Article

Beating the squeeze in the ATM business

In an industry feeling pressure from all directions, one IAD looks to get every penny of profitability from the ATM.

April 8, 2013 by Suzanne Cluckey — Owner, Suzanne Cluckey Communications

Editor's note: This feature is part of a continuing series of interviews with executives in the ATM industry. If you know of an industry changemaker we should feature, send an email to ATM Marketplace.

The ATM industry was a different world in 1999 when Josh Ettesvold founded Express Teller Services in Phoenix. In the 13 years since, he's seen the industry come under increasing challenges from government regulations, card association cutbacks, and a maturing marketplace.

As competition has intensified, Ettesvold has adapted his business, adding services, increasing efficiencies and focusing on a key factor in obtaining and retaining the best ATM locations — excellent customer service.

Q: What's your perspective on the ATM industry today?I think we're being hit from multiple areas — reductions in revenue, increased fees, decreased transaction volume. So there is definitely a squeeze.

When I first started back in 1999, we didn't have to deal with any of these items. I can remember that we could go out and grab a voided check from a customer, go back and activate a terminal number. It was incredible. We didn't have the due diligence process.

I think it's frustrating for any company out there large or small ... our industry is obviously based on nickels and dimes and when we start seeing that decrease that has a significant impact on us. 

Q: How have you approached the question of new revenue streams at the ATM?What we're trying to do is to take our financial institution clients and then take our retail clients and maybe bridge that gap with branding. Take the ATM that's sitting in a convenience store that's a white label ATM — just has our logo on it. Take that off, put the financial institution's information on there.

We're trying to increase our value to the financial institution customer by providing a convenient access point where they don't have to manage that ATM but they get the exposure … And the retailer enjoys additional traffic coming through the location by way of the financial institution promo on the website or in the newsletter or whatever the case may be.

Q: What do you think of the ATM lottery ticket sales program as a revenue builder? I think one of the disadvantages there is that you can't offer that in 50 states as of today. But it does look like more and more states are getting in. I know that the lottery piece is something that we definitely want to pursue just because a significant amount of our ATMs are located in convenience stores. And I think it would be a good complement.

Q: What is the best move an IAD can make to position himself in a difficult market?The devil is in the details. For us, it meant the decision to invest in a software program that audits the transactions to make sure that pass-through fees we have coming in, we're able to pass that through to the customers. We talk to the customers, explain to them that we're in this squeeze and the customer understands that so they've been open to that.  

So the software program for us I think was probably one of the key parts for us to be able to stop the bleeding. And so far we've had a customer base that's been supportive and understanding and we've been able to press forward.

Q: EMV is a huge pain point for the industry now; how have you approached it? When we swapped out machines for ADA, we kind of anticipated that EMV will be next — there were some rumblings — so we let the customer know that the machines they were purchasing were going to be compliant at the time of installation and, anticipating the next upgrade, the machine would require just a small upgrade: card reader, software and so forth.

Again, I think it comes back to that relationship with your customer, making sure that they know what that's coming … and I think they appreciate that.

Q: Where will the industry be in 5 years? I have a hard time trying to figure out where we're going to be next week ... I think in the next five years you're going to see maybe a little bit more of a consolidation within the industry. You may have fewer smaller companies out there and I think that's just from a lack of resources. With everything that's required, I think it's going to make it more difficult for the smaller operators to continue. I'm not saying that they can't do it, but I think it's just going to become more challenging, the more that's required.

On a positive note, I think you are going to see ATMs that will have multiple transactions. I think with technology advancing at such a rapid pace, I think you're going to have multiple products and services that you're going to be able to transact at the ATM.

We were very fortunate to be able to participate in the pilot test here in Arizona for Better ATM Services — we have about 25 or 30 machines dispensing gift cards. So I see at first hand as a very positive product. Better ATM actually launched that test through three of our financial institution clients and it's been successful with all three.

Q: Will cash eventually go away?I think cash is here to stay … people still like to have cash at hand. We know how wanted [cash is] when an ATM has a bill jam or has something go wrong. If it goes down, within 30 seconds we're receiving that call and they're wondering how fast we can get out there.

Josh Ettesvold is president and CEO of 
Express Teller Services, Inc., a provider
of self-service financial products —
including ATMs, ATM management and
outsourcing programs, transaction processing
and cash management — to a wide range
of clients including banks, credit unions,
retailers, and small businesses throughout
the southwest and nationally. 

Read more about distributors, ISOs and IADs.

cover photo: bottled void

About Suzanne Cluckey

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Suzanne’s editorial career has spanned three decades and encompassed all B2B and B2C communications formats. Her award-winning work has appeared in trade and consumer media in the United States and internationally.