Differentiating an ATM from a kiosk used to be easy. If it dispensed cash, it must be an ATM. If not, well then it must be a kiosk.
Not so much the case anymore, says Rob Evans, director of industry marketing for NCR Corp.
"Today you can do financial transactions that do not involve cash," he said. "You can do wire transfers. You can do money orders. So in terms of the classic definition (of an ATM) as something that simply dispenses cash — well, that isn't adequate to describe what's going on."
Surprising? No, says Sandra Hartfield, president and chief executive of Electronic Banking Division for Palm Desert National Bank.
Hartfield says dropping ATM transactions and escalating operating costs are pushing ATM deployers to rethink their business models and look for revenue-generating functions.
"The ATM business is a mature business," Hartfield said. "The next generation, I really feel, is a kiosk that has other services on it."
Phil Suitt, president and founder of Texas-based ATM Ventures, agrees. In fact, he's already complementing his ATM portfolio with kiosks, and he's selling his products to banks and credit unions.
"We do see additional functionality being requested by the FIs," Suitt said. "It's all driven by cost-savings. They're trying to save labor. That's the primary reason they're doing it."
While the banks want to add convenience and enhance the efficiency of their branches through services like self-service check cashing, ISOs want to build additional streams of revenue.
Taking their pick
In many cases, deployers say, increased ATM functionality translates into increased revenue. But it's not as simple as arbitrarily adding new functions like MP3 downloads or Internet browsing.
ATM deployers have to be selective, says Wes Dunn, director of business development for self-service products at Tranax Technologies Inc.
That means apps like music and movie downloads are out, Dunn says — at least as additional functions at the ATM.
What types of added functions work best? Financial functions, says Evans.
"By 'financial' I mean they involve the secure transfer of funds from one account to another, or the withdrawal of funds and the conversion into some type of currency, whether it's stamps or money orders or cash," he said. "Those are generally the things that lend themselves very well — and almost exclusively — to ATMs versus kiosks."
An ATM's ability to scan a check, verify a person's identity and instantly dispense the check's amount is complicated, but it's a transaction that ATM deployers are taking interest in. And one company, Fort Worth, Texas-based VALID Systems, is making some headway with a solution it has developed for either the financial-institution or retail environment.
PDNB's Hartfield, who hopes to roll out VALID's check-cashing option on PDNB ATMs before the end of the year, says check cashing will likely draw more users to bank and retail ATMs.
"If it can be a generator of revenue and it's in a location that can help bring more revenue to that terminal, then I think it's a natural to look at," Hartfield said.
The secret of the application's success is that it mixes self-service with full/teller service, she says.
In short, it is assisted self-service.
John Templer, chief executive of VALID Systems, says in a bank or credit union environment, that assisted solution calls for the enrollment of user in the program with the teller window, and subsequent check cashing taking place at the ATM. The check is inserted into the machine without envelopes or deposit slips and the ATM dispenses the correct amount of cash.
In the retail environment, the set up is slightly different, but is built from the same concept.
"In the retail model, the customer conducts all of his transactions with the clerk, where funds are either loaded on a card or are printed on a receipt," Templer said. "The user then takes the receipt or card to the ATM, chooses check cashing, enter in a PIN and get his funds."
Ultimately, it's more of a cash management tool, Templer says.
But both FIs and retailers are excited about the check cashing option. For banks, he says, it's an opportunity to get new clients by reaching out to the unbanked and underbanked markets. For retailers, it's an opportunity to increase their revenues, both from transaction fees and increased purchases from customers who now have cash in their wallets.
"What we've seen in the past is that a c-store, for example, can just about double the profitability of their location by adding financial services to it," Templar said, adding that merchants also gain revenue from the transaction fees.
VALID Systems has reseller agreements for its check-cashing solution with ATM manufacturer Diebold Inc. and hybrid ATM-kiosk deployer Tranax Technologies. Diebold is targeting FIs; Tranax is targeting independent sales organizations and retailers.
Dunn says he likes VALID's retail solution because it still relies on manual check verification.
"Their check-cashing transaction on an ATM is as fast as an ATM transaction because the majority of the actual check cashing is facilitated at the merchant's counter," Dunn said.
Templer says verification of the check itself and of the individual attempting to cash the check has always been a stumbling block for self-service check cashing. But VALID is working to make its verification as detailed as possible, using biometric devices such as fingerprint to verify the identity with a solution that has roughly 45,000 bits of check-verification criteria. The criteria can be examined in less than a second, he said.
Templer also touts the system's installability.
The VALID solution, which comprises a check scanner, a driver's license scanner and a fingerprint scanner, can be installed in 15 minutes at an ATM, because the system integrates with the ATM's transaction network, assuming the network is PC or terminal-driven. Beyond the check: Bills and remittances Reaching cash-preferred users, commonly referred to as the unbanked and underbanked, through self-service bill payment also is garnering attention, says Hamed Shahbazi, chairman and chief executive of TIO Networks Corp.
"If you look at all the different services you can offer, in terms of advanced functions and in terms of the underbanked community, from money transfer to check cashing to prepaid and billpay, I think what you'll find is that billpay is probably the one that has the highest value for the dollars invested," he said.
Check cashing, he says, can be costly when you figure in hardware expenses, like the cost of check scanners and biometrics equipment. Bill payment, on the other hand, can be an excellent source of revenue.Reaching cash-preferred users, commonly referred to as the unbanked and underbanked, through self-service bill payment also is garnering attention, says Hamed Shahbazi, chairman and chief executive of
"The customer that does pay his bills in person is highly mindful of posting times," Shahbazi said. "The reason they're paying that additional convenience fee and they're seeking out quicker posting times is because they want to wait until the last minute to pay their bills and they want to make sure that they can pay that bill confidently and still have their lights on, or still have their phone on at the end of the day."
Shahbazi said the trend toward self-service bill-payment is not just occurring in North America. More than 7,000 billpay kiosks are now operating in Russia, and the functionality is gaining greater acceptance in other parts of Europe as well.
Another function that's gaining some ground throughout the world, especially in the United States, Europe, and Latin America, NCR's Evans says, is money remittance, which uses the ATM for cash dispense.
Garanti Bank, an NCR client in Turkey, uses this option as a means for users to transfer cash from one person to the other.
"If you need to give somebody some money, you don't want to hand them your debit card," Evans said.
Instead, customers can obtain a one-time-use code, either over the phone or via the Internet, which can then be given to the individual who will be receiving the cash. When that individual enters the code, the ATM dispenses the appropriate amount of cash.
"That's not a classic ATM transaction," Evans said. "But it's really enabled by the technology that underpins the self-service device and the associated network. And that's something we haven't had in the past."
Though not a hot topic in the headlines, bill breaking is a function casinos are picking up on.
In addition to offering ATM transactions, the hybrid ATMs have a supplementary bill-breaking feature, which trades small-denomination bills for large ones.
"It didn't make sense to have ATMs throughout the floor and then ticket-redemption kiosks throughout the floor, because all of them would have to have money in them," Zanella said.
It's one more function that's helping cash to flow into deployer's hands, and making it increasingly difficult to tell a kiosk from an ATM, he said.
"I think we're just beginning," Hartfield said. "Financial services are going to be expanded to where these ATMs will automate banking facilities in the future, and they will serve both banked, unbanked and underbanked people. Isn't that cool?"