Article

An ATM giant enters the kiosk realm

They're a juggernaut in the ATM world - and now, with the introduction of a new transactional kiosk, Tranax Technologies is aiming for a bigger slice of the emerging self-service industry.

May 10, 2005 by James Bickers — Editor, Networld Alliance

Eight years ago, the Fremont, Calif.-based company Tranax Technologies introduced its first retail ATM, the Mini-Bank 2000. By 2004, the company had delivered more than 50,000 machines from a burgeoning product line.

That's a pretty impressive couple of years, and it certainly didn't go unnoticed. Today, Tranax is one of the biggest names in the retail ATM world, and as such, its recent announcement of a new foray into the cash-free transactional kiosk world caught the attention of everyone in the business.

Reasons why

When an established company moves into a business that strays even slightly from what has made them successful, the inevitable first question is: Why?

"We have close to 60,000 retail ATMs deployed throughout the U.S. and Canada," said Scott Holt, product manager for self-service terminals with Tranax. "We looked at how we could add real value to the ATMs - which was when we launched our first converged unit."

That converged unit, introduced in 2003, marked Tranax's move into the kiosk paradigm. The company's self-service platform pairs an ATM with various apps like check cashing, ticketing and card dispensing.

The company is following one of the basic laws of business, Holt said: When your customers ask you for something, you should aim to provide it.

"We realized there was an increasing demand from our existing channels," he said. "One of the things we were repeatedly seeing and hearing from the market is that there are obviously a whole range of kiosk providers, but at times a lot of those kiosks didn't seem to be as robust or secure as they could be. So we wanted to leverage all of the experience we had and transfer it to developing a line of kiosks that are based on transaction-based solutions."

Looking under the hood

As of this writing, the Tranax kiosk doesn't have a brand name or identity. And that, according to Holt, is by design.

Tranax's recently announced transactional kiosk (photo courtesy Tranax Technologies, Inc.)

"We're looking at getting through this month and next month without attaching a name to the product," he said. "We're doing some true field trials. In our industry and the channels we target, if you put a brand on it, it'll stick for life - so we're being cautious, and making sure we best understand how that's going to work. We also have to take into account branding considerations for what we do - we need to decide whether we'll brand it by individual turnkey solutions, or whether it will have a hardware brand name."

Although he can't offer a name, Holt does offer a number of details about the upcoming machine.

"The initial model we're launching is our turnkey model - this will essentially be customizable," he said. "We have a base platform, and it's a modular unit - there will be standard devices that will ship with all of them, and they'll have a series of bays, which they can option-up or option-down. Its base platform will include touchscreen, MCR, receipt printer and cash acceptor. On top of that, you can add a ticket printer or a range of other devices."

Those other devices include a money order printer, card dispenser and barcode scanner. "As time progresses, there may be other things we decide we want to integrate," Holt added.

He emphasized the open-ended nature of the unit, and its focus on flexibility and customization. "If someone just wanted to do bill payment, for example, (the default model) would meet their needs. But if they wanted to do bill payment and add a stored-value card, they could option-up and there would still be two bays they could add a peripheral to," he said.

Holt said the company hopes to have full production on the standard model up and running by the end of May. In addition to the standard unit, he said that Tranax has begun a custom development department that is already at work, although he said he couldn't give any customer names.

Other voices weigh in

York, Pa.-based Livewire International is one of the software providers that work with Tranax. Company president Charles Caserta, whose background is in the banking world, was taken with the way Tranax responded to his initial contact.

"I come out of the ATM world, and one of the reasons why I came to Livewire was to merge content with the kiosk and the ATM," he said. "I inquired a number of different ATM manufacturers, and Tranax was the first to come back to me saying they liked the idea. And they were very aggressive - by November we had a system up and running, certified."

Caserta, whose company works with Tranax to provide destination ticketing and prepaid debit cards on the converged ATM units, said that the move into transactional kiosks makes perfect sense.

"It fits with their business model," he said. "They come out of the ATM world, which is basically a kiosk that dispenses cash. So they have a lot of expertise. And the niche they really have expertise in is security - they have a lot of experience in securing a device, the safe, the keypad, the sensors, things of that nature."

"This ticketing kiosk they've got with Livewire - that is a good move," said Francie Mendelsohn, president of Summit Research Associates. "Livewire does a very good job with ticketing. I think that's a very smart move on their part."

But Mendelsohn doesn't think Tranax's move into kiosks is the big deal many perceive it to be.

"They're not players of note in the kiosk world at all - they're ATM folks," she said. "The good news is that they have a track record in an even more demanding area. So if they can convince prospective customers that `we've been around a long time, we have this track record of building reliable, robust units and are very affordable,' that will help them. But the challenge for them is, they're entering a field in which there are a ton of players. Even when you take the big guys off the table, they're entering an already crowded space. So the challenge for them is going to be to get the word out to prospective customers about what makes them different, and why people should pay attention and give them the business."

Strengths and challenges

When asked what Tranax does best, Caserta said that in addition to the aforementioned expertise in security, the company has a powerful ability to ship machines quickly.

Even when you take the big guys off the table, they're entering an already crowded space.

-- Francie Mendelsohn, Summit Research Associates

"From my understanding, you can order an ATM today and they'll ship it tomorrow," he said. "They're going to be able to ship kiosks quickly."

According to Mendelsohn, this might be a key element when it comes to Tranax's performance in the kiosk field.

"If they can say, `Yes, you need 50, you need them by the end of the week? You got it,' that would be huge," she said. "That would very quickly separate the men from the boys - a lot of these manufacturers can only turn out a few a week. For many projects it doesn't matter because the deployment is slow and steady, but there are others that want to do many at one time. So that capability could be a big deal."

And, of course, there is price; after all, Tranax is known for ATMs that are comparatively inexpensive to other models with similar feature sets.

"Because they've got all the expertise in manufacturing ATMs, I'm sure they're going to come out with a very good, competitive price," Caserta added. "I mean, they shipped close to 12,000 ATMs last year. That's a lot of devices."

"We're aiming to be extremely competitive price-wise," Holt said. "We want to deliver to people the same value you get in a retail ATM. Tranax is a company that has built its reputation on building secure and robust machines. We're looking at developing the same quality of machines with a price point that is not outrageous. We think we'll be more than cost-competitive."

Once again, Mendelsohn urges restraint. Price might not be a determining factor, she said, because prices on the whole for kiosks are down.

"In our big flagship report, we give people a price range and ask, 'What's the price you charge for your kiosks?'" she said. "And the average price has dropped every time we do the survey. Increasingly, people don't want to pay more than 5 or 6,000 dollars."

Caserta said that the toughest hurdle facing Tranax will be its adaptation to a business that is, despite some superficial similarities, fundamentally different.

"It's a horizontal market - with ATMs, it's extremely vertical," he said. "With kiosks, you go across all the markets - and there's a learning curve there. You've got e-concierge, ticketing, card dispensing, multiple types of markets that these things can go into. Over time, they're going to learn all of the different markets - I think that's their biggest challenge."

"If they get a couple of nice projects and can prove themselves, it could turn out to be quite lucrative for them," Mendelsohn said. "But my caution to them is, you're not alone. There are a lot of people out there who have a longer track record in this business than you do. If I were to give them advice, it would be, you might want to pick one or two vertical markets and go after that, rather than say `We can do anything for anybody.'"