ATM ISOs See a Deposit Bonanza But View Card Networks As Obstacles to Innovation

ATM owners and operators are thrilled about the new opportunities deposit automation and mobile devices are creating for their industry. They’re not so thrilled about the major card networks, according to survey findings released Tuesday by the ATM Industry Association, an international trade group of ATM independent sales organizations, vendors, processors and related companies.

The ATMIA conducted what it calls its first “global ATM innovation survey” earlier this quarter, with 79% of 176 respondents completing all questions. Industry executives were especially excited that deposit taking, once nearly the exclusive province of bank and credit-union ATMs, is extending its reach to non-bank ATMs typically found in stores and other locations off of bank premises. This so-called deposit automation comes from new ATMs that can accept cash and check deposits without the customer putting the check or currency in an envelope.

Asked which of seven relatively recent technologies “has meant the most to the ATM’s development,” 42% of respondents cited deposit automation. In second place was “enhanced security features,” cited by 33% of respondents. Video on ATMs came in last, cited by only 9% of respondents.

Deposits also came in first when respondents were asked to rank the importance of 20 value-added services over and above core ATM functions, notably dispensing cash. Respondents gave deposit automation 48% of the number-one rankings, making that service the most popular by weighted rank. The second most popular ATM service by weighted rank, bill payments, received only 15% of the number-one rankings.

“The advent of automated deposits has really done a lot to get people thinking about ATMs in different ways,” says David Tente, executive director USA for the ATMIA, which has its U.S. headquarters in Sioux Falls, S.D. Talk of the “cashless society” reined six or seven years ago, but then deposit automation came on the scene and made it easy for consumers to make deposits at ATMs, he says. “It’s been great. Consumers are viewing the ATM in a little bit more of a different light, more than just dispensing cash.”

Non-bank ATM operators are getting a lift from deposit automation because the technology is working its way down to traditionally less-expensive retail ATMs, and because financial institutions are more willing to do branding deals with independent operators, says Tente.

ATM executives also anticipate that they’ll share in the predicted boom in mobile payments. In fact, they think mobile services offer more opportunity than deposits. Some 55% of respondents said that mobile and contactless payments would be the fastest-growing ATM service in the next five years.

Exactly how ATMs will garner part of the mobile-payments action isn’t yet fully clear, but Tente notes that a consumer with a smart phone that can display or read QR codes or has near-field communication (NFC) technology could initiate an ATM transaction without a debit card. A consumer also could use a mobile device to pay a bill at an ATM, he adds. “Next to the branch, [the ATM] is the most secure channel the bank or financial institution has,” he says. “You’ve got the ability to leverage that.”

Deposits came in second, cited by 41% of respondents as the likely fastest-growing ATM service in the next half decade. Bill, fine and tax payments came in third with 37%, followed by person-to-person remittances or money transfers, 29%, and ATM advertising, 28%.

And what, as framed by the survey question, “are the biggest obstacles to, or inhibitors of, innovation in the ATM industry?” Among eight choices presented, “rules and mandates by the main global card brands” came in first, cited by 50% of respondents. Next was “external regulations,” meaning governmental, cited by 42%. Trailing in third place was the cost of research and development, 34%, and national ATM network rules, 32%.

The survey didn’t delve into specific irksome network rules and policies, but ATM owners have spoken out about difficulties that liability shifts will mean for them as the card networks migrate to Europay-MasterCard-Visa (EMV) chip cards in the U.S. They’ve also got beefs about honor-all-cards and transaction-routing rules. “That’s kind of been an ongoing area of discontent for a long time,” Tente says. “In some respects the networks seem like another government you have to deal with.”

Visa Inc. and MasterCard Inc. did not respond to Digital Transactions News’ requests for comment about the survey.

Meanwhile, ATM owners have had to make their machines more accessible to the visually impaired under updated Americans With Disabilities Act rules, and various states are mulling regulations that restrict cash access by recipients of public benefits at liquor stores, casinos, strip clubs and other places that some legislators see as morally questionable. “It puts quite a burden on ATM owners as to how you do that,” says Tente.