News

From unbanked to banked with ATM services

April 13, 2005

The average number of transactions per ATM has declined steadily for nearly a decade, dropping to 2,400 a month in 2003, down from 6,399 per month in 1996, the year that Visa and MasterCard began allowing widespread surcharging at ATMs.

As it becomes tougher to turn a profit on standard ATM transactions, more deployers consider offering services such as check cashing, bill payment and ticket sales.

While much of the interest to date has come from independent ATM operators, some industry experts believe banks will come on board as well - to generate added fee revenue and, perhaps more importantly, to attract new cardholders.

This story and all the great free content on ATM Marketplace is supported by: Palm Desert National Bank

"Going forward, ATM owners won't able to diversify their revenue streams with the existing base. They'll have to extend products to new audiences," said Don Jarecki, senior vice president of business development for Palm Desert National Bank's Electronic Banking division.

PDNB provides vault cash and cash management services for Info Touch Technologies, a Canadian software developer that offers bill payment, prepaid phone time, money orders and money transfers at kiosk/ATM hybrids in retail stores. PDNB uses its propriety Trakker software to balance and settle the terminals, tasks that become more complex with transactions where money flows between multiple third-party service providers.

Hamed Shahbazi, Info Touch's chief executive officer, said his company's terminals can build a bridge to demographics that typically have been underserved by banks. "We can help them reach customers they didn't have access to before."

Info Touch has deployed 400 of the terminals in Circle K, Exxon Mobil, Speedway and Kum & Go stores. Shahbazi said they generate in excess of 200,000 transactions a month, a number that is growing.

Info Touch's research shows that customers with bank accounts also appreciate having access to these kinds of services, Shahbazi said. While cash is used to pay for the bulk of the transactions, some 10 percent of customers use debit or credit cards.

By working with partners like Info Touch, banks can leverage an existing infrastructure. "I don't think most banks want to build this kind of a program from scratch. They want to be able to get it out there quickly," Shahbazi said.

PDNB also provides cash services for VERO, an Oregon start-up which introduced a check-cashing kiosk at the Retail Delivery Conference & Exposition in November. VERO's initial market is banks that want to use the terminals in their branches to serve non-customers cashing on-us checks as well as checks drawn on other FIs.

Like Shahbazi, David Grano - VERO's president and CEO - believes that many banks may want to use the check-cashing service to convert unbanked consumers into customers. "We're giving financial institutions an opportunity to create new relationships with customers they've never seen before," he said.

PDNB recently installed a VERO terminal at a branch in La Quinta, Calif. The main impetus was to move check-cashing transactions made by unbanked agricultural workers away from teller lines. However, Jarecki said, "We think we may be able to turn at least some of the people that we currently view as unbanked into customers."