ATM forecasts and fortunes for 2018
by Daryl Cornell, CEO, Triton Systems
As has been true every year, our predictions will likely prove to be off the mark, highly questionable or just plain wrong. And yet, we will prognosticate again this year, on the off chance that we do manage to land a few correct guesses. Here is where we see the ATM industry headed in 2018.
The U.S. ATM industry will reach full saturation
With nearly half a million ATMs operating in the U.S., it sometimes seems that there really is one on every corner. Buoyed over the last several years by upgrades and replacements for ADA and EMV, 2018 ATM hardware sales are now poised to fall off the proverbial cliff.
As we have seen in both the U.K. and Canada, once a market reaches the point of saturation, annual ATM sales can plummet by as much as 90 percent. The remaining ATM sales are generally replacements for worn-out or unsupported gear.
Whether one or more manufacturers wholly dependent on the sale of new ATMs decides to exit the U.S. market in 2018 will determine which ISOs continue to receive support for their ATM fleets.
ATM hardware prices will continue to fall
Much like the retail ATM industry a decade ago, bank ATM prices will continue to shrink in 2018. The brutal combination of slowing bank demand for ATM hardware and Asian competitors slashing prices in an attempt to buy share spell continued trouble for the likes of NCR and Diebold Nixdorf.
While nearly all FI ATM manufacturers are furiously paddling towards the elusive "ATM software model," the costs of maintaining armies of service techs to support hardware footprints will continue to take their toll in 2018.
The lone exception would appear to be those six-figure automated teller machines being deployed mostly by the larger banks. As in 2017, look for shrinking FI hardware margins and sluggish ATM sales this year.
Banks will begin taking a serious look at CE-based ATMs
The combination of expensive ATM hardware, service contracts and continued Microsoft upgrade requirements are giving pause to all but the largest banks.
While some banks will elect to outsource their ATM programs or simply reimburse customers for their monthly ATM fees, others are revisiting how to efficiently provide their customers with cash.
Historically, the cost of operating an ATM has been weighed against the cost of human tellers and a bank branch to determine ATM deployment strategies. Now that ATMs have facilitated the closure of tens of thousands of branches, banks are looking closely at their ATM acquisition and operating costs.
As the need for check acceptance at the ATM continues to wane, through-the-wall CE-based ATMs will begin replacing full function ATMs in many locations — at a fraction of both the cost and the headache.
The move to chip-only cards will gain steam
At long last it appears that the card brands have acknowledged the uselessness of signature as a security feature. However, few U.S. issuers have made the move to PIN credit.
This means that a large number of in-person credit transactions in 2018 will rely on merchant identification of the cardholder. In order to minimize any increase in fraud losses, the card brands and issuers will be leaning heavily on their own algorithms and magnetic stripe chargebacks for non-EMV POS terminals and ATMs.
It will also probably mean an increase in rejected fallback transactions of all types. After 2018, it will probably only be those pesky gas pumps standing in the way of the death of the magnetic stripe.
Operational ineptitude will accelerate the culling of the ISO herd
ATM deployers continue to face steady headwinds in an increasingly competitive market. Over the past several years, the lion's share of surcharge and interchange has been given away to merchants by ISOs attempting to scale and to "make it up in volume."
In 2018, ISOs will be reevaluating every facet of their businesses in order to survive. Refurbished ATMs and parts, trade-ins on the purchase of new units and manufacturer support will become more and more critical.
The days of treating ATMs like television sets — just buy a new one when the old one breaks — are long gone. Efficient field service, along with manufacturer support, stability and flexibility will be more important than ever for those ISOs hoping to avoid extinction in 2018.
Topics: Trends / Statistics
atm Atom Posts for the atmAToM blog are contributed by a collective of writers from Triton Systems and ATMGurus seasoned ATM pros who thought they might like to share a few things they've learned during the last 30 years in the ATM industry. www