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In early 1996, the Cirrus and Plus transaction networks lifted their voluntary ban on surcharging. What followed was one of the best examples of fast, exponential growth in this country's history -- suddenly, it became possible for ISOs to place ATMs at non-bank locations and actually make a profit from them. The ATM, originally conceived as a convenience device to reward customer loyalty, was suddenly a potential profit center.

February 12, 2002

Within a short period of time, ATMs could be found in a staggering number of new locations. Gas stations were particularly quick to add ATMs to their shops; convenience stores, supermarkets and truck stops also found that the customers already passing through their doors would spend more money and become more loyal if easy access to cash could be had on the premises.

Of course, there is a logical extension to all of this: in time, the prime locations for off-premises deployment have dwindled, leaving enterprising ISOs to look for new places to ply their trade.

ISOs are working hard to find new locations for off-premise ATMs. And they scoff at the notion that all the good locations are already taken.

"No, (the locations are) not gone for good," according to Pete Patterson with Covenant ATM Technical Services, an Atlanta firm that operates roughly 80 machines. "Equipment wears out, companies become complacent, companies go out of business. I believe that the industry is going to be around for some time, but I believe it will make some major changes in the next few years."

"I don't think it's going to be saturated until you see an ATM on every corner," said Noah Weider, vice president of Sales and Marketing for XtraCash ATM, Inc., a San Diego-based firm which currently manages about 4,000 machines. "And even then it won't be -- because you'll see new services. You'll be able to drive more and more products and services to that ATM.

"Some people say we're already at saturation, others say there are a million more places where you can put an ATM," Weider continued. "Four years ago, when we approached people and they said 'why do I need an ATM?' the benefits were convenience to their customers, a way to accept payment that doesn't cost them money, and to gain a competitive advantage. The only difference today is that instead of a competitive advantage, you're at a competitive disadvantage if you don't have one."

Weider's firm has had success placing machines in locations that one might not think would attract ATM users -- police stations and courthouses, for instance.

"Police stations are interesting," Weider said, "because people feel safe going into them."

XtraCash ATM has at least one machine located inside a prison. The machine not only serves the needs of the inmates, but also their visitors. And ATMs inside courthouses allow convicts to quickly get the cash they need to pay small bails or judgments on the spot.

Not all of XtraCash's deployments are quite that unusual, but all of them point to increased opportunities in new areas: for instance, residential rental and condominium communities.

In apartment complexes, residents need money to use the laundromat, or to use vending machines. Landlords are less likely to hear the "I couldn't get to the bank before it closed" excuse when the rent comes due, if they can point to the fact that money is readily available just a few feet away.

In at least one instance, Weider said a resident of a condominium community purchased an ATM and placed it inside the community's security booth. The gentleman who bought the machine (who, by the way, operates the machine as a break-even endeavor) did so out of concern for his wife, who makes frequent ATM trips.

Debra Pidick is with First National of Jacksonville, Inc., a Florida-based company which currently operates about 400 machines. She said her firm has had great success in places that are not usually associated with ATMs -- laundromats, dry cleaners, car washes, private pharmacies.

"Pharmacies are a great one," she said, "because in the state of Florida, the owner of the pharmacy has to be on the property during the hours of operation."

At car washes, Pidick said, customers typically have opportunities to buy snacks, soft drinks, car deodorizers and other trinkets as they wait for their vehicles to be washed, waxed and buffed.

First National also looks for possibilities tied to the unique geography of their location -- in Florida, that means placing ATMs throughout the overwhelming number of marinas. "Within a 45-minute radius, there are probably 500 marinas. People get the cash to buy gas for the boats, buy snacks. And we have marinas that are 24 hours down here," Pidick said.

Patterson's firm is working on two particularly interesting opportunities for ATM placement, one of which is automobile dealerships.

"[The dealers know that] they're not going to make a lot of money off the ATM, but they will sell more cars," he said. "The dealership owners that I know are seriously looking at it -- they say they lose at least one deal a day because somebody doesn't have a checkbook or credit card with them. They feel that they can pick up at least one sale per day if they had an ATM in there. A lot of people put cash down payments on cars -- it's surprising, but it happens more often than we think."

Perhaps more revolutionary is Patterson's idea of installing machines inside "mega churches." He is discussing placements with some large national and international ministries.

"They are seriously considering it," he said. "I wouldn't recommend it to a church with 300 people, but I do recommend it to churches with 1,000 or more in their congregations. Many times I take my family to church and we go to brunch afterwards. And I don't like using my credit cards. To have an ATM in the church would be very, very convenient. Plus, a lot of these churches have bookstores in them."

As an added philanthropic bonus for the church, the ATM is yet another fundraising device. "We firmly believe in sharing the revenue," Patterson said. "If you have a transaction fee of $1.75, the church would get at least $1.50 of that."

Originally, the cardinal rule of ATM placement was to make sure the location generated enough foot traffic. Conventional wisdom says that the number of ATM users will average out to a percentage of the total people who walk past that machine.

In the case of off-premises ATMs, though, high foot traffic seems to be less of an issue.

"Unusual locations typically have different motives than a merchant -- it's more of a convenience factor," Weider said. "I don't know if they're totally concerned with conventional foot traffic. Most of the time an ATM is in an unusual location because there isn't one anywhere close. So foot traffic might play less of a role; they might have a higher usage, compared to foot traffic."

Consider the church example, for instance. When averaged out over the course of a week, the foot traffic through a typical large church would be much less than typical street-corner ATM traffic. But during those select periods when traffic is high -- right after weekly services -- machine use would skyrocket, particularly if parishioners were aware that the church was receiving a portion of the proceeds.

"I see [the importance of location] changing, because the price of the systems is coming down," Patterson said. "Obviously, you're not going to put a machine in a graveyard, but we've got some financing programs where people can pay for a machine with just two transactions per day. And I believe price will continue to go down, while functionality will continue to go up."

Some other ideas on the horizon:

With how drastically the industry has changed in the last few years alone, it would be foolish to speculate that current ATM locations will continue to be the norm. Rapid change, after all, is one of the hallmarks of the business.

Patterson envisions portability going up as price goes down. "[ATMs] should become very mobile," he said.

Indeed, NCR, Cross Technologies and Access Cash all recently introduced ATMs that are tiny enough to be mounted on a countertop. Possible applications for small, easily relocated machines include airplanes, limousines, buses and the like.

New technology will lead to ATMs which deliver much more than just quick cash. As machines begin to pop up which allow stock trading, news updates, event ticket purchase, couponing, email access and a host of other features not yet imagined, so too will emerge the need for more of these machines than ever before. If convenience was the prime mover for the initial growth of off-premises ATMs, it will be doubly important when the machines deliver these highly interactive services.

At the end of the day, though, people still use ATMs predominantly for one reason: money. And as consumers, they want that money to be easily accessible. "We're getting to be a lazy society," Pidick said. "Who wants to do a U-turn or cross the street? And heaven forbid we lose our place in line!"

"People need cash wherever it's convenient -- and that's where the ATMs are going to go," Weider said.

So where do people need cash? In an increasingly complex world, the better question might be: where do people notneed cash?