Article
Lemons to lemonade: New revenues from obsolescent ATMs
A little repurposing can end a lot of angst over ADA, EMV, PCI and Windows 7 upgrades.
March 20, 2014
by Sam Bosch, presidentPeregrin Financial TechnologiesA recent article in ISO & Agent said that a perfect storm threatens ATMs and independent ATM operators:
[They] will soon have to upgrade, replace or abandon their newly obsolete machines.
The nation's fleet of cash machines is becoming outmoded because of the upcoming shift to EMV-chip cards, the decision to abandon a key Windows operating system, and issues raised by the Americans with Disabilities Act and the Payment Card Industry data security standards.
Fortunately there has now emerged a safe harbor that addresses this problem for IADs. In fact, it is an example of the old expression: When handed a lemon, make lemonade.
ATMs are basically special-purpose PCs. They have electronics, screens, Internet communications, keyboards, printers and some version of a Microsoft operating system. They just happen to have, in addition, built-in magnetic stripe card readers and cash dispensers.
These ATMs, which cost $2,000 to $4,000, process on average only 10 to 15 transactions per day, so they sit idle 98 percent of the time.
For decades, the industry has tried to use these largely idle investments to provide additional benefits and features. It has tried stamp, ticket and coupon dispensing, but with little success. And these features detracted from the main purpose of an ATM, dispensing cash. The new Linq3 lottery ATM application looks promising, but it is now limited to just a few states.
There is a light at the end of this dark tunnel — and it is not an oncoming freight train. It is closed-loop cash dispensing.
Columbus Data Services has implemented closed-loop cash dispensing on its ATM transaction processor. These closed-loop transactions, SeguraCash, do not access bank and card networks and thus incur none of their fees. Neither are they subject to bank-ATM regulations.
Cash dispensing can function on any merchant ATM, but Triton Systems also has written special code for its ATMs that recognizes the unique mag stripe cards that streamline cash dispenses, requiring just one key selection (dollar amount) instead of making a user go through a series of steps.
These ATMs function similarly to a $4,000 labor-intensive, time-release tube safe or a $14,000 teller cash dispenser. And the cash dispenses are Web-enabled, providing real-time monitoring and control of all transactions and cash balances, a feature not available on other cash-dispensing products.
A key advantage to IADs is that if the ATM is used only for cash dispensing by the merchant's employees and not by the general public it does not have to be EMV compliant.
This gives IADs the opportunity to offer merchants the choice not to spend $700 to $900 to upgrade an existing ATM, but instead to repurpose it into a cash dispenser and then having the merchant invest in a new EMV-enabled ATM with all the latest features, including year-long warranties.
Moreover, because a dedicated cash dispenser does not perform ATM transactions any more so than a time-release tube safe does, it doesn't violate any processing agreements the merchant might have with an existing processor. IADs now have the opportunity not only to sell new ATM "mechanisms," but also to receive some fee income from the cash dispenses.
Today there are about a quarter-million merchant ATMs installed in North America; only a fraction of these are EMV compliant. Cash dispensing gives IADs the option of marketing new ATMs to existing customers while also providing these customers an economical way to have secure, accurate cash dispensers.
Cash dispensing also will permit IADs to approach cash-intensive businesses such as check-cashing storefronts, lottery payout locations and Western Union offices.
A number of ATMs now operating in mini casinos in Montana are being used for check-cashing and payouts, also. The feedback from these casinos is that their SeguraCash ATMs provide increased security and reduced risk while also enabling increased accountability.
Peter Drucker, the famed management guru, is noted for saying that the prime responsibilities of business are innovations and marketing. ATM cash dispensing is one way IADs can achieve these goals and continue to increase sales and profits.
This article has been republished from the Triton blog, atmAToM, with kind permission from Triton.
photo: impromptukitchen
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Triton Systems
Triton FI based products • NO Windows 10™ Upgrade • Secured locked down system that is virus/malware resistant • Flexible configurations - Drive-up and Walk-up • Triton's high security standards • NFC, anti-skim card reader, IP camera and level 1 vaults are all options • Triton Connect monitoring • Lower cost
