Does it have to be new, or will refurbished do? For the ATM industry, it's a simple question without a simple answer. Every option is its own Pandora's box, opening up new questions about ROI, maintenance costs, capabilities (now and in the future), compliance (ditto the previous).
That said, the refurb market does seem to be steadily gaining traction with its retreads. And operators who once would have instantly dismissed the idea of buying a used ATM are now seeing refurbished machines in a new light.
A 'new' ATM at half the price
Matthias Thiele, vice president of global development at ACG Inc. said that for many of these deployers, the update to Americans with Disabilities Act regulations was the turning point.
The expense of updating entire fleets of ATMs in a tight economy made newer refurbs an attractive alternative to far more costly brand new machines, he said. A very attractive alternative.
"The average savings by using a refurb over new is probably 40 to 50 percent, depending on the model," said Corey King, a sales specialist at American Bank Equipment.
The return on that cost-saving investment can be both immediate and impressive, King said. "Maintenance costs are many times less, and if you pay for parts replacements [on an old machine] there is much to save with a refurb."
The returns can also be long-lasting. Thiele said that a machine coming out of refurb is "basically like new." A refurbished machine will be good for another five to seven years, Thiele said. King estimated the lifespan even longer — seven to 10 years, he said.
'It's the economy, stupid.'
King also sees a continuing growth market for refurbs. "In my 22 years in this line of work, I don’t recall a period of time with more … regulations requiring banks to spend more money to be compliant," he said. "The economy is also not yet recovered so the demand for the most economical choices has gone up dramatically."
And things could very well stay that way as PCI, EMV, ADA, Windows 7 and other forces render increasing numbers of older ATMs obsolete.
The most pressing need is to upgrade to Windows 7 before Microsoft discontinues support for Windows XP in April 2014, said Thiele. The ability to implement — and maintain — updated PCI standards hinges on migration to Windows 7.
This will generate the next wave of demand for refurbs, he said. "It's always the question does it make sense to buy a new card cage, a new software license and so on to upgrade my old machine to PCI? Or does it make sense to buy a refurbished machine that's completely PCI compliant?"
The second wave will be EMV, but it will will be driven by hardware, not software, Thiele said. A knock-out in the fascia will accommodate a new EMV card reader in some cases, but in others, the entire fascia will have to be replaced. Then it becomes a question of which is a better investment — upgrading, buying new or trading up to a newer refurb.
The 'wow' factor of new
Going refurb is not for everyone, though. A used machine can never match the up-to-the minute technology of a new unit. And in the extremely competitive environment of big banking today, bells and whistles matter.
Auto deposit, note recycling, coin dispensing, bill paying, on-screen branding and product marketing, touch-screen transacting, mobile prestaging — and the list goes on. It's all a part of the one-upmanship that wins brand exposure and new customers for the nation's biggest banks. And that means more frequent ATM replacement. "The tier one institutions keep them perhaps something between five and seven years," Thiele said. "Tier two and tier three institutions, they can go up to 10 or 12 years or so."
But it's not just the banks that are buying new, feature-rich machines. Paramount Management Group, an independent deployer in eastern Pennsylvania, purchases brand-new ATMs exclusively. The only refurbs in the company's fleet cpme from portfolio acquisitions.
"Generally we go with brand new hardware for the main reason that the ultimate goal is to put a bank brand on those machines and with a lot of the older ATMs, you really can't do much," said Michael Tedesco, chief marketing officer at Paramount Management Group.
"We just did a bank branding deal and they want to remotely load their screens, [use] custom receipt paper, interact with their customers on a weekly basis. And you can't do that on older machines."
Paramount applies its own branding to machines, as well. The company uses custom wraps, screens and receipt paper, and video toppers. "We want the latest and greatest," Tedesco said. "That's generally our model."
All good ATMs must come to an end
Tedesco said that Paramount does resell machines and parts, but it can be hard to find takers for older-models. The company recently renewed contracts for some machines in its legacy portfolio, which meant replacing older ATMs, Tedesco said.
"[W]e couldn't even get anybody to take them. So we paid to have them recycled," he said. "And it costs a lot of money because some of those older machines are really heavy."
But the good news is that companies seem to be placing increased emphasis on recycling machines, or refurbishing them to give them a longer life, instead of hauling them to the landfill. Most companies now have a process in place for environmentally responsible disposal of unusable machines.
Said King, "I can’t speak for other companies but we at American Bank Equipment have a process to recycle as much as possible, reuse as much as possible and send to the landfill only scraps remaining to minimize adding to landfills."
Read more about refurbished/used ATMs.