The ailing economy appears to have played to Cardtronics Inc.’s favor, as the ATM independent sales organization has seen the volume of cash withdrawals it handles rise along with the number of machines it manages.
Cash withdrawals at the Houston-based company’s ATMs have risen 15.1% over the past three years, according to the organization’s latest financial report. Consumers last year initiated 262.8 million withdrawals from Cardtronics ATMs, up 5.9% from 248.2 million initiated in 2009, when the volume grew 8.7% from 228.3 million the previous year (see chart).
Cardtronics believes cash withdrawals could increase again this year, depending on how the final Federal Reserve Board’s debit card interchange cuts under the Durbin amendment to the Dodd-Frank Act play out.
“The indirect fallout of the Durbin amendments on the lower revenue associated with debit for financial institutions may yield a series of intended, but favorable, consequences for Cardtronics,” Steve Rathgaber, Cardtronics chief executive, told analysts during a conference call Feb. 10 (
Some observers believe cash use could increase if issuers grow less interested in promoting debit cards. And increased cash use would only benefit ATM manufacturers and operators in the long run, executives agree.
“We think [the legislation] potentially has a direct benefit to us,” Rick Updyke, president of Cardtronics Inc.’s U.S. business group, told PaymentsSource in December (
The economy, regardless of its strength, mostly has played a positive role for Cardtronics, Rathgaber said. “Credit crunches drove purchases to cash,” he said. “Unemployment and job uncertainty drove people to cash for budgeting reasons.”
As of Dec. 31, the number of Cardtronics transacting ATMs increased 3.6%, to 35,837 from 34,568 a year earlier, and by 9.1% from 32,856 at the end of 2008. Cardtronics operates ATMs in the United States, United Kingdom and Mexico and added Australia this year.
The Mexican market continues to be a problem for Cardtronics, Rathgaber said during the conference call. A new law in that country that took effect last year that requires banks and ATM operators either to assess a surcharge for cash withdrawals or an interchange fee to card issuers. Banks and ATM operators could charge both in the past.
Cardtronics chose to charge a convenience fee and raised fees accordingly to offset lost interchange revenue. Cardtronics did not reveal what those fees are.
“Our business [in Mexico] was impacted by regulatory changes that have driven confusion on the consumer’s part and have caused all ATMs, including ours, to suffer transaction-count declines,” Rathgaber said. “As of today, there is no improvement.”
Cardtronics has increased the number of ATMs it operates in Mexico, to 2,867 in 2010 from 2,197 the previous year and from 1,747 at the end of 2008.
