Chapter 1 The Retail ATM Market
Types of independent ATM operators
Bank-branded retail ATMs
Chapter 2 Revenues and Costs
Chapter 3 Profiles of IADs
Elan Financial Services
Kahuna ATM Solutions
Payment Alliance International
Chapter 4 Choosing an ATM Model
Matching ATMs to transaction volumes
Leasing/rental or purchase
Chapter 5 Cash Management
Benefits and drawbacks
Chapter 6 Insurance
American Special Risk
The ATM Industry Association
Chapter 7 Security
Chapter 8 Selling Additional Products and Services at ATMs
Dynamic currency conversion
List of Suppliers
This report provides an in-depth guide for retailers, restaurateurs and other businesses that are considering installing ATMs on their premises. It gives an overview of the retail ATM market, and explains the role played by various participants, such as independent ATM deployers (IADs) and the services they provide.
In addition, the report explains the revenue opportunities for retail ATM deployers and provides guidance on issues such as finding the best location in the store for an ATM, regulatory compliance, security measures for protecting ATMs and the type of insurance needed by ATM deployers.
Despite the growth of electronic payments, U.S. consumers still have a huge demand for cash.
In 2012, the number of U.S. general purpose debit card cashback transactions totaled 1.2 billion with an average value of $40 per transaction, compared with 5.8 billion ATM cash withdrawals with an average value of $116, according to the 2013 Federal Reserve Payments Study. The total value of cashback from general purpose debit cad transactions was $49.2 billion, while the total value of ATM cash withdrawals was $670.4 billion in 2012.
"Cash is still king, and it isn't going to go away," Mark Smith, vice president of financial solutions at Peoria, Ill.-based IAD Kahuna ATM Solutions, said.
This is good news for independent ATM deployers, as it means consumers will continue to be willing to pay for the convenience of being able to access thei cash from ATMs in retail locations.
Although major U.S. retail chains such as Walgreens and Walmart have installed ATMs, there are plenty of opportunities for smaller retailers, hotels and restaurants to deploy ATMs.
"There is still room for growth in retail ATMs," Adam Hobelmann, senior vice president at Chesterfield, Miss.-based IAD Welch ATM, said. "Since 2008, there has been a contraction in bank-owned ATMs, and we're now seeing an expansion in the number of retail ATMs."
Retailers and restaurateurs have a range of choices when it comes to selecting an ATM business model. One option is buying or renting ATMs from an IAD and levy surcharge fees on ATM transactions. Another option is generating rental income, and possibly a share in surcharge revenues, by providing floor space for an IAD to install an IAD-owned ATM in-store.
A study conducted by the U.S. Government Accountability Office on U.S. ATM surcharge fees in 2012 found that, among an uncategorized sample of 100 ATMs run by four independent operators, the average surcharge fee was $2.24, with a variable range of $1.50 to $3.00. Additionally, personal finance publisher Bankrate reported in September 2013 that the average U.S. ATM surcharge fee rose more than 4 percent from the previous 12 months to $2.60.
Another business model that includes an ATM revenue source for retailers and restaurateurs is co-branding ATMs with a local bank or credit union, which, in return, pays a fee for the right to advertise on the ATM.
There is a significant opportunity for ATMs to be co-branded with a financial institution (FI), according to Hobelmann. Co-branding also means that FIs can extend the number of ATMs available free of charge to their customers without having to deploy additional ATMs.
Retail ATM deployers can even explore a surcharge-free business model such as MoneyPass or Allpoint. While forfeiting surcharge fees from cardholders whose FI belongs to the surcharge-free network, the retailer benefits from an increase in customers visiting their store in search of a free ATM. MoneyPass has found that these customers are then very likely to make purchases in the store.