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U.S. ATM manufacturers have been sending machines to banks in other countries for years, but now the international market for retail machines is beginning to take off.

January 30, 2002

American ATM manufacturers are widening their world view as the market for retail ATMs heats up in other corners of the world.

While NCR and Diebold have shipped units around the globe for years, the majority of them have gone to financial institutions. But with burgeoning retail markets in the UK, Australia, Latin America and elsewhere, those companies are increasingly focusing on nonbank customers.

And Triton, the top supplier of retail ATMs in the U.S. market, is positioning itself as a major player.

Some of the same forces that broke open the U.S. retail market – including surcharging, dial-up communications and lower-priced hardware – play significant roles in other countries.

However, "when you enter new markets, you're never quite sure when and how things are going to progress," said Brian Kett, Triton Systems' new senior vice president of sales and marketing.

Triton, the top supplier of retail ATMs in the U.S., has made inroads into several regions. Three of the five ISOs initially accepted into LINK, the UK's national ATM network, are Triton distributors. The company has enlisted a major distributor, Direct Cash Pty. Ltd., in Australia and several others, including CCS Mexico, in Latin America.

The company is also helping some of its U.S. ISOs take their business model elsewhere. Peachtree City, Ga.-based Hanco Systems, for example, opened an office in the UK last September for its new UK division, Hanco ATM Systems Ltd.

Triton recently promoted Kett, former vice president of business development, to senior VP. Before the change, Kett helped develop markets for Triton products in international locations, most notably Canada. His responsibilities now include the U.S. in addition to all international business.

Triton President Ernest Burdette said the time is right for an aggressive entry into foreign markets. "Our view is that the marketplace is becoming more and more global. (Kett's appointment) is a way of making our organization reflect that view."

Kett spearheaded Triton's advance into Canada in 1997. While the company shipped just five units in Canada in '97, that number grew to 1,669 in 2000.

First up

Retail ATM markets in the UK and Australia – like Canada, a former British commonwealth – are now coming on strong. Not surprising, Kett said. "There are a lot of common players with common business interests in North America."

The two regions have "an awful lot of similarities" to Canada, he added.

Retail ATM markets develop and mature more quickly elsewhere, largely because of the U.S. example. Kett said the Canadian market took just 18 months to develop, compared to about five years in the U.S.

"The U.S. market legitimized the (retail ATM) industry and the consumer offering," he said. "New markets don't necessarily have to go through that long learning curve. They extract what's worked well in the U.S. and create a homegrown version of the U.S. industry."

Neal Schwartz, NCR's vice president of convenience touchpoints, Financial Solutions division, said his company expects year 2000 shipment numbers in Australia to rival those posted in the UK. Not bad, considering that two of the UK's biggest independents, TRM Corporation and Moneybox, are NCR customers.

The UK market is "booming" for ISOs, particularly after British banks abandoned plans to introduce surcharging last year, Schwartz said. "They retreated and opened the door for everyone else."

In the U.S., Schwartz said, many off-site locations matured in a circuitous way: "First, the issue was whether you had an ATM at all, then you had a bank come in and put in a machine, then finally an ISO."

Few foreign banks can compete head-to-head with ISOs, he added. The biggest issue: speed. "(Banks) just don't have the arms and legs necessary to do large off-premise rollouts. If an ISO doesn't get a machine out there right away, he's losing money. Banks can put it off a quarter."

Bob Nemens, Diebold's senior marketing manager, said the growing popularity of Western-style convenience stores with fuel pumps in the UK and Australia is contributing to the demand for ATMs in those countries. "The expectation is that you'll follow a similar pattern with c-stores, where the customer expects to find an ATM."

Diebold expanded its foreign reach by acquiring Brazilian ATM manufacturer Procomp Industria in 1999 and the ATM businesses of Amsterdam-based Getronics NV and French manufacturer Groupe Bull last year. Procomp shipped 7,300 ATMs in 1998, and Bull is one of the top five manufacturers in Europe.

Entering new markets involves more than just shipping machines, however.

Hello?

An underdeveloped telecommunications infrastructure can present a major challenge – particularly when it comes to dial-up communications, which helped create the market for retail machines in the U.S.

Nemens said that not only is network support for dial-up not yet readily available in the UK, the cost structure is different than in the U.S. -- and not as economical.

Because of a lack of well-established dial-up environments, Nemens predicts that foreign markets may lead the way in the development of broadband wireless networks. "That type of telecommunications structure is growing like crazy in developing countries," he said. "They're not going to string wire at this stage of the game."

Some of the countries with the largest potential for growth lack basic features that are taken for granted by U.S. deployers. India, which was tapped by Retail Banking Research Ltd., to experience the biggest jump in ATM installations from 1999 to 2004, is "15 to 20 years behind the U.S. in terms of shared networks," Nemens said.

In some cases, extreme measures are necessary. Faced with the challenges of new third party processors and issues associated with his company's dial-up equipment, Kett help orchestrate a partnership with Sun Life Trust that resulted in the creation of Triton subsidiary Calypso Canada, a third-party processor.

Getting to know you

Another challenge is the special needs of certain countries, in some cases mandated by government regulation. Kett, Schwartz and Nemens agree that product lines must be flexible to find favor with foreign deployers.

Triton recently added the 9640 and 9650, which have multiple cassettes and friction-fed dispensers, to its flagship 9600 line. Multiple cassettes, while uncommon in U.S. retail locations, are more common in foreign markets where relatively untapped retail sites may do up to several thousand transactions a month.

Because foreign deployers are generally more security conscious, they often demand cash presenters, Level 1 vaults and dip card readers. In South Africa, one of the markets where Diebold is active, Nemens said wary cash handlers refuse to fill front-loading machines.

Not all ATM software is robust enough to support certain language sets, Nemens said. Screens in Chinese, for example, require characters rather than standard text.

"Some environments require us to be more unique than we'd like to be," Schwartz agreed. "A less expensive modem might work great in one country and not even be allowed somewhere else."

Yet because they rarely have to contend with legacy equipment, foreign deployers enjoy the benefits of the latest, greatest retail hardware. "They start fresh with a whole new base, a whole new style of equipment – and at a lower cost point," Schwartz said.

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Triton Systems

Triton FI based products • NO Windows 10™ Upgrade • Secured locked down system that is virus/malware resistant • Flexible configurations - Drive-up and Walk-up • Triton's high security standards • NFC, anti-skim card reader, IP camera and level 1 vaults are all options • Triton Connect monitoring • Lower cost

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Diebold Nixdorf

As a global technology leader and innovative services provider, Diebold Nixdorf delivers the solutions that enable financial institutions to improve efficiencies, protect assets and better serve consumers.

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