f ATMs and kiosks are "cousins if not brothers of each other" as Mike Lee, Chief Executive Officer of the ATM Industry Association recently said, why haven't the two industries experienced a closer kinship?

The two terminals share similar footprints, functionalities, and, in many cases, overlapping audiences for their services. It's not unusual to find an ATM and one or more kiosks offering services like phone cards or ticket purchases in a single location.

Yet with the notable exception of 7-Eleven's Vcom, which offers check cashing, money order purchases, bill payment and even electronic shopping in addition to cash dispensing via a single terminal, few ATM/kiosk combos exist in today's market.

The Challenges

Hamed Shahbazi, CEO of software developer and kiosk deployer Info Touch Technologies, said it's traditionally been difficult to offer more complex transactions at ATMs because few of the machines, especially those in retail locations, currently run a Microsoft Windows-based operating system.

Touchscreens on ATMs are also relatively rare and cash acceptors virtually non-existent. ATM manufacturers serving the retail market have resisted adding such features because they drive up the price of machines in a highly cost-conscious environment.

"You can't drive acceptance of a product like prepaid phone top-ups at ATMs without a cash acceptor because the primary audience for that product is still people without bank accounts," Shahbazi said. Info Touch offers prepaid wireless and long distance, prepaid WiFi, bill payment, money order purchases and money transfers at some 200 kiosks it owns and operates at Circle K stores. Info Touch also has deals to deploy 35 of its multi-functional kiosks at gas station/c-stores owned by Mac's and Exxon Mobil.

A bigger issue than hardware or software limitations at ATMs, said Shahbazi, is a narrow mindset among both deployers and vendors.

"Skeptical energy runs quite high," he said. "Many people in the ATM industry don't believe that other opportunities can generate revenue. They've monetized one (cash dispensing) application to death, and now they find themselves in a position where it has become so diluted that they've got to start thinking about 'what else can we do on these things?'"

Vendors have taken a largely ad hoc approach to adding new applications to ATMs, Shahbazi said. "They haven't developed strategies or made any real attempts to promote new services." At Circle K stores, Info Touch positions display screens promoting the services offered at its kiosks in high-profile spots near the cashier's till.

While Shahbazi believes "a kiosk developer's mentality lends itself better to creating new applications," he acknowledges that few kiosk business models to date have achieved the mainstream success enjoyed by the ATM. "The kiosk industry needs to find that sweet spot. The ATM has lived in that sweet spot for years," he said.

Keeping It in the Family

The upstart kiosk business will mature more quickly if it works with its older and more conservative sibling, Shahbazi said. "It's important for companies like us to have an ATM solution. We can penetrate the big guys like Circle K, but so much of the c-store industry is small mom-and-pop operators who can't afford to give up the floor space for two terminals."

Info Touch partnered with Texas-based Financial Payments and First Data Retail ATM Services to demonstrate a bill payment application on a Tidel ATM at the recent NACS Show in Las Vegas.

"We don't claim to be ATM experts; we took advantage of their incredible wealth of ATM knowledge to offer the ATM part of the equation," Shahbazi said, adding that InfoTouch hopes to help bridge the gap between the two businesses.

"We'll be pushing them hard to talk about things like cash acceptance," he said. "I think they'll come around. After all, people were initially skeptical about the retail ATM industry itself."

Scott Holt, a Product Marketing Manager for Tranax Technologies, said the ATM is a logical host for new transactions, especially those of a financial nature, because of its longer history with consumers. "Consumers trust ATMs. I don't believe they have the same public perception of security yet about kiosks."

That's the Ticket

Tranax plans to begin piloting ticketing sales with theater chains and other venues toward the end of this quarter, using its new Ticketing Self-Service Terminal (SST), a combination of its Mini-Bank 2500 with a sidecar attachment configured for dispensing tickets.

It's a complementary transaction because "we're not trying to redefine a market," Holt said. "When you go to a theater, you already see an ATM on one wall and ticketing kiosks on the other."

The machine runs Windows XP with a layer of middleware, which Holt said makes the integration of the theater chain's proprietary ticketing software "relatively seamless." Integration becomes somewhat more complex when non-ATM applications require the use of the ATM's cash dispenser, card reader or other components.

Internal beta tests have proceeded "better than expected," Holt said. "We're not just testing the technology, but the whole process."

Tranax also will soon launch tests with Livewire, a company that drives about 100 kiosks selling ski lift tickets at sports outlets and supermarkets in Colorado, Vermont and other states.

Charles Caserta, President of Livewire, said that his company shies away from the terms "ATM" and "kiosk," preferring the broader "self-service terminal."

Echoing Info Touch's Shahbazi, Caserta said, "the chasm between the ATM and kiosk industries is more cultural and emotional than it is commercial." Caserta has logged more than 20 years in the EFT business, most notably as a former principal of IFS International, a developer of ATM transaction processing and other financial services software.

Argument for Convergence

The kiosk industry is eager to align itself with the ATM industry because of its successful penetration into high-traffic retail locations, Caserta said. Many locations would prefer to offer several services at a single terminal.

"If you put in an ATM and a kiosk, you're going to spend $5,000 on one and $7,000 on the other. You'd be better off with a single terminal that costs $10,000 and takes up less floor space."

Many consumers purchasing tickets will likely also withdraw cash, he said. "We've got people bringing ice chests to fill to spend the day at an amusement park or a ski resort. Chances are, they're also going to do a cash dispense."

In addition to technologies like Windows-based platforms, which make it easier to offer services such as ticketing at ATMs, Caserta said ISOs that place machines in retail sites are now more open to considering new business models.

"For a while now, they've been saying 'I'm not making as much money. I need to get a cheaper machine.' So they're all fighting over price and eating their young," he said. "Offering new services is a way for them to differentiate themselves."

Tranax's Holt said that part of the challenge will involve educating the sales channel, which will need to interact not only with the manufacturer and the site owner but with partners like Livewire. "It's contingent upon us to educate them on these new relationships and what we can do to make them work."

That's the Ticket II

Regal Entertainment has installed some 260 Fujitsu 8000 Series terminals that dispense both cash and tickets in its movie theaters this year and has plans to add 250 more in 2005, said J.E. Henry, the chain's Chief Information Officer. The new terminals will replace 280 ticketing-only kiosks previously used by Regal.

Since January, Regal customers have conducted more than 200,000 cash transactions and purchased more than 1.2 million movie tickets at the machines, which the chain calls customer activated terminals, or CATS. Regal uses Alliance Services to replenish cash and eFunds to drive ATM transactions, and its own back office handles tickets. The terminals use IP connections via Regal's frame relay network. The terminals feature the ability to self diagnose first-line service issues such as a printer low on paper or a dispenser low on cash and notify the appropriate personnel via e-mail. Fujitsu technicians are dispatched to the site for more complex problems.

The $2 convenience fee that Regal collects for cash withdrawals offsets costs of offering the ticketing service, Henry said. "We serve approximately 250 million customers a year in our theaters. Many of them welcome the opportunity to get their cash in a safe environment."

While there were some initial challenges with the project, Henry said they were resolved quickly. Fujitsu replaced its usual printer with a much faster model from Boca Systems to handle the demanding ticketing application and added a receptacle to "catch" tickets when multiples were dispensed. Regal switched from its original armored carrier to Alliance.

Henry said Regal and Fujitsu will add new functions to the terminals soon, giving consumers the ability to obtain tickets purchased earlier via ticket seller Fandango's print-at-home capability and to purchase gift certificates. The terminals will also automatically dispense items like vouchers for free concessions for members of Regal's Crown Club, a program that rewards moviegoers for frequent attendance.

A new Crown Club twist, Henry said, will be to provide points to Regal Crown Club members for purchases made via Fandango, or for cash withdrawals from the terminals.

Labor reduction was not part of Regal's original ROI model but may eventually be added, Henry said. "Over time we could move to self-service devices rather than employees selling tickets, with a customer service center to offer assistance. As we all know, labor is expensive."

"The sky is the limit in terms of what you can come up with to do at machines like this," he said. "Any retail business with a lot of foot traffic that sells gift cards could make back the money it spent on a terminal almost immediately."

Going Postal

The U.S. Postal Service has installed nearly 2,200 Wincor Nixdorf terminals it calls Automated Postal Centers (APCs) at its branches since April. The total will reach 2,500 later this month, said Michael Adams, USPS' APC liaison.

The ProCash 1500 machines do not dispense cash, but are outfitted with sidecars that include a scale for weighing packages and a label printer. Another printer inside the safe allows customers to print out postage on special stock. A third printer dispenses standard transaction receipts.

Customers can perform 80% of the transactions available to them behind the counter at an APC, Adams said. "Moving the less complicated transactions away from the window allows our sales and service associates to offer better service to the customers with more complex transactions at the counter."

The APCs accept credit and debit cards for payment. Because of theft and vandalism concerns, Adams said the USPS does not plan to add cash acceptors to the machines.

The USPS opted not to offer cash dispensing at APCs because "it's outside of our core business," Adams explained. "Our job is to move the mail as efficiently as possible. Consumers don't expect to come to a post office and get cash out of an ATM." Following a three-month market test with 30 prototype terminals in Orlando, Fla., in 1999 and a four-year post-market test with 16 terminals primarily in Florida, the USPS selected sites with high revenues and heavy usage of credit and debit cards for APC installations.

Working with IBM, its back office partner and provider of the proprietary POS1 software used at point-of-sale terminals in USPS branches, the USPS tweaked the user interface of the APC software to make it as user friendly as possible during tests, Adams said. The POS1 software was integrated with Wincor's ProClassic platform.

"Once you are operating in a full-blown PC environment, anything is doable from a software perspective," said Saul Caprio, Wincor Nixdorf's Director of U.S. Business Development. "It's just a question of spending the time and effort to do it."

Postal employees provide level 1 service, such as clearing paper jams and replenishing stock. They also can swap out 13 components that can be removed without tools. More advanced repairs are handled by IBM.

Adams said consumers have performed 8.1 million transactions at the terminals since April, exceeding original expectations. The USPS expects usage to "go through the roof" during the busy holiday season.

"We timed this great," he said. "Customers are more used to doing self-service transactions at grocery stores, airports and other places. It's not a stretch for them to walk into a post office and see self-service technology."

Original article: www.atmmarketplace.com/research.htm?article_id=21167&pavilion=111&step=story