Is 7-Eleven Inc., which has long said that convenient access to cash was a natural fit for its chain of convenience stores, pulling back from its banking vision?
The Dallas company said Wednesday that it had agreed to
Some observers said that 7-Eleven's vision of using the ATMs, and especially the kiosks, to win the financial services business of the unbanked fell victim to an inability to break consumers of deeply ingrained habits — few people want to use the machines for anything other than withdrawals. Related Links
Ms. Chabris also noted that the sale would let 7-Eleven "invest resources back into our system" for such initiatives as opening stores and upgrading existing ones. She would not address questions about whether the company's top executives have changed their opinion about the value of offering financial services, or whether 7-Eleven wants to expand the number of ATMs or the types of banking services currently available.
The deal is priced at $135 million in cash and is expected to close this month.
Jack Antonini, Cardtronics' chief executive, said in an interview Wednesday that 7-Eleven wanted to "reinvest the proceeds into growing their core business, which they defined as their retail business."
He also noted that handing off the management of the machines is more in line with how 7-Eleven manages its other operations. "Outsourcing it, frankly, is not that much different than the products they sell in their stores," he said. "They don't make the chips that they sell. Frito Lay comes in and stocks the shelves. This is the same kind of thing."
Cardtronics will now control the Vcom strategy, Mr. Antonini said. "We'll get the learnings, the lessons learned, all that kind of stuff, which we see as really important, and you get the whole infrastructure that's behind it," he said.
He said that Cardtronics has tested ATMs that could offer more advanced services than the basic machines typically found in merchant sites, with encouraging results, and that the Vcom "was appealing" because it performs more of these nontraditional ATM transactions than just about any other machine.
Besides basic deposits and withdrawals, Vcom kiosks were designed to cash checks, pay bills, purchase money orders, transfer money, and even shop online or sell car insurance.
However, Tony Hayes, the managing director of Dove Consulting Inc.'s financial services practice, a division of Hitachi Consulting, said that these advanced functions never caught on with users.
"What people use ATMs for is to get cash. Many people have tried to introduce other transactions in the past, but people continue to use these machines primarily for one reason: to withdraw cash," he said.
Ms. Chabris said that the Vcoms were "successful and that's why the number grew to about 2,000," though she said that some functions, such as online shopping, proved "less compatible" to customers.
Avivah Litan, a senior analyst at Gartner Inc., said that operating the machines had probably become unprofitable, especially as transaction volume per ATM has dropped industrywide. "They wouldn't have sold it if it was profitable," she said.
Cardtronics is already the No. 1 nonbank ATM operator, with about 25,000 machines, and this deal would add about 3,500 ATMs and 2,000 Vcoms. Cardtronics will also get a 10-year exclusive agreement to operate the machines in 7-Eleven stores.
Cardtronics will also inherit a branding agreement, covering all the ATMs, that 7-Eleven made with Citigroup Inc. in April 2006. "We've talked with those guys, and they're very pleased with this acquisition," Mr. Antonini said.
