Article
Through-the-wall ATMs
Most of the retail ATM deployment activity in the past few years has been confined to the freestanding cash dispensers that have become nearly as common as cash registers at convenience stores, gas stations, nightclubs and other ATM-friendly businesses. In recent months, however, more ISOs have begun dabbling in through-the-wall ATMs, until now deployed almost exclusively by banks.
January 7, 2002
Most of the retail ATM deployment activity in the past few years has been confined to the freestanding cash dispensers that have become nearly as common as cash registers at convenience stores, gas stations, nightclubs and other ATM-friendly businesses.
In recent months, however, more ISOs have begun dabbling in through-the-wall ATMs, until now deployed almost exclusively by banks.
ISOs' interest in these ATMs can be summed up in two words: Volume, baby. ISOs that have installed them report that transaction volumes on through-the-wall machines are through the roof -- typically two to five times higher than those of interior machines in the same geographic area.
�We'll double or almost triple the volume on a through-the-wall machine installed in the same block as an interior machine,� said Neil Johnson, president and CEO of Euless, Texas-based International Merchant Services (IMS). �If we're doing 900 to 1,100 (monthly) transactions on an interior machine, we'll do 2,500 to 3,000 transactions on an exterior machine. �
Johnson said that about 10 percent of the 2,700 machines his company currently has under contract are through-the-wall installations.
Michael Guthrie, vice president of sales for Pleasant Hill, Calif.-based Automated ATM Solutions, reports similar numbers. He has sites that support both interior and exterior machines, with the exterior ATMs racking up about three times the transactions. At a few busy San Francisco locations, Guthrie has installed two through-the-wall machines side-by-side to keep up with heavy demand. �If I don't put in a second machine, somebody else is going to get those transactions,� he said.
Pumped-up volume
Guthrie and Johnson attribute the boffo volumes to several factors. Exterior locations offer truly 24-hour service. If installed in a busy area such as a nightclub district, the ATMs may be used practically around the clock.
More people pass by and see the exterior machines, which leads to more spontaneous ATM transactions. While an ATM inside a retail location is only likely to attract patrons of that particular store, a through-the-wall machine lures more men (and women) on the street.
Sometimes it's just easier for consumers to use an outside machine, Johnson said. �If you've got a machine in a busy nightclub with a lots of crowds inside, it prevents people from getting to the machine and using it. If they can see lines forming inside, people will often go ahead and get their money outside so they don't have to wait,� he said.
At other locations, a through-the-wall ATM may be the only option. �We're seeing a demand at non-traditional places like fully-automated carwashes,� said Marty Ambuehl, president of Billings, Mont.-based ATM Express. �There's nowhere to put an interior machine at a place like that.�
�You want me to what?�
While the pumped-up volumes are appealing, ISOs pursuing the through-the-wall market will encounter challenges.
Perhaps tops on the list is a wary merchant. �Number one, you've got to talk the guy into cutting a hole into his wall,� Ambuehl said.
Guthrie sometimes installs an interior machine before trying to convince a merchant to allow the more drastic exterior placement. �I tell him that if he lets me put in a machine through-the-wall, he can probably double his transaction numbers. He usually goes �ka-ching' and that's that,� he said.
Fewer powers of persuasion are required if an ATM can be installed in a pre-existing hole, to replace another ATM or a window, for instance. Even then, however, removing the machine is no simple matter. Ambuehl, whose company manages about 2,000 machines, said savvy ISOs prepare for possible de-installations by storing brick, plate glass or any other materials that were removed.
Through-the-wall installations must be coordinated far more precisely than typical interior deployments, Ambuehl added. �Most guys are used to selling the machine, bolting it into the floor, programming it and walking away. Once you've got a hole in the wall, that machine has to go in the same day. There's no room for error.�
Building codes vary; so ISOs may have to wade through a pile of red tape to get a machine installed. Johnson, of IMS, said that historic districts offer a particular challenge. While they are attractive sites because they tend to attract tourists, an ISO must be prepared to make a large upfront investment.
�You may be required to have an architectural planning study done,� Johnson explained. �In some cases, we've spent more on engineering feasibility studies than what we would normally pay for a piece of our standard equipment.� (IMS installs mostly Triton machines.)
New vs. refurb
Until recently, most ISOs opted for refurbished Diebold or NCR hardware for through-the-wall installations. Two of the most commonly deployed models were Diebold's 1071 and NCR's 5085, commonly sold by refurb shops for $8,000 to $12,000. While these machines are still popular choices, the introduction of lower-priced new models such as AmStar Systems' e-Teller and Cross Technologies' NanoCash is changing the dynamics of through-the-wall deployment.
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| The Cross NanoCash was not designed as an exterior machine. But several ISOs are using it outdoors anyway, in through-the-wall applications. They say transaction volumes are higher at exterior ATMs. |
While the Cross NanoCash was launched late last year as a countertop model, much of the interest to date has been devoted to its application as a through-the-wall unit. Bill Dunn, director of sales, said that approximately 80 percent of the machines shipped thus far have been configured for through-the-wall installations. Cross created a through-the-wall kit for its distributors, which includes the fascia and mounting hardware.
However, Dunn believes that the sales curve may change now that Cross has introduced a pedestal on which the NanoCash can be mounted for more flexibility in interior locations.
Ambuehl, of ATM Express, said his company has placed the NanoCash in a number of exterior locations, including on Mackinac Island, Mich. � perhaps the ideal spot for a through-the-wall ATM, since no automobiles are allowed.
Ambuehl said the NanoCash installations were a snap compared to the more complicated process involved for a refurbished machine. �(The NanoCash) doesn't weigh 1,000 pounds, so you don't have to have a crane to lift it in there,� he said. �It's a one-man job instead of a four-man job.�
Johnson agreed, noting that the NanoCash offers some leeway to installers in both height and depth. �The Cross application allows for a height of anywhere from 25 inches to 42 inches and for wall sizes of varying depths. With an NCR or a Diebold, you have to be real, real careful,� he said.
Alik Perakh, head of operations for San Diego-based Cashflow ATM, doesn't believe that a unit like the NanoCash, which wasn't designed for outdoor use, will be able to withstand the elements of most exterior locations. He prefers using refurbished machines. �These machines were designed to work for years and to do tens of thousands of transactions a month,� he said.
Perakh's favorite model, the NCR 5085, has a stainless steel fascia and keypad and screen encased in thick plexiglass � all nearly impervious to vandalism. �It's just about bulletproof,� he said. Because the model was so popular with banks in its original incarnation, there are plenty of them to be found on the refurb market.
Another possible advantage to using a refurbished machine is increased revenue opportunities, said Bob Nemens, Diebold's global marketing manager. All machines built on Diebold's ix platform, including the 1071 and the 1064, can be upgraded to run MPEG video, for instance. And because through-the-wall installations generally are high-volume machines, they may be better candidates for advertising programs than many interior machines.
Like Perakh, Nemens questioned the wisdom of using equipment that wasn't specifically designed for exterior installations. �When you have your first pelting rainstorm, you're going to have problems,� he said.
Few ISOs are equipped to provide service for a refurbished machine, so service calls will be more expensive � in some cases, far more expensive. Getting the right site is the key to offsetting the added cost, Perakh said. �We figure we want to do at least 1,000 transactions a month. We won't go in if it's just a so-so location,� said Perakh, who didn't disclose how many machines his company has under contract.
It's important to remember that high traffic doesn't always translate to high volume, Perakh said, noting that Cashflow once had a machine near a bus stop in downtown San Diego. While the area was always crowded, the machine did a disappointing number of transactions. �You had a lot of people taking the bus in from other low-income areas of town. It was a gang-banger hangout,� he explained.
Another caveat: ISOs using refurbished equipment may want to stick to the more recent models. While older refurbished machines like Diebold's 9000 Series may look like a bargain, Johnson cautioned, replacement parts for them are scarce � and thus costly. �You're really up a creek when you need a part for one of those,� he said. �That's part of the reason the banks got rid of them in the first place.�
Ambuehl, of ATM Express, doesn't believe that refurbished machines are worth the added service expense. Noting that the hourly rate for Diebold and NCR-certified technicians can run upwards of $200, he said, �I'd rather replace 10 screens on a NanoCash, or replace the whole machine every year, than get into that kind of cost.�
It's the cash, stupid
While service for a NanoCash won't be expensive, Johnson said that cash replenishment may be another matter. Noting that the NanoCash is only designed to hold 1,500 new notes with an optional cassette increasing the maximum to 2,000, he said that machines at typical high-volume exterior sites would likely require twice-weekly cash loads.
�On our standard exterior locations, we're doing over 2,000 transactions a month. We also find the average withdrawal on the exterior machines is a little higher, about $80 compared to $50 or $60 on our interior machines,� Johnson said. �So you're going to need at least $160,000 in those machines over the course of a month.�
Installing two NanoCash units side-by-side is one option for providing ready cash, Johnson said. Another is having the merchant load the cash himself, a fixture of many retail ATM programs. Yet many merchants may not have $6,000 to $10,000 a day to spare -- not an unrealistic figure for a busy exterior machine.
The ISO can also handle cash replenishment, but Johnson said this can be a problem for small ISOs with limited credit. �At a certain point, a guy's going to max out his ability to get cash.�
Money shortages are much rarer with refurbished machines, because most of the common NCR and Diebold models have up to four cash cassettes.
Guthrie, of Automated ATM Solutions, opts for the more expensive armored car service at most of his through-the-wall sites. His rule of thumb: �If I'm dispensing $20,000-plus a week, I'm going to go for the armored car,� he said.
Looks matter
Another investment that Cashflow ATM's Perakh feels is worth the extra cost with a through-the-wall installation is an attractive, custom-built surround. �It makes it look and feel like a bank machine, which increases user confidence. It's worth the couple of thousand dollars because of the increased business I'll get,� he said.
A snazzy surround also helps raise the ATM's profile. �If a customer sees a machine, he sees the machine. If he sees a sign, he sees nothing,� Perakh said.
Guthrie said his company, which has about 300 ATMs under contract, designed its own durable plastic fascia for the Triton 9601 machines it uses for through-the-wall installations. Other enhancements Automated ATM Solutions makes to the 9601 include an added layer of plexiglass over the screen and a plastic protector for the cash dispenser that helps keep out dust and other materials.
Like the NanoCash, the 9601 was not specifically designed for through-the-wall installations. However, both of the machines are rear-loading models, which all of the ISOs interviewed agreed is preferable for exterior locations.
�You don't want to stand there on a busy street loading cash cassettes,� Guthrie said.
Taking the concept of an exterior through-the-wall ATM even further, Cashflow ATM's Perakh mentioned that his company has some interest in through-the-wall applications in a stand-alone kiosk.
�Sometimes you can find a refurbished kiosk or a used kiosk in good condition at the same place you get your refurbished ATMs,� he said. �That opens up a completely new market because all you're asking a merchant to give up is a piece of his parking lot or his landscaping.�
Diebold apparently has some interest in pursuing this market as well. Two years ago, the manufacturer introduced the 1075ix,a freestanding, walk-up cash dispenser with a weather and vandal-resistant housing that does not require a kiosk or other enclosure.Nemens said the 1075ix can be deployed for roughly one-half to one-third the cost of a standard new ATM with enclosure.
ATM Solutions Inc., a subsidiary of First Union Bank, deployed several of the 1075ix machines, including one at Universal Studios Islands of Adventure in Orlando, Fla.
Bob Ash, First Union's national ATM sales director, said, "This product really opens up a whole new arena for us."
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