In early 2012, Better ATM Services Inc. went public with new technology that turned ATMs into Visa Inc.-branded gift card dispensers. Now, the Mesa, Ariz.-based ATM technology developer is leveraging that technology for another innovation: a program allowing ATMs to dispense Discover Financial Services-branded gift cards that can be used at a network of select retailers.
Todd Nuttall, Better ATM Services' Chief Executive Officer, called the myGIFT One Card Many Choices Discover Prepaid Card initiative a global ATM industry first. "As far as we know, this has never been done anywhere else in the world," he said. "And even the whole idea of grouping merchants together is very rare."
In the prepaid card industry, restricted authorization networks (RANs) are understood as a collection of merchants pooled onto one network-branded, general purpose reloadable card, for example a movie theater, restaurant and café located in the same entertainment district of a city.
Nuttall said Better ATM Services' program leverages RAN technology, but in a new way; instead of distributing cards by mail, as typical RANs do, the myGIFT One Card is distributed via the more robust ATM channel.
Better ATM Services partnered with program manager InteliSpend Prepaid Solutions LLC on the initiative. Nuttall said InteliSpend provides the connectivity to the national, brand-name retailers in the network. Macy's, Lowe's and Outback Steakhouse are among the nine retailers currently on the Discover gift card, with more reportedly to be added over time.
"It's hard to have 300 different gift cards available from the ATM, like you do in a grocery store," Nuttall said. "But what you can do is pick the top 10, 20 or 30, group them all on a card, and have that as one card."
Nuttall believes the solution only enhances the value of ATMs for consumers, boosting ATMs from check depositing and cash withdrawing mechanisms into "one-stop shops" for consumers' gift card needs as well.
Better ATM Services research shows that 81 percent of consumers who use ATMs are also gift card buyers, just not at ATMs. "People who use ATMs are the same people going down the street and buying prepaid products," Nuttall said. "And so it's funny. Here they are. They are at a bank, at an ATM, and they don't go into the bank to get those products."
Nuttall said the reason they don't enter banks to purchase gift cards is due to lack of convenience. "You're not going to get out of your car and go stand in line at a bank just to get a gift card," he said. So even though it has been more convenient for shoppers to pick up gift cards from grocery store racks, ATMs that dispense gift cards can now change that dynamic. "This is the chance for the banks now to be more convenient even than a grocery store," Nuttall noted.
According to Nuttall, studies show consumers view drive-up ATMs as more convenient for the services they provide than quick service restaurant drive thrus for the services they provide. "[Banks] are already seen as incredibly convenient for cash because of their ATM drive-ups," he said. "By leveraging that convenience factor that they already own, we've now made it to where they can be perceived as the most convenient prepaid product source as well."
The myGIFT One Card program is in pilot mode at 11 Banner Federal Credit Union ATMs in Arizona. The pilot is scheduled to last into the first quarter of 2013. For every ATM-dispensed myGIFT card sold through March 2013, 50 cents will be donated to the credit union's charity, Banner Health Foundation.
Banner Federal was considered a natural fit for the type of program being offered, because of its ATMs located in hospitals throughout Arizona and with one of its core consumer constituencies being health professionals. "If you study doctors and nurses, they have to work all the holidays," Nuttall said. "And so they are some of the most impacted with gifting. Gift cards are seen by them as a real option."
Nuttall thus reported the pilot has been well received, as hospital staff can purchase gift cards via in-hospital ATMs and realize their purchases are helping the charity they have a vested interest in seeing succeed. 
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