The following is an excerpt from "Reducing the Cost of Operating African ATM Estates," a white paper by ATM Parts Company, distributed and supported by the ATM Industry Association and available for download after registration here.

ATM density per head of population in Africa is the lowest of any global region. There is, however, plenty of evidence to demonstrate strong and increasing user demand that could lead to Africa becoming one of the fastest growing ATM markets during the next decade.

Average cash withdrawals per ATM in Africa are the highest of any global region at nearly 4,000 per ATM per month. This is more than double that of North America and 40 percent higher than Europe and Asia. In Africa, "cash is king" and with the steady migration from payment of wages in cash to bank accounts, ATM cash withdrawal transactions will continue to grow strongly.

The SADC (Southern African Development Community) Payment System Project is slated to bring greater payment system integration across 15 Southern African countries by 2018. This will result in the building of an improved technical financial infrastructure and facilitate an increase in the rate of ATM deployment across the region.

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The growth in cell phone usage to more than 500 million users across the continent in the past five years demonstrates that Africans will embrace technology if there is a clear customer benefit. The cell phone industry will continue to invest heavily in wireless infrastructure and this will allow connectivity to ATMs deployed in areas without wired communications and further drive ATM growth in the continent.

There is anecdotal evidence that the cost of ATMs and ATM replacement parts is higher in Africa than in other regions. Spare parts, such as cash cassettes and replacement monitors, can be several hundred percent higher than in American and European markets.

The large global ATM manufacturers have a stronghold in the sale of machines and distribution of parts in the majority of African markets resulting in an absence of third-party discounted priced products.

The development of a second-user refurbished ATM market, and the arrival of multi-vendor ATM parts businesses are at an early stage in Africa. The development of these types of suppliers adds to the sophistication of the market and drives down costs significantly for end users.

African banks and ATM operators can typically save 60 percent through the deployment of fully refurbished "like new" ATMs, and 50 percent on new parts acquired through international multi-vendor parts suppliers. Certain vendors will also offer well-funded banks refurbished ATMs on an interchange revenue sharing model, eliminating the requirement for capital expenditure to grow ATM estates.

Reducing ATM portfolio costs

The cost of estate maintenance is an area where increased density and competition from non-original equipment manufacturer suppliers generally lead to an average cost reduction trend. New entrants in the ATM maintenance market, such as cash-in-transit businesses, provide competition to the OEMs and reduce cost.

To benefit from this trend, ATM operators should periodically tender their ATM maintenance requirements and look beyond their traditional suppliers. The underlying demand for ATM services relative to the number of ATMs is strong in Africa. This demand is forecasted to increase during the next decade.

For ATMs and parts, large cost reductions on both capital expenditure and operating expenses could be realized by bank's ATM departments and independent ATM deployers through partnering with multi-vendor part suppliers.

Major capital and operating cost reduction and new business models have the potential to revolutionize the speed of ATM deployment in Africa.