Dec. 5, 2011— -- ATM users could soon be able to opt out of ATM surcharges by agreeing to watch an advertisement in the same amount of time it takes for a typical transaction.
Clinton Townsend, a 25-year old Brooklyn, N.Y., resident from New Jersey, is founder and CEO of Free ATMs NYC. He created an ATM that uses targeted advertisements to cover the cost of the surcharge of an ATM outside its network. And, assures Townsend, the transactions don't take any longer than they would without the commercial.
The ad plays during the time the screen's message indicates a transaction is processing, typically 10 seconds or less, Townsend said. Or customers can choose not to view the ad and pay an ATM surcharge of $3.
"We don't want customers to feel like hostages," he said.
Townsend said the ATMs also give them users the option to donate a portion of their fee to a charity. And at the bottom of the ATM receipt there might be a coupon that can be torn off and redeemed at a local business. While banks already show advertisements on ATMs for their own mortgage rates and other products, Free ATMs NYC offers local deals to businesses where ATMs are placed.
Though Townsend has plans to expand through the New York area and eventually beyond, his first and only ATM for now is in a music venue and bar in Brooklyn called the Knitting Factory.
"I've heard nothing but good things from customers," general manager Bob Reiter, who has hosted the ATM since Nov. 4, said. "I've had a lot of people who come in not for the bar or a show but just to use the ATM. It's been good for business."
Reiter said he has used the ATM himself and found it "pretty simple."
"I didn't find it any more difficult than any other ATMs," he said. "Instead of a screen that tells you it's processing, it gives you an advertisement. I hardly noticed there was an ad there."
Reiter said he had noticed a gradual increase in the number of people who come into the Knitting Factory to use the ATM after word of it spread, and the bar placed a sandwich board outside its doors advertising the free machine. There are a few ATMs within two or three blocks of the bar that do charge $2 or $3, Reiter said.
"The more traffic I can get in, the better," he said. "The more likely they will come to see a show or grab a drink."
He said the ATM is the perfect way to draw a new clientele who had perhaps never heard of the Knitting Factory, or even knew it was a bar. Reiter would not reveal the details of his agreement with Townsend but said he plans to host the ATM indefinitely.
"I don't see a downside," he said. "Even if just 10 percent of those people stay, it still has a lot of value," he said.
Townsend said the ATM user, the advertiser and the business or location hosting the ATM all benefit from the targeted marketing.
Narragansett Beer company, for example, is planning to run an advertisement exclusively on the Knitting Factory's ATM from January through March. The connection between a beer label and a bar may be obvious, but to attract the ATM user's eye further, Narrangansett could potentially spit out a coupon for beer to the ATM user.
Narrangansett hasn't yet said whether it would offer a coupon on the ATM receipt, but it has agreed to advertise externally on the actual machine, Townsend said.
Narrangansett did not immediately return a request from ABCNews.com for comment.
Townsend has two ATM models: One has a 10.2 inch main screen through which transactions would be conducted and the short advertisement viewed, and the other would have a 15-inch LCD screen above that shows a looping video advertisement.
A 2008 graduate of Morehouse College in Atlanta with a degree in finance, Townsend is mum on the company's specific plans, although he said he planned to "aggressively roll out" additional ATMs and hire employees.
Townsend said his company has already received requests for ATMs in other parts of the country as more and more consumers grow weary of paying ATM fees.
But Townsend said he plans to place his ATMs "very strategically."
"We target a demographic and we place them in safe locations. Not on street corners in high crime neighborhoods, for example," he said. "We don't put our customers in harm's way. Our goal is to make our customers happy."