations with U.S. Bank. The committee on Monday elevated the staff's recommendation to the full commission, which will make a decision on it later this month.
Gaston said it's valuable to U.S. Bank to offer ATMs at the airport as a service to customers, not because travelers see the name of the bank on the concourse. "Simply putting a logo up, we don't necessarily see any value in," he said.
The airport's 50 percent cut on U.S. Bank's ATM fees is in line with the industry standard, said Dan Kramer, an executive at Shazam, a bank-owned network of ATMs in 32 states. "It's typically 50 percent or higher," he said.
But the case for ATMs in general has weakened in recent years.
Total dollars withdrawn in the U.S. from ATMs rose gradually through 2012, but the number of transactions ticked downward, according to the Federal Reserve. When savvier consumers withdraw money for free at the cash register while shopping, or simply plan ahead by visiting one of their bank's ATMs, the machines generate less revenue for banks, since fees are how they make money.
"They've got to pay for the telecommunications and they've got to pay for cash replenishment," Kramer said. "Those machines obviously can't be down, and they require a lot of maintenance."
Kramer is now touting Skype-enabled machines that allow customers to talk to tellers as an alternative to bank branches. But he said the profitability of ATMs is being undermined as consumer habits shift.
U.S. Bank is also working on more interactive ways to use ATMs, though Gaston declined to discuss those efforts in detail.
Adam Belz • 612-673-4405 Twitter: @adambelz
