Growth in the automated teller machine business is tapering off, and ownership is becoming more concentrated among a few banks, according to an annual survey of electronic funds transfer executives by Speer & Associates Inc.

Citing its survey, the Atlanta-based consulting firm said there were 230,000 ATMs in North America at Dec. 31 and predicted that the total would reach 300,000 by 2002, an unimpressive gain. The growth projection for overall ATM transaction volume was also pitched low, at a 7% increase for 2000 over 1999.

For the 15th year in a row, Speer queried executives at institutions of various sizes that own ATMs. About half of the top 250 ATM owners in the United States and Canada responded to this year's questionnaire, which sought projections for the full year of 2000, Speer said.

Respondents said they were scaling back their deployment of off-premises ATMs. In 1999 the survey respondents forecast a 10% increase in off-premises deployments; but just a 3.3% increase was forecast in the recent survey.

In 1999 on-premises ATMs were 40% of the total, compared with 48% the year before and 58% in 1997. On-premises machines accounted for 70% to 80% of transaction volume.

At institutions that own more than 1,000 ATMs - which Speer refers to as "tier one" banks - Speer said the average number of ATMs owned was 1,752, a 63% increase from the previous year's average. In 1999, the number was 1,075, a 24% increase from 1998.

Speer said the number of ATMs per institution is rising because of industry consolidation, not because of increased market opportunities. Indeed, Speer predicted there would be ever fewer good places to deploy ATMs in the years ahead.

Speer chairman George L. Albright said the market for ATM installation has been virtually exhausted and that owners are more interested in squeezing more profit from existing machines than in placing new ones. ATMs need to make 500 to 750 transactions a month in order to turn a profit, he said.

"Owners want to generate more money at the sites they already have," said Mr. Albright. "To find hidden sites is hard to do, since ATMs are pretty ubiquitous now."

Mr. Albright said banks could boost their ATM profits by offering extra functions at their machines - selling postage stamps and phone cards, for example. But he did not recommend putting full-motion advertisements on the machines, a move some banking companies - including Wells Fargo & Co. - have made in order to create an additional revenue source. "From a consumer's perspective, you're not going to want to wait in line at the ATM because the person in front of you is watching a movie," he said.

Executives at tier one banks told Speer they plan to increase the number of point of sale, direct debit terminals by 20% this year, up from last year's predicted increase of 16%. The overall respondent base expected only a 2% increase. Mr. Albright said these numbers are consistent with the steady growth of POS terminals being installed in the last five years by the largest banking companies.

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