Banks have begun implementing wireless, cellular telecommunications in earnest at their automated teller machines at merchant locations.
Mike Cochrane, the senior solution manager for Pathway technology at Diebold Inc., said that the North Canton, Ohio, ATM manufacturer has been converting merchant machines from dial-up to wireless systems for about a year, but that conversions have increased in the past three or four months.
On recent example: First Horizon National Corp. has upgraded all 310 of its merchant ATMs from dial-up modems to wireless or other high-speed telecommunications systems.
The Memphis company, which upgraded the machines using Diebold's Pathway, also has 560 ATMs at branches, but those were not upgraded.
The new technology is designed to speed up ATM transactions, to improve monitoring capabilities for maintenance, and to be installed far faster than a landline.
"For us it was a significant cost savings," said Mike Marzec, the senior vice president for electronic banking and strategic planning for First Horizon.
Telecommunications costs per machine fell from several hundred dollars a month for a dial-up system to $100 for the wireless system, he said.
Union Square Federal Credit Union of Wichita Falls, Tex., was an early adopter of wireless technology, switching its dial-up merchant ATMs to wireless systems three years ago. Susan Starr, the ATM coordinator for the credit union, said it adopted wireless technology because it was tired of dial-up systems, which were expensive.
"The communication was just outdated, and we needed to move to a new form of communication," she said.
The wireless systems generated "huge" savings for Union Square, Ms. Starr said. "We cut our monthly recurring costs in half. I think we were spending somewhere around $200 a line with a regular telco, and we came down to about $90 per machine."
The savings over the past three years have covered the up-front costs of installing the wireless routers, she said, and the new systems gave Union Square the flex ibility to move machines around to different locations.
According to Mr. Cochrane, the setup process for a wireless system is often much faster than putting in a dial-up system.
"It's very expensive to put a frame [landline] in, and it takes nine weeks," he said. "With wireless, you hook it up, and you're up and running with very low installation costs, very rapid deployment, and you get high-speed connectivity."
The average time it takes to deploy a wireless system is about five days, Mr. Cochrane said.
According to Mr. Marzec, installing a wireless system inevitably decreases transaction time, because the connection is always engaged.
"With the cellular, it's just like opening up your cell phone," he said. "It's there. It makes the connection that quickly."
Not only is the speed of deployment and transactions faster, but downloading new information through the wireless technology is quicker as well, Mr. Marzec said.
"We did some benchmarking," he said. "In our old environment, on the dial-up, if we had to download new information to the machine — new screens, for example — it would take anywhere from 20 to 30 minutes. We did it in less than five on a cellular circuit."
Mr. Cochrane said that over the past few years cellular telecommunications have gotten much stronger, and that there are few locations these days where wireless ATMs cannot be deployed.
One strength of the system, and a source of its speed, is that Diebold employs bandwidth dedicated to carrying information data only, he said; older wireless systems run on bandwidth shared with cell phones.
"Your uptime is being affected. That was a big complaint in the past," Mr. Cochrane said.
However, there are a few instances where wireless technology does not work well, he said, and in those cases Diebold converts the machines to DSL or frame relay landlines, which are much faster landlines than traditional dial-up ones.
Paul A. Tomasofsky, the president of Two Sparrows Consulting LLC in Montvale, N.J., said that wireless technology recently gained "broadband type of speed," so it has become a more viable alternative to dial-up modems.
Until then wireless systems were not much faster than dial-up ones, he said. "That now creates the better business case."
Even though wireless transactions now are a little faster, the bigger benefit with those systems today is the speed in which ATM owners can upload software, customize screens, "and do all kinds of stuff that speed gives you when it comes to moving data," Mr. Tomasofsky said. "Now it makes more sense to do it, because there's more functionality that I can take advantage of."
However, he also said that by moving to wireless systems, banks lose the security of a dial-up network.
Wireless networks may not be connected directly to the Internet, but they generally share the same computers that are directly connected to the Internet, so "you have more points of compromise, and you have to be more careful that the transactions and the data remain secure," Mr. Tomasofsky said. "It's not a Web site, if you will, but there is a little extra bit of exposure that has to be taken into consideration."
Of Union Square 19 ATMs, 13 are now wireless, including 12 in merchant locations. About six months ago the credit union decided to make one of its branch ATMs wireless, Ms. Starr said.
About four months ago the branches' computers all went down, and the only thing working at the branches was the wireless ATM, she said. "It was only about an hour, but it was still a way for our membership to get funds from that ATM."
Union Square never had disaster recovery in mind when it equipped the branch ATM for wireless, Ms. Starr said, but "that came in handy and I think we'll leave it."
