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Do Triple DES, don't triple expenses

July 5, 2005

For many financial institutions, it can be quite a dilemma: What do you do with a non-Triple DES-compliant ATM that still works?

Complicating matters is the recent move by some original equipment manufacturers to password-protect software so third-party maintenance companies can't service their ATMs.

Annie Cooper, a branch operations manager at Gatesville, Texas-based National Bank, said her "initial response (to the Triple DES mandate) was overwhelmingly pessimistic. … What do you do, toss (an ATM) and buy a new one?"

Cooper said when the bank initiated a Triple DES compliance strategy, bank executives thought their choices were limited. From their perspective, National could replace each ATM for about $40,000 or spend $7,500 per machine for hardware and software upgrades.

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According to Mike Stebbins, chief executive officer of Springboro, Ohio-based ATM Components & Technology, National Bank's perception was not unique; most FIs thought they had limited options for Triple DES compliance.

Fortunately, he said, that's not the case. ACT distributes Pi Systems International's 3 DES Fix, a hardware/software remedy that doesn't change the way an ATM operates and can be installed without violating OEM proprietary software agreements.

"Our third-party solution leaves customers with all of their previous options. It doesn't exclude OEM or third-party maintenance," Stebbins said.

Before Pi Systems' fix hit the market, there was no other solution for making legacy ATMs Triple DES compliant.

"We are looking at a lot of people who … are upset that they are going to have to spend all of this money" to replace a non-compliant ATM, said Sabrina Turner, president of Pi Systems. "The people that tend to buy our solution are ones that want their ATMs to operate in the same way, just with the addition of Triple DES compliance."

Third-party fix

Stebbins said his company has seen interest in a third-party fix from FIs of all sizes, because using an OEM solution "forces a large investment by ATM owners and they are really getting nothing back except better security for their customers." But, he added, "This does nothing to drive business or increase profits."

Cooper agreed. "We provide (ATMs) as a service to our clients," but small to mid-sized banks can't afford to provide ATMs if ensuring compliance becomes too costly. Third-party "upgrades required minimal technical expertise at an affordable cost," she added.