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Overcoming interchange

April 19, 2013 by Mark Smith — VP of Financial Solutions, Kahuna ATM Solutions

"Nobody would dare say they see interchange going away ... what matters is ensuring there is an equitable exchange between issuer and acquirer…" 

This was the assessment made by Bryan Bauer of Kahuna ATM Solutions in a recent webinar, "The Future of Interchange." Bauer and David Tente of ATMIA delivered a compelling presentation on the history of interchange, its evolution and its current condition.  It was refreshing to learn that ATMIA, NAC and many Registered ISOs are in this together to find common ground.  United…we have a voice.  Separately… we're too small to make an effective impact.  It is vital that we begin seeking alternatives to diminishing revenue streams for independent deployers of ATMs.

It's easy enough to identify the problem and find support amongst our peers.  What's difficult is identifying ways we can offset these losses.  What I found most important in the webinar were the seven steps that independent deployers can take to increase revenue and control more of their destiny.

1. Update pricing strategies — Evaluate all of your service fees. Adjust pricing for field service and tech support, for example.
2. Increase the surcharge— Pass more expense on to the cardholder.
3. Increase transaction volume — Utilize more robust signage and/or join a Surcharge-Free Network.  This can dramatically increase the usage of your ATM.
4. Upsell — Use Branding/Advertisement on ATMs as a means of revenue.  Banks, Credit Unions and Retail Brands all see ATMs as viable impression points.
5. Add outsourcing and other services — Use your expertise in managing ATM programs for financial institutions.  You have a much more efficient and cost-effect business model.
6. Offset interchange losses — Negotiate with those that benefit from interchange and seek ways to balance out the fees absorbed by the deployer.
7. Review agreements — Make sure your agreements are up-to-date and still in line with your costs of operations.  You have to allow room to adjust for any unexpected increases in service costs.

When the landscape shifts, we need to build new foundations for our business models.  ATMs and the use of cash are still thriving in our global market.  It will require flexibility, good planning and execution to offset the loss of revenue from interchange.

About Mark Smith

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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.

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