The IPayments Forum and its nonprofit parent organization, the ATM Industry Association, recently rebranded its joint venture to support the evolution of the ATM into a payments hub. The ATM Acquirers Alliance, formed in February 2013, is now the Integrated Payments Alliance. A. Lyle Elias, Chairman of the IPF and an ATMIA founding director, said the name change represents a new direction for the ATM industry and a route which can benefit ISOs that market and service ATMs.
The partner organizations based the name change on feedback from the ATMIA's membership of 3,700 members in 60 countries. "I think a lot of it just had to do with a misunderstanding," said Elias. "They thought that by promoting it as an acquirer alliance, that it was going to be acquirers only. So we decided it would be better to deliver a different message."
That new message involves the transition of ATMs from primarily being money dispensing machines for bank accountholders to being self-service payment hubs integrated to accept mobile and contactless transactions, as well as extend ATM functionality to include such services as bill payments and person-to-person money transfers.
The alliance is therefore seeking to include other types of businesses in its membership mix, including money transfer specialists and prepaid card companies, as well as mobile telecommunication firms and mobile device manufacturers. Elias said the IPA will need input from all such stakeholders to develop a shared framework that fosters ATM interoperability across different payment channels. From closed to open Elias noted that the impetus for the formation of the IPA was in response to the direction payments is heading. "We see the convergence of the payment channels," he said. "So regardless of the type of device, whether it's a cash dispensing ATM machine or some other type of self- service kiosk, the same payment options could be made available to the customer."
Elias said the ATM industry is lagging behind the brick-and-mortar retail sector in this regard. Mobile and e-commerce payment providers are integrating their services with in-store POS systems, while ATMs remain predominantly closed systems. "The way the ATM networks have been structured, they have basically excluded all outside players," Elias said. "It has just been really an intrabank type of network based on card association rules."
To provide consumers the ability to use contactless cards or smartphones to pay bills and transfer funds via ATMs, ATM operators and others must speak the same figurative language, Elias noted. "And that's what we felt was primarily missing," he said. "There are security standards for mobile. There are security standards certainly for ATMs. And you have PCI, which is another big security oriented group. But what we found that was missing was there wasn't any real coordinated effort between one payment channel and another."
It is therefore the IPA's mission to develop standards and best practices for the ATM industry and for data security organizations, device manufacturers and processors, among others.
Elias believes the IPA's initiative will result in more revenue for independent ATM ISOs. He said interchange (which runs in reverse for ATM operators – from issuers to acquirers) has been trending downward. Operators are also paying increased compliance and card brand fees. He added that mobile payments in general, as well as prepaid card payments, are "eroding cash."
By opening up ATMs to facilitate P2P and other types of transactions, including mobile, independent operators can generate additional revenue that is not dependant on banks and the card brands.
"The independent that really doesn't have a customer base, per se, because they're just on the acquiring side, I think are the ones that have the most to gain, and potentially the most to lose by inaction – in other words, by staying complacent," Elias said.
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