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Issue 020201- Table of Contents ATMIA Responds to ISO Audit Request Getting the Best Price When Selling Your Portfolio GS Announces Advisory Board Changes New Standards for Payment Acceptance GSQ November 2001 Update: Finding The Missing Lynk Checking In at the BAI Show: Fraud Statistics are Alarming Smart Auto Accessory Could Drive Sales, Service
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Lead Story: How to Hook into ATM Revenue R
emember when conducting your banking business was limited to only a few hours a day and meant a special trip to a fixed location? The term "banker's hours" was coined to reflect the abbreviated day bank presidents and tellers enjoyed - and bank customers had to work around. Long lines out the doors on paydays or Friday afternoons were an irritating fact of life.
But the advent of Automated Teller Machines (ATMs) changed all that, providing banking options to suit our schedules and activities. Now we have access to cash at all hours, from locations numerous enough to make it seem odd if there isn't an ATM around when you need one. A full range of banking transactions can be completed by pushing a few buttons, without any human interaction, from just about any sidewalk, shopping mall or foreign country.
An entire industry was born and has been flourishing since. For ISOs and others involved in that industry, this is a mixed blessing. Easy ATM accessibility means that salespeople have been busy and successful. But ATMs on every corner also means there's nowhere else to place them.
To ensure the revenue stream doesn't become a dry creek bed, ATM manufacturers, service providers and processors are looking for new directions in which to point their industry. Adding bells and whistles - features like color screens, audio, the ability to purchase movie or plane tickets - to machines might seem the logical tack to take. Some in the industry feel otherwise. Over the past 20 years, the prime locations for ATMs have been taken. Finding new ways to keep the industry growing is the new focus for everyone involved, from manufacturers and service providers to transaction processors ... and ISOs.
One side of the ATM coin says slicker machines with added services and features is the best way to sell new machines. The other side says that until the systems necessary to keep the added services working properly are in place, old-fashioned customer service - for merchants and ATM customers - is the way to go.
Consumer dependence on cash is up following the events of Sept. 11, and people are definitely using ATMs to withdraw money from accounts. While the number of ATMs placed throughout the country has never been higher, though, the average number of transactions conducted at each machine is down.
Keeping the revenue stream running, or adding services to increase per-transaction fees, makes good business sense for deployers/providers/processors but can frustrate customers with software compatibility glitches or can overload them with unwanted information.
Anyone who uses a lot of ATMs in various locations has experienced how different the machines can be. Older machines are big and noisy, even dark and dingy, with simple screens projecting information in monochrome displays, clunking and whirring as they spit out the cash.
Technological advances have resulted in sleeker machines providing options like four-color touch-screen operation. New ATMs run the gamut of styles, sizes, service capabilities and price range.
Smaller, inexpensive models fit easily in tight spots and allow merchants to purchase or lease machines giving their customers access to cash - almost a necessity in operating a retail business - without mortgaging the farm. Larger, Web-enabled ATMs let customers access the Internet or check e-mail while they get cash, but with hardware costs of $40,000 and additional costly software expenses, these machines are out of reach for most merchants.
Delone Wilson, Vice President of Financial Technologies Inc. (FTI), an ATM ISO that sells, leases, distributes and supplies complete service packages for 3,200 ATMs in 49 states, said most of the company's salaried salespeople and independent distributors are not selling or leasing less, but the amount of new business they're generating is not growing the way it used to.
FTI represents several ATM manufacturers, including Triton, Cross, Tidel and NCR, and installs the machines, sets up service, handles processing and trains merchant customers.
Wilson said the industry has more components than just the manufacturers, and in order to concentrate efforts on increasing the number of transactions at ATMs, there needs to be cooperation among everyone involved. He feels as if the attitude among sellers, ISOs, processors and manufacturers is more conducive now than it has been to creating a unified overall product and making an impact on public awareness.
"We need to coordinate the processors and manufacturers, creating a model by consensus of all in the industry," he said. "There is some interest in new ATM features because people want to generate more income from ATMs. Some pie-in-the-sky promises have been made that really haven't come true. Physically, and technically, we can offer the bells and whistles. The problem is the back-end part, like problems with systems not interacting."
Wilson said that trial-and-error is all part of the process, and FTI is developing new services to generate real income. He cited efforts to sell prepaid phone cards through ATMs, which were hampered by not knowing who was going to handle and load the money-shaped cards into the machines, and the fact that ATMs don't accept cash - most people buying prepaid cell phone or long-distance time want to use cash. FTI came up with a solution that uses receipts printed by the ATM, with information provided by the host.
Michael Fuoco of ATM Enhancement is a consultant who works with ATM distributors to develop revenue-generating solutions and strategies. He believes that because transactions per ATM are dropping, the ISO distribution channel needs to work harder at creating better relationships with merchants and integrating complete product lines.
"The ATM business is driven by volume, and revenue is based on a per-transaction basis, Fuoco said. "We need to build a better business base, with fewer but more productive machines, and with happier retailers. There is a definite need for better service and strong customer support for the retailers.
"There needs to be more effort made in support and service rather than emphasis on selling or leasing more machines. Issues like ATM maintenance - who will be responsible for providing the basics like paper and loading the money - need to be addressed." Fuoco believes people always will want convenience, and developing better ways to deliver services through ATMs makes sense as long as basic customer-service issues are addressed. He agrees with Wilson that adding features like the capability to buy movie tickets or check e-mail at an ATM doesn't mean a lot to customers if the applications don't work correctly.
"Manufacturers are getting more sophisticated in creating arrangements to enable successful software applications," Fuoco said. "There have been problems with slow response times, connectivity issues and incomplete transactions."
When problems associated with the customer service provided to merchants by ISOs are kept to a minimum, Fuoco said, business will improve.
"The first-contact ISOs may have a better handle on that than others who serve as middlemen," he said. "The reps dealing directly with the retailers at the first level seem to provide the best level of service to their merchant customers."
Rather than focusing on selling glitzy ATM features to boost revenue, Fuoco recommends creating opportunities for ISOs based on customer satisfaction. One way his company does this is by marketing value-added services for bank-issued credit and debit cards, like ATMsafe's insurance program.
ATMsafe is transaction insurance for the consumer. Kate Gillespie, Associate Product Analyst for the four-year-old company, said the service allows ATM owners or lessors to provide a sense of safety and peace of mind to the people who use their ATMs.
"Most of our clients are in Latin American countries, where safety concerns while using ATMs are very real," Gillespie said. "We have clients in South and Central America, Mexico as well as in Canada, and we will be expanding into Hong Kong, India and Indonesia. We are also growing here in the U.S."
She said that cash usage is way up since Sept. 11, and she expects the idea of transaction insurance to catch on accordingly.
"Although ATM owners and merchants can participate in the program, most coverage is through banks for their customers and covers any ATM they use worldwide," she said. "The insurance covers the amount of cash lost and medical expenses resulting from injuries incurred if the customer is robbed at an ATM.
"It's a flexible program that adds value for customers while adding a new revenue stream to each transaction conducted at the ATM. We can structure the premiums to be reflected as a surcharge per transaction or otherwise. There are ways to add new revenue streams for the ATMs out there."
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