News

Connecting ATMs to the Internet

With its RAAP software, iATMglobal.net plans to wed the ATM to the Internet.by Ann All, editor

March 20, 2002

E-commerce companies are developing new products every day, if not every hour. But they're not developing new distribution channels for them.

"They've got goods and services, and they've got to get them to market. The new economy is no different than the old economy in that way," said Fred Stockton, president and CEO of TRM Corporation.

What the e-commerce economy needs, Stockton said, is a PC-based distribution channel located in convenient sites like retail stores. Sound familiar? It does to a lot of ATM deployers.

Noting that a good number of the approximately 230,000 ATMs in the U.S. are essentially PCs with the ability to deliver cash, Stockton envisions converting some of them into Web-enabled terminals that can offer goods and services such as ticketing, bill payment, Internet banking and prepaid phone cards.

Yet there is a "missing link," Stockton said. "What we need is a distribution link between our machines and the Internet."

TRM, a Portland, Ore.-based owner/deployer of copy machines and ATMs, in January created an independent subsidiary called iATMglobal.net to help create that link. Daniel Cohen, a TRM board member, and Shami Patel, TRM's former chief financial officer, were appointed to lead the San Francisco-based company, with Cohen as chairman of the board and Patel as president.

The first step: iATMglobal.net's purchase of Strategic Software Solutions, which was engineered by Cohen. The Scottish software company, which created the remote monitoring and management system that is found on NCR's entry-level ATMs, will become iATMglobal.net's technology development team.

The monitoring system, @tmLink, is the foundation of iATMglobal.net's architecture. "We're not recreating or reinventing technology," Patel said. "That foundation is already built, and the competency already exists."

The company is building upon @tmLink to create what it calls RAAP, or Remote Access Application Protocol. Cohen envisions providing a RAAP "toolkit" to dot-coms to help them migrate their product offerings to the ATM.

While RAAP is comparable to the Wireless Application Protocol (WAP) used to connect handheld devices such as Palm Pilots to the Internet, it's a more robust interface than WAP because ATMs possess more processing power than handhelds.

RAAP will "fundamentally force dot-coms to conform their product offering to end-user expectations," Patel explained. Transactions will take no longer than two minutes and will be presented in a standard screen-flow format.

Preserving an ATM's intuitive interface is necessary because consumers don't want to learn new technology, Stockton said. "Just because you put new technology out there, it doesn't mean all of us are going to commit the time and energy to learn it. Something like 90 percent of homes have VCRs, but I wonder how many of those are blinking midnight all the time?"

Noting TRM's strong retail background, Stockton added, "We're used to dealing with consumer interfaces and wait time. These kinds of issues are critical."

RAAP will be "a turnkey solution" for ATM deployers rather than simply Internet-enabling software, Patel said. "You won't need a new machine or an NT platform to make it work."

It will function on any ATM with a modem and a "somewhat robust operating system," he added.

RAAP's initial rollout will take place on MCD machines manufactured by NCR and owned by TRM Corporation, but Patel said it will become a multi vendor application. "We hope to be on several vendors by the second quarter of next year," he said, noting that iATMglobal.net is in discussions with several manufacturers.

While TRM provided the initial funding for iATMglobal.net, both Patel and Stockton stressed the company's independence. "Over time TRM will become just another customer of iATM," Stockton said.

iATMglobal.net does not intend to charge ATM deployers for the RAAP software. Revenue will come from dot-coms, who will pay a fee for all successful Internet-related transactions; the company will share up to 50 percent of revenue with deployers.

While iATMglobal.net will route e-commerce transactions, standard ATM transactions can be routed through a deployer's usual processor.

Because of the continued downward pressure on ATM transaction volume and the possibility of an additional revenue stream -- which can be shared with merchants -- several top ISOs are reportedly interested in RAAP.

ISOs must keep their clients happy, and a great way to do so is to "offer them a higher return for the square footage they are giving up," Patel said. "We're not going to sell all of the individual mom and pops. We'll let the ISOs do that. To induce them to do so, we will share revenue with them."

While financial institutions are less interested in incremental revenue, they view ATMs as a way of enhancing customer relationships. Noting that iATMglobal.net plans to "give some degree of flexibility to ATM owner/operators to select the dot-coms or the categories that they want," Patel said banks will be able to offer their cardholders "a value proposition that's very targeted."

Patel, a former investment banker and venture capitalist, said he has spoken to several interested dot-coms. To sweeten the deal, iATMglobal.net plans to offer them branding opportunities such as on screen advertisements.

"In addition to a new distribution channel, they'll have the ability to touch and engage the consumer," Patel said.