Article

IADs must improvise to survive: How DCC can help boost revenues

Shrinking interchange, increased competition and growing operational expenses have taken a toll on ATM profitability. But advances in technology can help IADs claw back some of those losses.

August 22, 2014

by Bryan Bauer
President, Kahuna ATM Solutions

In the late 1800s Charles Darwin said, "In the long history of humankind, those who learned to collaborate and improvise most effectively have prevailed."

It's no different today. In every business channel, we see the continuous need to adapt in order to survive.

The overwhelming majority of independent ATM deployers have seen transaction revenues steadily decline over the past 10 years. Shrinking interchange, market saturation, increased competition from surcharge-free networks and cash-back debit options, and increasing operational expenses resulting from more stringent regulatory scrutiny and security mandates have all taken a toll. 

Additionally, any of the successful ancillary products to date for driving additional revenues require such careful orchestration, immense focus, extreme economies of scale (i.e., volume, bandwidth, etc.) and investment of resources that they remain either out of reach or next to impossible to achieve for most IADs working on their own.

However, advances in technology are beginning to help IADs increase revenues by adding functionality to the ATM. Dynamic currency conversion is one good example.

Consumers traveling abroad historically only find out the real cost of their travels when they get home. Reviewing their bank statement upon returning often comes as a shock — the various fees associated with the exchange rate can be staggering.

Originally developed for point-of-sale terminals, DCC allows cardholders to review the exchange rate and conduct their ATM transaction in their home currency. DCC provides convenience for accountholders and paying in cash while traveling allows cost conscious consumers to save on credit card currency exchange fees.

For the ATM deployer, offering DCC provides a competitive edge and a new source of revenue. In addition to receiving the surcharge fee and interchange revenue, ATM deployers earn a percentage of the total withdrawal.

Best of all, DCC is inexpensive to implement and most new ATMs on the market today with a WIN CE 6.0 operating system can easily accommodate DCC functionality with a simple software upgrade.

According to the ATM Industry Association white paper "Implementing DCC at ATMs," which highlights the benefits of DCC, the average domestic ATM deployer can expect 1–2 percent of transactions to be eligible for DCC. For ATMs located in popular tourist destinations the number could be as high as 20 percent. And, with international travel expected to exceed 1.8 billion annually by 2030, according to the United Nations World Tourism Organization, the demand for foreign currency exchange transactions is sure to rise.

For ATM deployers looking to increase revenues, now is a great time to improvise and add DCC to your product offerings. It may help ensure your survival in an ever-changing marketplace.

Bryan Bauer is the president of Kahuna ATM Solutions, a business development and service company for ATM ISOs and IADs. Bryan currently serves on the boards of directors of the National ATM Council and the ATM Industry Association US chapter. He also sits on the ATMIA IAD committee.

Included In This Story

---

ATM Industry Association (ATMIA)

The ATM Industry Association, founded in 1997, is a global non-profit trade association with over 10,500 members in 65 countries. The membership base covers the full range of this worldwide industry comprising over 2.2 million installed ATMs.

Request Info

Learn More