News

Showing it all online?

Opponents of posting ATM prices online say it further erodes already shrinking margins, forcing ISOs to compete for profitless sales. Yet a growing number of ISOs say strong Internet promotion - including pricing - is becoming a necessity.

December 12, 2004

To publish ATM prices online or not - this appears to be an increasingly divisive issue in the retail ATM industry.

While many ISOs maintain a Web site, relatively few of them choose to post their ATM prices online.

Those opposed to the practice say it further erodes already shrinking margins, forcing ISOs to compete for profitless ATM sales. Opponents argue that selling ATMs for less than the wholesale price - a tactic used by some online - is leading the industry down a dead-end street.

This story and all the great free content on ATM Marketplace is supported by: CardTronics Offers the best in reliable ATM equipment, courteous customer service, and revenue-generating programs so owning an ATM is easy and profitable.

"Our business over the years has eroded," said Tom Mortimer, executive vice president of Kahuna Business Group, a Triton distributor with about 4,500 ATMs under contract through its 200 independent U.S. affiliates, companies which buy ATMs at wholesale prices from Kahuna. "People (merchants) are going to see the cheapest prices and that's what they're going to shop for. … A lot of people are out there selling their equipment for nothing, and it's all undercut the market."

Neil Johnson, president of International Merchant Services Inc., which primarily sells Triton and Tranax ATMs and has more 3,500 machines under contract in businesses ranging from C-stores and laundromats to nightclubs and office buildings, said the price wars are pinching everyone.

IMS included ATM prices on its Web site for about two years, but removed them after Johnson decided it was negatively affecting his business.

"What we found was that our customers would go to our Web site and find the cheapest price and then go to a salesperson and want that cheap price," he said. "They still wanted to buy their ATM from one of our sales reps, but they didn't want to pay the price for the commissioned sale."

Pulling prices off the company's site didn't hurt sales, Johnson said; instead, the move kept the Web site from competing with IMS' sales force.

If you can't beat 'em...

But other ISOs believe that not listing prices limits the information merchants and other customers need to make informed decisions, which can hurt credibility.

Besides, say folks like Haze Lancaster, one of ATM USA LLC's owners, the Internet isn't going anywhere. If an ISO wants to maintain a competitive edge, it's going to have to learn how to effectively market itself on the Web.

ATM USA, which has about 1,500 ATMs under contract and owns about half of them, boosted its Web presence about two years ago. The company recently redesigned its site and is currently paying about $4,000 a month for site maintenance and organic search hits that drive users to its site from Google, Lancaster said.

"We wanted to get our prices out front. Since most people don't list prices, we thought it would give us an advantage," he said.

Lancaster said that those who are wholly opposed to price promotion on the Web aren't seeing the big picture.

"If somebody is looking on the Web to buy an ATM, then I have to provide the same information that any other ISO on the Web is providing," he said. "But we also want people to know (from reading our site) that we do a lot more than other ISOs do. For instance, we do placements too."

Pricing alone can't keep an ATM business afloat, Lancaster said.

"If you list the prices or you don't list the prices, you still have to be competitive," he said. "Anyone can call and get low prices. You've got to have low prices to compete. But you've also got to have services, because there's no money made on the equipment (anymore)."

Lancaster said between 75 percent and 80 percent of ATM USA's revenue comes from its ATM placements - even though those machines account for only half its portfolio. "You don't see a lot of ISOs doing (placements) though, because it costs a lot of money and you have to have a lot of capital tied up in the deal."

This story and all the great free content on ATM Marketplace is supported by: CardTronics Offers the best in reliable ATM equipment, courteous customer service, and revenue-generating programs so owning an ATM is easy and profitable.

With merchant-owned ATMs, Lancaster said, "the only way any of us are going to make any money is through processing."

Indeed, some ISOs publish low hardware prices largely to raise their profiles, in hopes of boosting processing and other reoccurring revenues.

...join 'em

Mark Dalton, an owner of DAS Express ATM LLC, sells ATMs by price on his company's Web site. He has also sold about 25 machines on eBay.

DAS, which manages between 150 and 200 ATMs and owns and operates another 100 ATMs throughout Tennessee and Alabama, doesn't advertise frequently on eBay, Dalton said, noting that some of the competition he's encountered on the auction site appears less than ethical.

"When we do list something (on eBay), we don't mark it up very much, maybe only a couple hundred up from cost. …But some of the things I've seen on eBay I would be extremely leery of, like Triton 9100s that are priced $1,000 below cost," he said. "There's no way you can do that. Like with anything, there's probably some scam going on."

Dalton prices most new ATMs on his own company's Web site at a markup of only about $100. "We're hoping to get the processing of the machines, because that's where we make our money," he said.

Can't live on Internet alone

Mortimer doesn't think the industry can survive on Internet sales alone. Interestingly - although perhaps not surprisingly -neither do Dalton and Lancaster.

"A big percentage of the calls we get from the Internet are people who are interested in buying but really can't afford it, or they aren't really in the market to buy," Dalton said. "That's why a lot of companies want to deal with the actual merchants themselves, rather than taking calls from people who have simply seen an ATM on the Internet."

"You still have to have a sales force," Lancaster said. "You still have to have someone there to answer questions. You've got to have someone follow up and do the paperwork, and it takes an inside sales force to support an aggressive online sales campaign."

Lancaster said companies need to put money into building their online presence - and then use that presence to promote their overall business, not just their prices.

"A lot of companies are out there selling ATMs below cost on the Web, and we don't do that," Lancaster said. "We think it's bad business. We might work a deal with someone on a special occasion, but that's all we'll do. … Companies who sell under cost usually end up upside down in their business plan."

Included In This Story

---