STRATEGIC PARTNERS
Several manufacturers, including NCR and Cross Technologies, are trying to grow the retail ATM market by shrinking the size of their machines. But is there a real need for these units, which are so tiny they can sit on a countertop? Some don't believe the potential market share is much larger than the machines themselves.
January 1, 2001
Several manufacturers, including NCR and Cross Technologies, are trying to grow the retail ATM market by shrinking the size of their machines. But is there a real need for these units, which are so tiny they can sit on a countertop? Some don't believe the potential market share is much larger than the machines themselves.
NCRand Cross garnered a generous amount of buzz with their pint-sized machines – the Easy Point 53 and the NanoCash, respectively -- at recent trade shows. A few smaller manufacturers, including Universal ATM Network, GTI(formerly Greenlink Technologies) and Sterling Technologies (formerly BVC Technologies), have been producing undersized units for over a year. Access Cash, the Arden Hills, Minn.-based ISO, is getting into the manufacturing business with the iACT2000, a machine so narrow that the dispenser is in a vertical rather than the standard horizontal position.
Operating on the premise that floor space is a valuable commodity and extremely scarce in certain retail locations, these companies say their products offer several different installation options, including countertop and wall-mounted configurations, for sites which have no room for a standard freestanding ATM.
Davie, Fla.-based Sterling Technologies even offers a through-the-wall configuration with its MicroTouch 2001. "If you want us to put mechanical legs on it and make it walk, we'll do it," joked Ron Nolte, the company's CEO, noting that Sterling has a patent pending on the through-the-wall process.
The former BVC Technologies first produced its micro machine -- which is 24 inches high, 18 inches wide and 9 ½ inches deep -- in 1997 "because we thought it was a niche we could fill," Nolte said.
While there was always some interest in the product, which Nolte likens to a "sophisticated cash register," he said it has grown tremendously in the past year or so. Sterling is launching a major marketing campaign and hopes to line up 15 or 20 distributors for the machine.
In addition to size, the other significant difference is price. With wholesale price points under $4,000 and sometimes under $3,000 and a merchant self-replenishment model, the transaction break-even point can sink as low as 50 transactions a month.
Sacramento, Calif.-based Universal ATM Network has been selling its Moneytel CD, a Verifone-based terminal that's 16 inches high, 16 inches wide and 18 inches deep, for about a year and a half.
The incredible shrinking ATM
Universal President Joseph Vu thinks the market for miniature machines is just beginning to take off. "The landscape is really changing as far as available locations," he said, noting that his customers include kiosk gas stations with less than 6 square feet of floor space.
Retail ATMs have been steadily shrinking in size for several years, Vu said, following the lead of other industries that trade heavily on the concept of customer convenience. "Look at cell phones. You can get one now that's not much bigger than a credit card."
Even though the countertop version of the Moneytel CD does not outsell the freestanding floor model mounted on a pedestal, Vu plans to reduce the size even more – to 14 inches high by 12 inches wide by 13 inches deep.
Making machines smaller opens the door to unconventional locations, said Gregg Zastrow, Access Cash product manager. An Access Cash salesman placed an iACT 2000 – which is 19 inches high (27 ½ with topper) by 8 inches wide by 23 ½ inches deep -- mounted on a pedestal next to a condiment table at a Minnesota bingo parlor. "There's no way we could have brought anything else in there."
The iACT has earned positive reviews from merchant customers since Access Cash began selling it in late July, Zastrow added. "Retailers want to maximize their revenue. If you can find an ATM that generates the same revenue in a smaller footprint, why wouldn't you want it?"
And the novelty of tiny terminals may attract the attention of distributors and retailers alike. "We always look at differentiation. It's the key to selling," Zastrow said. Access Cash plans to sell the iACT2000 through indirect sales channels as well as its own sales force.
Stand and deliver
Like Vu's Moneytel CD, most iACT customers to date have chosen to deploy it on a pedestal rather than on a countertop or a wall. The stand adds about 33 inches to the iACT's height. Zastrow expects more customers to opt for a countertop installation when Access Cash adds software that makes it possible to conduct POS as well as ATM transactions, which the company intends to do in the future.
"As the machine gets more functionality associated with it, the countertop option will make more sense," Zastrow said.
Lyle Elias, president of Hurst, Texas-based GTI (formerly Greenlink Technologies) agrees that incorporating POS and ATM functionality into a single terminal will likely increase the number of countertop deployments. GTI's C1000, also called the Orca, is usually sold with a pedestal even though it's small enough – at 14 inches high by 16 inches wide by 21 inches deep -- to be mounted on a countertop.
"Even though there seems to be a big demand for the smaller machines, I'd say 98 percent of them have gone out with the pedestals," Elias said. "In the end, people realize they want it bolted to the floor if they've got money in the machine."
While security would seem to be an issue with ATMs that weigh between 100 and 200 pounds, Zastrow doesn't believe they are any more likely to be targets for theft. "In my experience, a lot of the bigger machines aren't even bolted down. At least ours is anchored to the stand or the counter," he said.
While most manufacturers of mini machines are targeting the mom-and-pop retailer as their primary customer, one who breaks from the ranks is Fremont, Calif.-based Cross Technologies. Hansup Kwon, president of Cross, believes the Nano Cash – which is 20 ½ inches high, 11 inches wide and 20 inches deep – is best suited for larger, more highly trafficked businesses like fast food chains.
"I'd like to see (a Nano Cash) in every McDonald's, Burger King and Jack-in-the-Box," Kwon said. Because such restaurants have standard counter sizes and layouts, he added, the ATM could be positioned in the same spot at every outlet.
The machine, which was emblazoned with a bright blue Nano Cash logo at the recent ATMs 2000 and NACS trade shows, could just as easily carry a corporate brand. "They could put the Golden Arches right on the side of this if they wanted to," Kwon said, adding that branding could be extended through advertising screen and coupon promotions.
He suggested that multi-machine deployments might be appropriate for certain locations, perhaps in international markets. A single, more traditional ATM like those widely deployed throughout Europe can sell for as much as $20,000 to $30,000. "You could get three of these plus a kiosk enclosure for the same price," Kwon said.
If it looks like an ATM...
Kwon said Cross devoted a great deal of attention to the Nano Cash's design, which bears more than a passing resemblance to a computer tower. Calling it more "consumer oriented" than the beige box often found in retail locations, he said, "It's important to offer something pleasing to the eye in the off-premise world."
The interior of the Nano Cash is strikingly different as well, with the workings all confined to a single pull-out module. Like other members of the Cross product line, Kwon said the Nano Cash can be easily modified because all parts are manufactured by parent company Hyosung.
In fact, he added, using Hyosung parts made it possible to produce such a scaled-down machine in the first place. "If we used standard components, we couldn't make it small enough."
At least one manufacturer, Dayton, Ohio-based NCR, questions the wisdom of straying too far from the look and feel of a typical ATM. Concerned over how consumers would react to its EasyPoint 53, NCR visited malls and other highly trafficked areas to gather opinions. What the company found, said Neal Schwartz, NCR's vice president for convenience banking, Financial Solutions Division, was that consumers shunned a machine that didn't look enough like their usual ATM.
At 24 inches high, 18 ½ inches wide and 18 ½ inches deep, the EasyPoint 53 is wider than most of the other mini units. That's part of a conscious effort to offer consumers a more familiar interface, Schwartz said.
NCR dabbled in countertop units a few years ago with its unsuccessful Personas 40. But like other early entrants to the countertop market, Schwartz said that unit wasn't small enough or inexpensive enough to satisfy retailers' needs.
"They required a great deal of counter space or a very strong base, and they failed to save space. Their cost alone would have negatively impacted any of today's business models," he said. "We firmly believe that the EasyPoint 53 is the right product at the right time."
Because of the earlier units' larger size, Schwartz said they didn't offer the flexibility of deployment on a countertop, pedestal or against a wall. "It's difficult to compare the entry level market to deployments five years ago as the opportunities for placement locations have expanded greatly. We want to give our customers the flexibility they need to fit within their unique environments."
PC power
According to Schwartz, the EasyPoint 53's strongest selling point is its Pentium III processor, a feature not offered on any of the other mini units.
NCR aims to defeat "premature obsolescence," Schwartz said. "We believe a consumer should have a low cost migration path for the future, and we've delivered one. (The EasyPoint 53) comes equipped to perform e-commerce out of the box. Does any other competitor in this market space?"
An issue that shouldn't be overlooked, he added, is regulation that may be mandated in a forthcoming update of the Americans With Disabilities Act. "Enhancements such as private audio will be very difficult to deliver in a POS environment, and could cause an ATM owner to find himself cited for being out of compliance."
Been there, done that
Mark Levenick, Houston-based Tidel Engineering'spresident and CEO, was both amused and surprised when he saw the new countertop units. Tidel sold an early countertop unit, the AnyCard sc, from November of 1995 to October of 1997. Of 5,200 units sold during that period, only 19 were deployed on a countertop, Levenick said. The rest were sold with a pedestal.
Because of the underwhelming demand, Tidel replaced the AnyCard sc with the freestanding AnyCard td. "It was an obvious cost reduction to the product line since there were virtually no sales of the AnyCard sc in its countertop configuration," Levenick explained.
Before discontinuing the sc, Tidel surveyed its distributors. What the company found, Levenick said, was that counter space was just as valuable as floor space, if not more so, for the typical retailer. In fact, cigarette companies and other vendors pay a premium to place their racks on the front counter.
And while the market is changing somewhat, Levenick said the counter is "still prime real estate" at popular off-site locations like c-stores and gas stations. "I'd be absolutely shocked if 7-11 ever put on an ATM on a counter."
North Canton, Ohio-based Diebold was an even earlier entrant to the countertop market with its 1060, which was first manufactured in the early '80s.
Bob Nemens, Diebold's senior marketing manager, said the 1060 was originally designed to sit atop the counter of an unoccupied teller window to attract bank customers who just needed cash and didn't want to wait in line behind others conducting lengthier transactions. But because of its relatively small size and price tag (under $10,000), it became one of the first off-premise cash dispensers, Nemens said.
Diebold discontinued the 1060 in 1997, shortly before introducing its CashSource Plus line of retail ATMs, when it became obvious customers wanted cash dispensers with color screens, thermal printers and other more modern enhancements.
Like Levenick, Nemens said most retailers are loathe to give up even a small amount of counter space. They also want to keep customers moving quickly through the checkout, a goal that is "at cross purposes" if they're conducting ATM transactions when they reach the head of the line.
And while Nemens is aware that the new small units can be mounted on a wall, he said, "I haven't seen that much wall space in an average c-store."
It's possible, Levenick believes, that the new countertop units may find favor at certain locations such as hotels, which can spare the space. If they do catch on, Nemens agreed, they could create "another sub-segment of the off-premise market."
