Article

Beyond 'cash out': ways to cash in on ATMs (videos)

Now that today's ATMs can do so much more, should you be looking into adding new revenue sources?

March 18, 2013 by Suzanne Cluckey — Owner, Suzanne Cluckey Communications

Nobody understands the term "incremental income" better than ATM operators. Theirs is a business whose profits are built by the penny.

So it follows that nobody understands better than an ATM operator the adage, "A penny here, a penny there and pretty soon you're talking about some real money."

At the moment, the ATM industry is eyeing several sources of incremental income that look like they could add up to some "real money."

The two incremental income sources that are garnering the loudest buzz now are direct currency conversion and lottery ticket sales.

Direct currency conversion

EFT provider and ATM deployer Euronet has been in the DCC market in Europe for years. At the recent ATMIA US conference, Dave Bishop of Euronet explained how the process works.

A DCC transaction "basically moves the revenue from the issuer to the acquirer, is what it boils down to," Bishop said. The benefit to the ATM user is that it lets that individual know the true cost of a transaction at a foreign ATM.

Bishop gave the example of a tourist in the U.S. withdrawing $300 at an ATM:

In a traditional (non-DCC) transaction, the ATM sends the request to the card-issuing bank (say, in Germany) for $300 in U.S. currency. The issuer approves the request and deducts €231.75 from the cardholder's account, plus a percentage of the transaction amount as a foreign exchange fee.

The cardholder gets $300 and has no clue as to the actual cost of the transaction and fee in her home currency until she sees her bank statement.

In a DCC transaction, the ATM recognizes the bankcard's country of origin and converts $300 into that country's currency at the point of interaction, adding a $2 service charge, which the cardholder must approve in advance. The ATM sends a request for €233.29 ($300 + $2). The issuing bank deducts €233.29 from the cardholder's account — with no foreign transaction fee.

According to Bishop, DCC is ideal for ATMs in locations frequented by tourists and business people, as well as border locations.

In the video interview below, Monex, another DCC provider, talks further about this incremental revenue stream.

Lottery ticket sales

On Nov. 28, 2012, Minnesota became the first state in the U.S. to offer lottery ticket sales at the ATM, using a ticket sales system powered by New York-based software developer Linq3.

The Linq3 system offers $5, $10 and $20 ticket puchases at the ATM. According to Daniel Cage of Linq3, who presented on the concept at ATMIA US 2013, the company's initial expectations were that ticket purchases would average out to about $7 per buyer. "Now after about 14 weeks, I'm happy to report that we were wrong," Cage said. "It's more like $9 — $8.62, to be exact."

Currently, tickets are quick-pick only, which prevents lines from backing up at the ATM. Ticket-buyers must produce an ATM card and PIN, a drivers license and a cellphone number to play.

Getting into the lottery business isn't quick for a deployer — it takes about 18 months for compliance approval and there are, of course, regulatory hoops to clear.

But that accomplished, Cage said, "It's a fairly straightforward value proposition." Each transaction nets 3 cents. Linq3 deals only with licensed ISOs, so they would have to pass through the share going to the machine operator.

Approvals for lottery ticket sales on ATMs have now gone through in Washington, D.C. and Missouri, "with some other states to come," said Cage.

The following video interview offers a perspective from Cardtronics, a participant in the Minnesota lottery ticket sales program.

Read more about multi-function ATMs.

photo: tax credits

About Suzanne Cluckey

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.