February 21, 2011

Poll: ATM owners and operators see major challenges facing their industry

Declining ATM withdrawals, network costs and legislation related to Disabilities Act has ATM ISOs "concerned".

Poll: ATM owners and operators see major challenges facing their industry | ATM Marketplace

ATM owners and operators, concerned about the changes buffeting their industry, will begin arriving Tuesday for the annual ATM Industry Association (ATMIA) Conference in Miami, where many of those concerns will be aired and addressed.

Despite the challenges, the overwhelming majority of owners and operators say they plan to grow their businesses through additional investments and by working with government agencies to protect the interests of independent sales organizations.

The owners and operators are most concerned with network changes and increased costs, pending legislation and declining transactions, according to a survey by Kahuna ATM Solutions, the nation’s only business development catalyst dedicated to the success and profit maximization of independent sales organizations and operators. Kahuna polled online 200 ISOs and received 69 responses.

The survey, which was conducted in November, found that 54 percent of ISOs and operators believe pending legislation and network changes are the greatest areas of concern with respect to the health of the ATM industry and the future profitability of their companies.

Twenty-eight percent of the 54 percent cited network changes and increased costs as their single biggest concern. Twenty-six percent of the 54 percent cited pending legislation as the major issue out of the two.

“This year will be very telling for our industry as the pendulum could be redirected in so many ways by governing bodies,” said Bryan Bauer, president of Kahuna, which is based in Bloomington, Ill.

The survey also found that 15 percent of respondents said declining ATM withdrawals are their big concern. Thirteen percent indicated ATM saturation in the U.S. is what scares them the most and poses the greatest threat to their business.

North America boasts the highest density of ATMs per capita, according to Global Industry Analysts, Inc., a San Jose, Calif.-based market research company. In 2009, there were 492,000 ATMs in North America.

“The survey results affirm what our team has heard time after time during conversations with our clients and other ISO and operators in the industry,” Bauer said. Kahuna’s affiliate network of independent distributors and operators manage and process transactions for 13,000 ATMs nationwide.

Mike Lee, CEO of ATMIA, said the poll identifies issues of concern for ATM owners and operators.

“Surveys like this help us to hear the heartbeat of our members,” Lee said. “It is clear that U.S. independent deployers are concerned about changing legislation and interchange erosion. “

He added: “ATMIA will invest heavily in 2011 in lobbying, government relations and legal work to our utmost to maintain and build a sustainable and thriving ATM market in the U.S.”

The National Association of ATM ISOs and Operators (NAAIO), a trade association that represents ATM ISOs and operators, also has a vested interest in minimizing the changes affecting their industry. The National Association of ATM ISOs and Operators is concerned about federal rulemaking under the Dodd-Frank Wall Street Reform and Consumer Protection Act and The Americans With Disabilities Act.

“We want to ensure that new guidelines for the visually impaired, adopted last and under consideration this year, do not require ISOs to spend millions of dollars upgrading or replacing older ATMs that have years of useful life,” said Jim Cabe, president of NAAIO.

President Barack Obama signed the Dodd-Frank Act into law July 2, 2010. The legislation contains the Durbin Amendment, which addresses restrictions on debit card interchange, a concern of the ATM industry.

Although the industry faces a series of challenges, the majority of independent sales organizations are focused on the future growth of their businesses, the survey found.

Some 73.5 percent of poll respondents said they planned to grow their businesses in the next year compared with 5.6 percent who did not plan to make any changes. Only 1.8 percent said they were looking to retire or sell their companies in the next 12 months.

“The numbers regarding the future growth of the ISO business was a little surprising,” said Pamela Philipps, Kahuna’s vice president of affiliate development. “We are engaged in more and more conversations where ISOs are looking for help to transition away from their businesses or sell their businesses. However, in general, most of our clients are optimistic about the growth of their businesses."

Companies are interested in growing their businesses by offering remote deposit capture, cash advances, prepaid gift and loyalty cards, bill payment and check cashing.

“If you are an ISO and you are surviving on just your ATM revenue, you are not looking to the future,” said Trey Prats, president of ATM Worldwide, which is based in Kenner, La. “We have seen profits shrinking over the years; we’ve seen compliance get more difficult. All that being said, if you are not looking for ancillary products, then you have blinders on.”

Bauer cautions, however, that ancillary products and services should not supplant the ATMs primary function, which is to dispense cash. Bauer also suggested that ATM operators join forces with a larger company, like Kahuna, to “save money and make more money.”

Alicia Blanda, who conducted the survey for Kahuna, also suggested that ATM ISOs and owners should spend money marketing their companies. “Marketing is important for any business and is something that ATM ISOs shouldn’t put off doing,” said Blanda, president of Lagniappe Marketing and Public Relations.

ATMIA’s annual conference will be held from Feb. 22 through Feb. 24.

Poll: ATM owners and operators see major challenges facing their industry | ATM Marketplace

Posted by staff at February 21, 2011 01:39 PM