News
At ATMs, ubiquity sells
Ubiquity is what made the retail ATM industry what it is today -- and what may help take it to the next level. Several key industry players, including manufacturers, processors and ISOs, have formed an informal consortium that is working to put advanced function transactions on ATMs.
June 6, 2002
Why do consumers go to ATMs?
Sure, because they need cash. But more importantly, because they know they can get it there.
Ever tried getting stamps at an ATM? While it's possible, the number of machines offering them is so small that it's generally quicker and easier to find a post office branch, grocery store or other outlet selling them. Not to mention they can be purchased online via the United States Postal Service site.
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Ann All |
Less than 10 years ago (in the dark days), one could only expect to find ATMs at bank branches. Few people used non-branch ATMs because the time spent searching for one generally cancelled out the reputed convenience factor.
Off-site ATMs didn't truly catch on until people could count on finding one. Are there any c-stores today without an ATM? Maybe a few - but they are the exception, not the rule. I react the same way to a c-store without an ATM as I do to an airport without a Starbucks -- with barely contained annoyance.
And I'm not alone. ISOs have long used the "your competitor's got one, you need one too" pitch to their advantage. Bank of America is running a clever ad campaign in which their ATMs are found everywhere, even on the bottom of the ocean.
Ubiquity sells.
It doesn't take a rocket scientist -- or an industry pundit -- to realize that the same principle will apply to any product or service that can be sold via the ATM. A flurry of recent announcements regarding advanced ATM services -- money transfer, check cashing, prepaid mobile phone top-ups -- are long on optimism but short on details.
In many cases, potential partners are performing an elaborate mating dance. Companies like Western Union and CashWorks are wooing ATM manufacturers, transaction processors and deployers in an effort to get their products on as many machines as possible.
No yolk
Yet, just as with the effort to implement ATM advertising on a broad scale a few years back, there seems to be a chicken-or-the-egg issue involved. In many cases, manufacturers must make changes to their software to implement the new services. They don't want to do so unless they know the changes will be supported by processors, and the new services ultimately sold to ATM owners.
NCR has introduced a program called Convenience Connexions (see related story Making the connexion) which it says will facilitate offering a number of advanced transactions by offering ATM deployers a complete hardware/software platform (essentially the same one used by 7-Eleven for its Vcom program) as well as connections (spelling approved by Webster) with vendors like Western Union and Certegy Check Services.
The Connexions program is targeted to financial institutions with retail ATM locations and to large chain retailers such as grocery stores. It does not, however, address the needs of the smaller "mom and pop" retailers who purchase ATMs from ISOs. Though these merchants don't have the same kind of financial clout as large chains, many are interested in leveraging their ATMs by offering services beyond cash dispensing.
Several ISOs with some 11,000 machines under contract between them have put aside their worries over tipping their competitive hands to negotiate collectively with manufacturers, processors and transaction providers. Their goal is to get several advanced functions on as many ATMs as possible.
They are working with, among others: the three leading retail ATM manufacturers (Tidel, Tranax Technologies and Triton), three processors (Core Data Systems, Lynk Systems and Genpass Technologies), CashWorks, Western Union and several prepaid cell providers.
Share the love
In a new twist, the ISOs reportedly plan to share a small percentage of any fee revenue resulting from advanced ATM transactions with manufacturers. In theory, this provides a stronger incentive for manufacturers to make the necessary software tweaks.
This approach makes sense: the other parties in a retail ATM program (processor, ISO, transaction provider, merchant) all see a more direct benefit from increased transaction volumes. As hardware sales flatten, manufacturers will likely welcome the chance for more recurring revenue.
The first service the group intends to collectively offer, according to several of the key players, is prepaid cell phone top-ups. It's a less technology-intensive application than some of the others in the pipeline and has been wildly successful in other markets like Europe and Asia (where, admittedly, the whole concept of prepaid cell time is far more popular than here in the States).
In addition to this informal consortium of ISOs, E*Trade Access is preparing to launch a prepaid top-up program of its own, beginning with a pilot in Boston. E*Trade's large network (some 11,000 machines) and considerable marketing muscle should help advance the advanced function cause.
ISOs have revolutionized this business in many ways. Through their influence, the industry has adopted low-cost ATMs, dial-up communications, merchant cash replenishment, merchant leasing and other innovations unheard of a decade ago.
Let's hope we'll soon be able to add new ATM transactions to that list.
Tommy Glenn, the president of Jackson, Miss.-based ISO Financial Technologies, has spearheaded these efforts at industry-wide cooperation. He said, "If we can pull this off as an industry, it puts us in a position to do something the banks have never done -- to actually drive customers to the ATM."
Well said, Tommy.
