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Countdown to E-Day

European ATM owners are preparing for January 1, 2002, the day when their machines must begin dispensing the euro, the continent's new common currency. Some are likening the effort to one that led up to another notable New Year's Day.

May 20, 2001

ATM manufacturers working to ensure that every machine in Europe is hardware and software synchronized to begin dispensing the euro, the continent's new common currency, on Jan. 1, 2002 are comparing their efforts to the activity that surrounded another notable New Year's Day.

As with Y2K in 2000, years of intense preparation were required to gear up for the actual physical changeover to the euro. The public holiday is also one of the busiest times of the year for ATM usage, creating an added challenge to the deadline.

 Ken Justice, director of market intelligence inDiebold'sGlobal Market Group, said that getting euros to ATMs on what some are calling E-Day requires an incredible attention to detail.

 "It's not rocket science. It's not a new technology at all," he said. "It's a massive coordination effort. When you're making such a change, it can be a logistics problem."

 The main difference between preparations for Y2K and the euro is that there is less of an element of the unknown, said Peter Woeffen,Wincor Nixdorf'sproduct manager for the euro. "With Y2K, no one knew everything. With euro, we know what we need to do."

 Twelve countries, known collectively as the euro zone, are making the transition to the new currency: Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain and Greece. Other members of the European Union -- the United Kingdom, Denmark and Sweden -- are not participating but may choose to do so later.

 Although the euro was incorporated in theory in January 1999, it has taken three years to print the more than 14 billion euro notes to saturate the marketplace. With an estimated 17 million customers withdrawing 1.7 billion euro from ATMs each day, the ATM will be the primary means of dispensing the euro.

 Both euros and local currencies will be acceptable legal tender for two months. After this grace period, consumers must spend only in euros.

 "In EU countries, the ATM will be critical in facilitating this currency transition for consumers," said Michael Brown, chairman and CEO ofEuronet Worldwide. "We believe that ATMs are one of the easiest means for consumers to access their funds and begin to use the euro for all transactions. As they withdraw cash for routine obligations, having the euro available will assist in a more rapid distribution of the currency."

Euronet, which manages ATM programs for several European banks, is helping institutions in France, Germany and Greece prepare for E-Day. In the first quarter of 2001, for instance, Euronet supplied an ATM that was configured to dispense the euro, along with a test system for processing the transactions in euro, to one of its clients.

"This project will allow our clients to test and validate the back office systems to ensure that their accounting, balancing and other financial aspects accommodate this new currency, " Brown explained.

 The owner and operator of the largest independent ATM network in Europe, Euronet is making similar preparations for its own machines."It's highly likely that our ATMs will be the first in the European Union to dispense the euro," Brown said.

 Euronet also acts as a network switch for EFT transactions. Based on Greece's time zone difference, Brown believes that Euronet may process the first-ever euro-based ATM transaction.

 Here's what some of the top ATM manufacturers to find out what they're doing to facilitate the changeover:

 NCR

 Of the 200,000 ATMs located in the euro zone, Dayton, Ohio-basedNCR Corporationreportedly manufactured about 50 percent of the machines. The company is providing services for owners of both NCR and non-NCR ATMs to help with the switch.

 According to Ian Buxton, NCR's senior business consultant for Europe, Middle East and Africa professional services (EMEA PS), the services address a common need in the euro-zone."While there are competitive considerations, there are common issues to ensure ongoing service to the user," he said.

 NCR has produced euro kits, cassettes already converted for various euro denominations, for both NCR and non-NCR ATMs. The cassettes will switch to dispense the euro on E-Day.

 Buxton said that customers will first target high activity machines front-loaded in the two-month period before the changeover, so that on E-day, a message from the host will tell the ATM to switch from the national currency cassettes to the euro cassettes already in the ATM. Other machines will need a manual cassette swap on E-Day to meet the requirements.

 Significant software changes may be required, Buxton said, depending on the way the machines operate with their respective hosts. Prior to E-Day, ATM owners must make sure their machines will communicate with other hosts in the network. Operators must also physically test other network ATM cards to make sure they will work under the new system.

 Besides changing cash cassettes, Buxton said some printers on older ATMs may need changes to print the euro symbol. However, current rules allow banks to print the letters "EUR" as well.

 Besides euro kits, NCR is offering consulting services to help NCR and non-NCR customers with the transition. NCR's services, which can cost ATM owners up to $25,000, involve ATM project management, engineering and software in the form of workshops and seminars. NCR also will outsource the management of cash in transit companies and cash management.

 Buxton said the changeover to the euro is much more than just a currency conversion.

 "The real issue about the euro is it's not just a currency changeover, it's a new way of doing business," he said. "NCR's major challenge is the public's high expectation of a seamless changeover. From January 1, 2002, the customer expectation is that the money will be available. So, how do I keep it going and make sure each branch has enough money. That's the challenge."

 NCR began putting teams together in 1996 to plan for the change. One team managed the internal changes such as accounting and invoicing. Since January 2001, companies have been required to audit accounts according to euro. The second team began developing solutions for the changeover on terminals, both financial and retail.

Buxton said most countries will have a gap of up to five hours, probably in the middle of the night, between the national currency switch at the end of the last business day to the first euro business day the following day.

 After January 2002, Buxton said that ATMs in the euro zone will only dispense euros, with one exception: some machines may deliver the euro and a foreign currency at country entry and exit points in airports and train stations to get euros coming in and foreign currency coming out.

Diebold

 Headquartered in Canton, Ohio, ATM manufacturer Diebold is offering hardware, software and consulting services to Diebold and non-Diebold ATM operators. Diebold is working with banks and some non-bank customers throughout the euro zone.

 Diebold's Euro Project Team has been involved with testing and planning in conjunction with the European Central Bank for the last five years.

 In Germany, Diebold has already implemented a euro smart card, which allows consumers in Germany to perform non-cash money transfers and load currency in euros. By E-Day, users will also be able to withdraw cash with the cards. Diebold believes this will help banks bypass expected bottlenecks.

 Diebold estimates more than 250,000 self-service cassettes may need to be changed to dispense the new currency in Germany. ATM operators may need to change up to four cassettes at each machine.

 For a smooth changeover, Diebold executives say the currency cassettes need to be configured properly to the size of the new notes. Programming at the ATM will tell the ATM that there's a new currency. Adjustments are made according to the size and thickness of the note.

 Diebold's software change can take place at the ATM or from a server, sending messages to the ATM and making sure the software communication matches the type of money in the machine.

 While the company did not release information about the cost of such services, a Diebold news release stated that the company consults its clients concerning the implementation strategy necessary to keep financial institutions' business operating without any interruptions.

 Wincor Nixdorf

Wincor Nixdorf, based in Paderborn, Germany, is working exclusively with Wincor Nixdorf ATM customers in the changeover. Wincor Nixdorf has 35,000 ATMs and 7,000 teller assist units, cash dispensing units operated by bank employees, in the euro zone. The company also has 1,000 cash-in machines installed, with banknote validators.

 For its customers, who include banks and retailers, Wincor Nixdorf holds free workshops to explain the different ways they can change their machines to fit the euro.

 According to Woeffen, the company's product manager for the euro, Wincor Nixdorf is the only ATM supplier offering its customers the ability to make the changeover themselves. Customers can buy new cassettes and technical support or invest in the do-it-yourself tools.

 "The technique is so simple that a video, screwdriver and templates are sufficient to change the cassettes, " he said.

 Providing customers with tools to make the switch is one way of dealing with a likely shortage of ATM service technicians, he said. "In Euroland, about 200,000 ATMs have to be changed, and one technician can change three machines per day. So, we need 67,000 technician days. This capacity does not exist."

 Woeffen said ATM owners must define time frames when the machines can be changed and make technical preparations in advance so that on euro eve, only euro cassettes need to be inserted.

 Wincor Nixdorf's list price for a set of four cassettes is 1840-euro, plus one hour of technician service time and other project-specific changeover costs. For customers performing the changeover themselves, a euro toolkit costs 150-euro.

 Wincor Nixdorf has worked with the European Central Bank to test euro banknotes several times to ensure that its machines will have no problem with the switch. This included the testing of fresh, unpacked and sometimes deformed notes to advise its customers on how to handle such situations.

 Wincor Nixdorf is also working closely with computer centers where the host/server adoptions are made.

 Woeffen said that the company started euro work in 1998, re-directed its attention to Y2K concerns in 1999 and re-focused on the euro in April 2000.

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