Location, Location, Location

Location, Location, Location
Tags: Distributors / ISO / IAD
January 7, 2002

Now that most every convenience store and gas station in America seems to have an ATM, finding new spots to put them in has become more of a science. The buckshot approach has given way to one that requires rifle-like precision.

ISOs are becoming more competitive in their search for locations, and they're continuing to grow. They are digging deeper into their bag of tricks, using sales ingenuity and simple common sense. By challenging conventional thinking about the role ATMs are designed to fill, they are opening new avenues for profit potential.

According to Tom Hannon, president of Peachtree City, Ga.-based Hanco Systems, Inc., there are two qualities that any prospective ATM location must possess: people traffic and a need for money. Using these criteria, virtually any business establishment - any place where commerce takes place - is a potential ATM location.

"Fast food restaurants, or anything from Putt-Putt to country clubs," Hannon said, referring to locations where his firm has enjoyed success. "You can even put them in schools now."

Location refers to more than just physical coordinates; it also refers to the nature of the resident business. ISOs have to make sure that the business is a logical choice for an ATM, and that they place the appropriate ATM to fit that business' needs.

Having an ATM does more for a business than just earn revenue on fees. According to the 1999 Convenience Store Decisions Sales Trends Handbook, ATM users spend an average of 20 percent to 25 percent more than non-ATM users and cash retention among retailers with ATMs ranges from 30 percent to 40 percent.

"First of all, you're looking at the type of business, and seeing if it is at a competitive disadvantage by not having a machine," said Hannon. "And above all, you have to make sure you have a machine that's affordable to a merchant."

Hannon said that with falling prices and competitive lease deals, the break-even point for some machines has come down to 50 to 60 transactions per month.

Manufacturers have developed a number of newer, smaller and less expensive machines to make placements possible in new locations. A successful ISO makes a full range of machines available to its customers, and by doing so opens up more businesses as possible locations for ATMs.

Above all else, the challenge for the ISO is to seek out new possibilities. While certain segments of the market may appear to be saturated, the market for ATMs continues to grow.