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Tranax expands into kiosk business

Since Tranax opened its doors, it's been cranking out retail ATMs to dealers and deployers throughout the United States. But last week the company announced its new self-service venture - one that walks outside the confines of cash-dispensing machines.

June 28, 2005 by Tracy Kitten — Editor, AMC

One of the industry's "Three T's," Fremont, Calif.-based Tranax Technologies Inc. is an ATM leader in the United States. Like the other T's, Tidel Engineering Inc. and Triton Systems of Delaware Inc., Tranax is known for producing ATMs with advanced functions and sleek, modern enclosures that are sold at competitive prices.

And, like the other T's, the popularity of Tranax's ATMs exploded in the retail and small/community financial-institution markets.

By 2004, Tranax had delivered more than 50,000 Mini-Bank 2000 ATM units - a line it released in 1997. And in 2003, Tranax ranked fourth among ATM manufacturers in U.S. sales, according to ATM & Debit News' 2005 EFT Data Book.

That report also noted that Tranax' sales jumped from 7,600 units to 9,000 units, an 18.4 percent increase, from 2002 to 2003.

But competition in the ATM world has been tight.

Finding a niche

Ahead of Tranax in U.S. sales in 2003 were NCR, Triton and Diebold, three manufacturers that target the FI arena. And behind Tranax were NexTran, Tidel and Wincor Nixdorf International, all manufacturers known for their advanced/multiple function ATMs.

Tranax wanted to grow its business through diversification. That's one reason, said Scott Holt, Tranax's  product manager for self-service terminals, the company announced last week the release of a non-cash-dispensing kiosk.

"There are only so many ATMs you could have out there in the market," Holt said. "And there are many locations that are looking for a terminal that provides financial service, but one that's not an ATM."

He added that Tranax sees "a big market" for kiosks that don't spit out cash but can handle multiple transactions. In fact, Holt said, Tranax expects to meet the needs of a niche market with its new line, which doesn't even have a name yet.

"We're looking at getting through this month and next month without attaching a name to the product," Holt said. "We're doing some true field trials. In our industry and the channels we target, if you put a brand on it, it'll stick for life."

So Tranax is being cautious, Holt said, about what it calls the kiosk; because, after all, it can do just about anything the customer asks, except give you cash.

"We feel we can be competitive," Holt explained. "We also have to take into account branding considerations for what we do - we need to decide whether we'll brand it by individual turnkey solutions, or whether it will have a hardware brand name."

A competitive edge

Charlie Caserta, president of York, Penn.-based Livewire International Inc., said he thinks Tranax is on to something.

"I really think there is room in the market for both an ATM with kiosk capabilities and a stand-alone kiosk," Caserta said. "It really depends on the solution the customer needs and the footprint. … A c-store might be more apt to put the ATM and kiosk functions together for space considerations."

Tranax announced the launch of its nameless, cashless self-service kiosk line last week.

A big-box retailer, like a Home Depot, on the other hand, might prefer keeping the ATM and the kiosk separate, since floor space isn't as great a concern.

Livewire provides its Destination Ticketing Solution Software for Tranax's Ticketing Self-Service Terminal - a ticket-dispensing ATM that hit the market in April - and also will provide software for the self-service kiosks, depending on the functions requested. And that's what makes the new unit unique, Caserta said. It's flexible.

A familiar platform

Tranax isn't developing its new kiosk from scratch. It's incorporating features from its existing ATM product lines. But the company is offering customers an option of how much or little to offer on their kiosks. Some applications that can be supported include bill payment, ticketing, instant-issue card dispensing and money-order printing.

The standard kiosk comes equipped with a 15-inch touchscreen, receipt printer, MCR and a barcode scanner. Additional options include a ticket printer, card dispenser or money-order printer.

The open-ended platform and the unit's modularity are huge selling points for Tranax, since it allows customization.

And breaking the ATM mold is not new to Tranax. "We have close to 60,000 retail ATMs deployed throughout the United States and Canada," Holt said. "We looked at how we could add real value to the ATMs - which was where we launched our first converged unit."

Highlights Advances in software and connectivity are making multiple options at kiosks and ATMs practical. Consumers are more likely to use a self-service device than they were 5 to 10 years ago. Experts say there is room in the market for ATMs, kiosks and terminals that offer coverged functions. The kiosk industry will soon be as competitive as the ATM industry, where price and security issues are concerned.

In 2003, Tranax took its first step into the kiosk paradigm. The platform pairs an ATM with various apps, such as check-cashing, ticketing and card-dispensing.

Software and connectivity are giving companies like Tranax more options.

"Today you have the ISO, you have the banks and you have the technology," Caserta said. And the software coupled with consumer experience is making multiple functions at a kiosk or ATM easier and more acceptable, he added.

"There are 400,000 ATMs out there in U.S.," Caserta explained. "And there are six figures of kiosks out there. So you've got a lot of real estate being covered by the kiosk, and the market has changed. The consumer is more likely to use a kiosk - because he is more comfortable with it. … Customer awareness is allowing the market to do more."

More kiosks: a good thing

Some multiple functions make sense at the ATM, while others don't, Caserta said. Ticketing, for instance, might be a complementary function at an ATM, but offering maps or the ability to make hotel reservations is not.

Joe Harris, general manager of Hamburg, N.Y.-based ANS Marketing LLC, an ATM systems, service and transaction processor, agreed.

"It's hard to say if the industry is moving in a direction to offer more options, but it is clear that more and more kiosks are being deployed that offer convenience for people," Harris said. "When you try to put too many functions on one terminal, you're not convenient. You don't want to have a terminal that does too many different things."

It's all a balancing act, Holt said.

"We realized there was an increasing demand from our existing channels," he said. "One of the things we were repeatedly seeing and hearing from the market is that there are obviously a whole range of kiosk providers, but at times a lot of those kiosks didn't seem to be as robust or secure as they could be. So we wanted to leverage all of the experience we had (with ATMs) and transfer it to developing a line of kiosks that are based on transaction-based solutions."

But Francie Mendelsohn, president of Rockville, Md.-based Summit Research Associates, doesn't think Tranax's move into kiosks is the big deal many perceive it to be.

"They're not players of note in the kiosk world at all - they're ATM folks," she said. "The good news is that they have a track record in an even more demanding area. So if they can convince prospective customers …'We've been around a long time. We have this track record of building reliable, robust units, and are very affordable,' that will help them."

"But the challenge for them is, they're entering a field in which there are a ton of players," she added. "Even when you take the big guys off the table, they're entering an already crowded space."

Strengths and challenges

Caserta said there is a learning curve.

"It's a horizontal market - with ATMs, it's extremely vertical," Caserta said. "With kiosks, you go across all the markets - and there's a learning curve there. You've got e-concierge, ticketing, card-dispensing - multiple types of markets that these things can go into. Over time, they're going to learn all of the different markets."

But, he added, Tranax's expertise in security, coupled with the company's ability to ship machines in 24 hours, will set it apart.

According to Mendelsohn, that might be a key element when it comes to Tranax' performance in the kiosk field.

"If they can say 'Yes, you need 50. You need them by the end of the week? You got it.' That would be huge," she said.

And, of course, there is price.

Holt would not disclose price ranges, since the kiosks and their options will differ, depending on customer needs. But, he said, "We're aiming to be extremely competitive price-wise."

Pricing could give Tranax an edge, if it can come in lower than the industry average.

"When the price of these multipurpose/multifunction kiosks goes down, you'll see more of them out," Harris said. "But when you see terminals that cost in the mid-20,000 to 30,000 dollar range … you can't afford to put them in a number of locations."

Some retailers, he added, may opt for a multifunction ATM, just to keep costs down.

But Mendelsohn said prices might not be enough, since the cost of kiosks are dropping across the board.

"In our big flagship report," Mendelsohn said, "we give people a price range and ask, 'What's the price you charge for your kiosks?' And the average price has dropped every time we do the survey. Increasingly, people don't want to pay more than 5 or 6,000 dollars."

Tranax's highest hurdle: adapting to a business that is, despite some superficial similarities, fundamentally different, Caserta said.

James Bickers, KIOSKmarketplace editor, contributed to this story.

Tell us what you think about an ATM company breaking into the kiosk market.

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