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Another Hannon joins Hanco's UK ATM operations

ATM deployment was always a family affair at Georgia-based Hanco Systems, where six of founder Tom Hannon's children worked in the business. The trend continues in the UK, with the recent appointment of Todd Hannon as managing director of Hanco ATM Systems.

May 19, 2003

Tom Hannon wants to do for ATMs what the Beatles did for popular music in the 1960s.

The ATM veteran, who last year sold his Georgia-based Hanco Systems business toeFundsfor $11.4 million, took a concept that was wildly successful on one continent -- retail or convenience ATMs -- and transplanted it to another.

Much like the Beatles did in 1964, when they brought their special brand of British pop to the United States, Hannon seems to have struck in the right place, at the right time.

Since he entered the British market in the summer of 2000, hisHanco ATM Systemshas become one of the UK's most successful ISOs, with 3,300 machines under contract.

Family affair

To accelerate the company's growth, the senior Hannon recently appointed son Todd to serve as Hanco's managing director. Until March, Todd Hannon ran eFunds' ATM business; before that, he was Hanco's vice president of sales.

Sales remain strong in the UK, said Todd Hannon, noting that Hanco sold 250 ATMs in March and hopes to double its installed base in 2003. "It's a realistic goal," he said.

Hanco has been particularly successful in the pub and nightclub market, inking deals with Punch Pubs and other companies that sell pub franchises to individual operators. It also earned a contract with Consignia, the company that runs the UK's Post Office system, to install ATMs at up to several thousand Post Office branches.

(See related storiesHanco ATM Systems in deal with UK's Punch PubsandBig post-ibilities in UK for Hanco)

Cashing in

These locations, and all other Hanco sites, have adopted a merchant cash replenishment model imported from the States. Hanco became one of the first British ISOs to offer cash replenishment, and Todd Hannon said it has become a differentiator for the company.

While there was initial resistance from British merchants nervous about loading cash into ATMs, it has proven especially popular at sites like pubs where owners appreciate the added control over the machine.

Todd Hannon, left, and Terry Turner are the two men responsible for growing Hanco ATM Systems' market share in the UK and elsewhere in Europe.

"Once they've had a machine from another company run out of cash a few times, or paper, that becomes an easier sale for us," he said.

The break-even point (number of monthly transactions required to cover the cost of an ATM) is higher for non-banks in the UK because, unlike the U.S., no interchange is assessed on surcharged transactions. So there is less margin for error in site selection.

"That's why we survey each site very carefully, looking at the footfall, inside sales and other factors. We only want to sell (our program) where it works," he said.

New markets

Perhaps inspired by competitorMoneybox, which has ATM outsourcing deals with three British financial institutions, Hanco plans to target banks. (See related storyMoneybox in ATM outsourcing deal with British FI)

It will be a challenge, said Terry Turner, Hanco's deputy chairman. "Banks obviously have very different demands and expectations."

Yet Hanco's emphasis on service should be a strong selling point, said Todd Hannon. The company has 18 full-time technicians and plans to double its service force by year's end.

Hanco's service-centric model works better in the UK's compact geography than it ever did in the U.S., where Hanco had ATMs in 40 states. "We've always preferred to keep our service in-house, but the sheer size of the U.S. made that impractical. You'd have techs driving hours and hours to get to remote locations," he said.

Two new ATM models recently introduced by Triton, Hanco's primary supplier, also should appeal to banks, he said. (See related storiesTriton refines the product rollout)

Hanco expects to sell some of the new models -- Triton's FT5000, a through-the-wall unit, and the RL5000 lobby unit -- to retailers as well. Todd Hannon said that several existing customers have already expressed interest in the FT5000, which costs about 30 percent less than most comparable through-the-wall ATMs.

In addition to exploring new market segments, Hanco intends to enter new countries. First up will be the Netherlands, where regulations permit acquirers to collect a convenience fee and there is a common switch, Interpay. Rival Moneybox already has 100 ATMs there. Hanco recently appointed a country director, Hans Molenaar. (See related storiesMoneybox to install ATMs at McDonald's in HollandandISO expansion in the UK)

While Hanco will establish sales/service offices in each new country it enters, Todd Hannon said that finance and help desk operations will all be based in the UK. The biggest challenge for the help desk, he said, will be hiring multi-lingual staffers.

The company will use "an opportunistic approach" when evaluating new markets and new countries, Turner said.