Losing the envelope

Instead of stuffing deposits into envelopes to be retrieved later, customers at most new automatic teller machines insert checks and cash directly into the machines to be automatically scanned, with the money usually credited to their accounts the same day. Most of the new machines can also print a receipt with a copy of the checks, making some customers more confident their deposits won’t be lost.

“It’s more secure,’’ said Hugo Salazar, 52, a janitor from Everett, making a deposit at Bank of America’s bank of new ATMs across from the Boston Common.

Love them or hate them, the new ATMs are here to stay, as banks across the country are investing hundreds of millions of dollars in the check-scanning machines. Bank of America, which started installing the new machines in Massachusetts last year, said it plans to convert all of its 13,800 deposit-taking ATMs nationwide by year-end. TD Bank, the state’s fourth-largest retail bank, said it started upgrading ATMs in Massachusetts this month and plans to replace all its ATMs in New England over the next five years. And several other major US banks, such as Wells Fargo & Co. and JP Morgan Chase, are also replacing all of their ATMs. Overall, one in five ATMs that accept deposits already offered the feature by the end of 2008, according to Celent, a financial research firm based in Boston.

“It’s the hot topic in the ATM industry,’’ said Melissa Fox, senior manager in financial services for Hitachi Consulting of Dallas. “Some of the largest banks have made big splashes by promising to roll out envelope-free machines.’’

The reason: The new models could potentially save the banks big money.

With the older machines, banks dispatch an armored carrier to retrieve deposits every day and transport them to a central facility for processing. That alone can cost $1,000 a month for each ATM, according to the Nicole Sturgill, an analyst with the financial consulting firm, TowerGroup.

But since the new machines automatically capture images of the checks and transmit them to the bank office, banks generally only need to service the ATMs once a week or so, sharply reducing the expense of armored trucks. And unless the ATM has trouble read ing a check, there’s no need for a bank employee to physically process each deposit. Sturgill said it typically costs about 50 cents to process each deposit with the new machines, compared with $1.82 per deposit using the old machines.

Bank of America declined to say how much it invested in the new machines or how much it expects to save. But bank spokeswoman Anne Pace said deposits at locations with the new ATMs rose more than 30 percent, a sign that some customers prefer the technology.

Pace said the new machines also make it possible to give customers swifter access to their cash. Bank of America, for instance, promises to credit customers the same day if they make a deposit at the new machines by 8 p.m.; with the older models, customers would typically have to wait until the next day.

Bob Meara, an analyst with Celent, said banks could also earn slightly more interest handling checks, because they can receive funds in a transaction more quickly from other financial institutions.

Some banks have other reasons for upgrading their machines. TD Bank, for instance, currently operates a patchwork of machines it inherited after acquiring 21 banks in New England over the past two decades.

“We would like to have a consistent network in terms of look and feel,’’ said Suzanne Poole, executive vice president for retail banking.

Poole said the disparate network also drives up its expenses. When the bank changed its name from TD Banknorth to TD Bank, for example, it had to reprogram every ATM in person. With a network of new machines, Poole said, the bank would be able to remotely tweak the software from its main office.

But the upgrades are expensive. The TowerGroup estimated a new image-enabled bank typically ATM costs $30,000 to $35,000. And Celent estimates top-of-the-line models fetch as much as $50,000. That means Bank of America alone will probably spend millions of dollars replacing its ATM network. (Bank of America declined to give an exact figure.)

Indeed, most banks don’t believe it’s worth the up-front investment to replace their ATMs, Sturgill said, unless the ATMs are worn out and need to be replaced anyway.

Salem Bank, for instance, said it would prefer to invest in mobile banking or a program to reimburse customers when they use other banks’ machines instead of buying new ATMs of its own. “We don’t see them as a strategic vehicle of the future for us,’’ said Martha Acworth, chief marketing officer for Salem Five, which has just 22 ATMs.

Sovereign Bank and Eastern Bank, two of the biggest banks in Massachusetts, said they have no plans to upgrade existing machines.

Citizens Bank upgraded some ATMs and will use the technology when it installs ATMs in new locations.

Like any new technology, there also have been glitches. They can be slow. Very slow.

“If you have more than one check, it takes forever. And it never accepts your cash,’’ said Amy Leydon, a yoga instructor from Boston. She said it once took her 20 minutes to get one of the new Bank of America ATMs to process a stack of checks. So she doesn’t even bother anymore, preferring to go during banking hours and have a teller inside a branch handle transactions for her.

Moreover, the machines sometimes jam or misread checks or cash.

“With cash, it’s sort of a hassle,’’ said Max Stewart, a 29-year-old graduate student from Boston. With the Bank of America ATMs he uses, Stewart said, he sometimes has to feed bills into the machine several times before they’re accepted; some are rejected altogether.

Because of unfamiliarity with the machines, Bank of America has taken to assigning employees - nicknamed “ambassadors’’ - to help teach customers how to use the new machines.

“Early on, there have been some challenges,’’ said Fox, the analyst. “Banks have been working out some of the kinks.’’

Todd Wallack can be reached at twallack@globe.com.