Vendors Adapt to Constraints of Disabilities Law
Vendors of used teller machine are trying to enlarge their niche in banking, despite the competitive and regulatory forces that are increasing the demand for new machines.
After experiencing record sales in 1990, the market for used ATMs suffered a serious blow last year, as sales plummeted 27%, according to The Nilson Report, an industry newsletter.
The recession made ATM purchases a low priority for bankers. Yet it isn't the dearth of capital in the banking industry that has hurt used-ATM sales. Rather, its the fallout from the Americans with Disabilities Act.
The 1990 law - which requires that ATMs and other public facilities be accessible to people with disabilities, including those in wheelchairs - did not spell out the installation requirements for used ATMs until a few weeks ago.
Uncertainty Causes Reluctance
The ensuing confusion made bankers hesitant to purchase used ATMs, even though refurbished units typically cost about half of the $30,000 price tag for a new machine.
"The up-front costs [for used models] are definitely lower, but we're concerned about costs that could be incurred down the road," said B.J. Peterson, an electronic banking executive at Space Coast Federal Credit Union in Melbourne, Fla.
Space Coast has 12 ATMs that were previously owned, but it plans to gradually replace these with new models from Fujitsu Systems of America starting next year. Complying with the Americans with Disabilities Act is a major reason for the change in strategy.
"People were nervous about the new law, there's no doubting it," said David Parlin, president of the ATM Exchange, an ATM reseller based on Cincinnati.
"Bankers wanted a sure-fire way to comply with the law, and at the time, none of the secondary-market vendors could provide that," he said.
For a number of reasons, that situation has changed in recent months.
First, ADA regulations specifying 54 inches as the maximum height for controls of a newly installed ATM allow some latitude for used machines, government officials have indicated.
According to correspondence between the Justice Department and the American Bankers Association, a few order ATM models that cannot possibly be lowered to 54 inches will be considered compliant if they are over that height.
"It's my understanding that if it's not technically feasible to lower a machine below the required height, the Justice Department is prepared to make some exceptions to the general rule," said Nessa Feddis, a senior federal counsel at the American Bankers Association in Washington.
However, since these regulatory exceptions are not likely to affect a large number of the estimated 1,000 to 2,000 used ATMs that are sold each year, some ATM refurbishers are taking matters into their own hands.
For example, the ATM Exchange has designed several ADA enhancements to the IBM 3624 teller machine, a out-of-production unit that is frequently sold on the secondary market and is currently installed at 5% to 10% of all ATM locations in the nation.
The most significant of these enhancements is a facade that allows a second ATM keyboard to be installed at a height that is easily accessible to people in wheelchairs who would otherwise have difficulty completing transactions on the machine.
The enhancements cost about $8,000. A typical used machine equipped with the new keyboard would still be $5,000 to $7,000 cheaper than a new ATM, industry experts said.
Compliant Machines Sought
Other used-machine vendors have adapted to the ADA differently. King Computer Corp., for example, is concentrating most of its searches for used machines on models that meet the ADA height requirement.
The Atlanta-based company, which distributes new Fujitsu ATMs as well as used models from other vendors, is also doing some consulting work for banks that need some minor construction alterations in order to meet ADA.
"There are always going to be cases where you just can't do anything to make a older model any more accessible," said Jo Anne Herndon an assistant vice president at King Computer.
"But there are a number of thing that are restoring confidence in this business again, and hopefully, we will see the community bankers who make up our core market coming back around."