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2001: The year in ATMs

The ATM industry emerged a bit battered but far from beaten in 2001. In a year defined by a number of unusual challenges – from Credit Card Center's high-profile collapse to deployers' efforts to comply with tightening ADA regulations to an economic downturn that drove several companies out of business – the industry coped, and then some.

January 17, 2002

The U.S. ATM industry emerged a bit battered but far from beaten in 2001.

In a year defined by a number of unusual challenges – from Credit Card Center's high-profile collapse to deployers' efforts to comply with tightening ADA regulations to an economic downturn that drove several companies out of business – the industry coped, and then some.

Several manufacturers introduced hardware and software designed to facilitate the kind of advanced functionality that many think will give the business a big boost. There were a few real-world experiments, most notably by retailer 7-Eleven with its Vcom program. More deployers seem poised to follow in 2002, including Wells Fargo, Fleet Bank and E*TRADE Access.

On the ADA issue, a handful of large financial institutions rolled out audio-enabled ATMs, which won raves from the advocacy community. Several manufacturers rolled out audio capability as a standard feature on their new generation of machines.

Here are some of the highlights from a year to remember:

January

Pittsburgh-based PNC becomes one of the first financial institutions to announce a plan to better guide its visually impaired ATM users through their transactions, launching a pilot program in which specially trained phone representatives communicate with blind PNC customers via cell phones. The agreement is part of the settlement of a lawsuit filed by two visually impaired PNC customers.

NCR signs a major outsourcing contract with Royal Bank of Canada to manage its network of 4,700 ATMs. The deal, valued at $173 million, includes service, maintenance and installation of new machines.

Florida's BankAtlantic becomes one of the first financial institutions to pull a large number of off-site ATM locations, announcing plans to remove 349 machines from Wal-Mart, Kmart and Sam's Club stores in Florida, Alabama and Georgia. The bank had deployed most of the machines in 1998-99 in an effort to boost its fee revenues but found it difficult to turn a profit at many of the sites. The bank planned to maintain 400 ATM locations, both at branches and in retail locations.

The financially troubled Oceanside, Calif.-based Greenland Corp., a developer and manufacturer of automated check-cashing machines, says it secured $3 million in funding from a California investment banking group. Greenland appoints T.A. "Kip" Hyde Jr., former vice president of retail sales and marketing for Affiliated Computer Services (ACS) as its new president and chief executive officer.

February

The Houston-based PULSE EFT Association completes its merger with the Cincinnati-based Money Station network becoming, briefly, the nation third-largest EFT network – behind Star Systems and NYCE – with a total of 53,500 ATMs and 313,000 point-of-sale terminals.

Memphis, Tenn.-based Concord EFS and Maitland, Fla.-based Star Systems finalize a deal that will create by far the nation's largest EFT network. Star will become a wholly-owned subsidiary of Concord, which owns the MAC and Cash Station networks. Combined, Concord and Star will have a presence in 31 states plus the District of Columbia and will process about 51 percent of the country's electronic transactions. Concord plans to switch all of its ATMs and POS terminals to the better-known Star brand. The new network will include about 195,000 ATMs and 800,000 POS terminals.

Houston-based manufacturer Tidel Technologies reports a 27 percent increase in net income for the quarter ended Dec. 31, 2000, largely based upon a 50 percent increase in number of units shipped when compared to year-earlier numbers. However, Tidel warns that it expects shipments to its largest customer, Credit Card Center, will be "at substantially reduced levels" in the next quarter. In a portent of troubles to come, Tidel also says that CCC sales represented 70 percent of its total revenues in the previous quarter and that CCC now owes the company $26.7 million.

InnoVentry, a deployer of automated check-cashing machines, completes a third round of funding worth $253 million, with Capital One and Wells Fargo & Co. among the lead investors. The latest infusion brings the San Francisco company's fundraising total to some $400 million since its 1998 founding. Diebold signs on as InnoVentry's exclusive hardware supplier in a three-year deal valued at $100 million. The North Canton, Ohio-based manufacturer also agrees to provide first and second-line maintenance on all of InnoVentry's Diebold machines.

Plano, Texas-based EDS purchases the remaining 50 percent of the Bellevue, Wash.-based TransAlliance network, a company in which it held a partial ownership stake for the previous five years. EDS gains about 475 transaction processing customers in 13 Western states.

Pittsburgh-based Mellon Bank rolls out 11 ATMs with voice-guided technology in Pennsylvania to assist its visually impaired customers. The voice-guided feature allows users to hear audio cues on conducting transactions through a set of headphones inserted into a jack on the machine. Mellon, along with PNC, had been named in a June 2000 lawsuit filed by the National Federation of the Blind in Pennsylvania.

Boston-based Fleet Bank introduces 16 Massachusetts ATMs with audio capabilities, with plans to increase that number to 150 by year's end. Fleet also commits to installing more than 1,400 "talking" ATMs throughout its Northeastern service area over the next two years, by far the largest planned deployment of audio ATM technology to date.

 March

Chicago equity investment firm GTCR Golder Rauner enters into an agreement to acquire the Transaction Solutions subsidiary of PSINet in partnership with an executive team led by former Transaction Network Services executive Jack McDowell. TNS was sold to PSINet in 1999 at a price of $720 million. Backed by GTCR, the former TNS principals pay just $385 million to acquire their old company from financially troubled PSINet.

April

Greenland suspends the check processing operations of its Check Central subsidiary, as well as sales and distribution of its automated check-cashing machines, due to what it calls greater than acceptable check processing risk and operating losses.

NCR enters into a seven-year agreement making GE Capital Vendor Financial Services the preferred provider of leasing services for NCR's U.S. customers. The agreement covers financing for purchase of NCR products including ATMs, retail automation systems, service and maintenance contracts and Teradata warehousing and customer relationship management products.

E*TRADE Access, a division of E*TRADE Group, becomes the exclusive ATM supplier for Target and Target Greatland stores in the U.S. E*TRADE will add another 1,000 ATMs to the 110 it already manages for Target. E*TRADE will also operate about two dozen "E*TRADE Zones," 400-square-foot facilities at selected SuperTarget stores staffed by E*TRADE sales and service representatives. The two companies also operate a co-branded Web site featuring E-Trade financial tools and services and offering users discounts at Target when they open E*TRADE Bank or E*TRADE Securities brokerage accounts through the site.

 Five national banks – Metrobank, Wells Fargo Bank Iowa, Bank of America, Firstar Bank and U.S. Bank – file a lawsuit in federal district court against Iowa Banking Superintendent Holmes Foster, contending that the state's ban on ATM surcharges is unconstitutional and seeking to have it lifted.

 Bank One installs 30 "talking" ATMs in Illinois and Ohio and announces plans to roll out an additional 100 machines with audio capabilities by year's end.

May

 Long Beach, Miss.-based manufacturer Triton introduces Triton Capital, a lease financing program in conjunction with CitiCapital's Canadian office. According to Triton, the program makes it easier for its authorized distributors to sell to retailers with limited credit histories or minor credit blemishes.

 Tidel reports net income of $65,000 for the second quarter, a dramatic drop from the $2.5 million in 2000's second quarter, largely due to the termination of its relationship with its onetime largest customer Credit Card Center. Tidel says it sold no ATMs to CCC in the quarter ended March 31, 2001.

 According to a report in the Philadelphia Inquirer, CCC has closed more than half of its regional sales offices and laid off a large number of employees. The Philadelphia-based ISO, in an effort to pay its retailer clients, has apparently shuttered more than 30 of its 70 offices in the cost-cutting effort.

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