An ATM services provider sums up the situation this way: “Don’t be discouraged. There is still ample opportunity within the ATM industry.”
Kahuna ATM Solutions, a Bloomington, Ill.-based ATM independent sales organization with a Hawaiian name and marketing theme, includes those encouraging words in a recently released 31-page report on the state of the ATM market. Kahuna is making the report available on its website.
The report identifies six challenges and offers strategies for meeting them, says Bryan Bauer, Kahuna president. The challenges include decreasing profits, soaring expenses, the inability to do it all, compliance complexity, security issues and cutthroat competition.
“If you have ATM A at one end of the block and ATM B at the other end, then somebody puts ATM C in the middle,” Bauer says of the competitive situation. “You have more ATMs chasing a declining number of transactions.”
The need for cash has been declining over the past five years with virtually all businesses now accepting credit and debit cards, says David Konig, an analyst for Milwaukee-based Robert W. Baird & Co. In the near future, mobile payments will increase in frequency, thus displacing more cash, he notes.
“Stand-alone ATM people must be feeling some of the same pressures as cash and checks,” Konig says.
The public has responded to higher ATM surcharges by withdrawing larger amounts of cash, Bauer says. Surcharges in the Kahuna portfolio now average $1.84, up from $1.77 a year ago. Withdrawals have reached an average of $83.20, up from about $78 a year ago.
The Kahuna report includes “survival strategies” for coping and even prospering in the face of those difficulties. They include suggestions on how to leverage one’s knowledge, voice and negotiation power; to maximize industry resources; to commit to strategic leadership; and to expand one’s influence and capabilities.
Kahuna hired the Empire Research Group to conduct the study on which the report is based by interviewing industry players and gathering data, Bauer says. Kahuna executives were looking for a way to encourage the ATM ISO’s clients, and the study confirmed what they had heard about fears and frustrations in their conversations with colleagues, he says.
Kahuna has a stake in keeping the ATM industry in a good state of mind because its business is aggregating deployers’ transactions and equipment purchases, Bauer says.
By combining their purchasing power in a setup similar to a for-profit cooperative, ATM ISOs and operators get better deals and more options.
Kahuna works with three equipment manufacturers and five processors to provide its clients with more choices. Processors tend to have strengths and weaknesses in gateways, routing, Web interfaces and cash-management modules, so picking and choosing among several reduces costs and improves service, Bauer says.
“There probably isn’t one that has everything,” Bauer says of processors. Some Kahuna clients use all five processors at different times, he adds.
The company does not divulge the number of customers that use its services but does say that it is involved in operating 18,000 ATMs across the nation that account for 40 million transactions annually.
The company website also offers a 56-page, 10-point analysis that ATM ISOs can use to evaluate their businesses, Bauer says.
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