ATM Surcharging: 10 Years Later
Calling All ATM Deployers
Welcoming Stefan Stuerwald
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Issue #14
The lifting of the national EFT networks’ ban on ATM surcharging on April 1, 1996 marked a watershed event in the evolution of the ATM industry. The widespread adoption of surcharging has had a long-term and dramatic impact on the dynamics of the ATM industry: that single rule change precipitated a shift in the way deployers viewed ATM revenues, costs, and strategic purpose—and re-defined consumers’ ATM experience.
This issue of On Payments revisits the changes that have taken place in the ATM industry over the last ten years, takes stock of where we are today, and looks ahead at the changes to come.
To sign up for an online subscription to On Payments, please click here.
ATM Surcharging: 10 Years Later
A Look Back, A Look Forward
April 1, 2006 marked the ten year anniversary of a day that changed the ATM industry forever—the day that the national ATM networks, Plus and Cirrus, lifted their bans on ATM surcharging.
Surcharging did not come into existence on April 1, 1996. It was not even a new concept. Some regional networks, most notably PULSE, were already permitting surcharges at the time, and banks were increasingly pushing for the ability to surcharge. As long as it was restricted by the national networks, however, surcharging was limited to small pockets of the market.
Once the national networks lifted their surcharging bans—quickly followed by most of the regional EFT networks—the ATM industry immediately experienced several fundamental changes:
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Independent Sales Organizations (ISOs) entered the market |
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Growth of terminal deployments—particularly off-premise—accelerated rapidly |
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ATMs became profit centers |
Prior to surcharging, ATMs were primarily deployed as a customer distribution channel. There were relatively few terminals and the average transaction volume per ATM was high. With surcharging, however, the role of ATMs shifted: revenue generation became the name of the game. As a result, a frantic period of ATM deployment ensued. As terminal deployments moved further and further downstream, from highly-desirable locations to less-desirable locations, however, many ATMs struggled to generate sufficient transaction volume to remain profitable.
Ten years later, the industry is in need of—and may indeed have found—a new model. There are signs that the industry has come full circle, with banks and credit unions once again focusing their ATM channel on customer servicing opportunities instead of stand-alone revenue generation.
In order to maintain a high-quality ATM network that simultaneously maximizes cardholders’ ATM access and minimizes ATM expenses, many financial institutions have recently turned their attentions to ATM branding partnerships (in many respects, a byproduct of surcharging). Other deployers are investing in new ATM software capabilities, linked to Customer Relationship Management (CRM) applications, to offer a more personalized ATM experience, with the potential to (finally) use the ATM as a sales channel. Additionally, after several years of hype, it looks as though ATM check imaging will finally start to gain broader deployment, led by a few large banks.
All of these developments have one thing in common—they are driven by customer needs. This new-found focus will ensure the ATM business remains vibrant for at least the next 10 years.
To read the full article, please click here.
Calling All ATM Deployers
The 2006 ATM Deployer Study is officially underway!
Sponsored by the leading EFT networks, the 2006 ATM Deployer Study is the fourth in a series of nationwide surveys of ATM deployers, and will be the definitive guide to performance metrics and trends in the ATM industry.
We are currently in the process of gathering data and insights from banks, credit unions, and ISOs across the ATM industry. Now is your chance to contribute! Click here to participate if you are a financial institution deployer; click here if you are an ISO deployer.
All participants will receive a full copy of the study findings, as well as a chance to win the latest 60GB iPod. If you have any questions or would like additional information about the 2006 ATM Deployer Study, please contact Melissa Fox at 617-753-9205.
Welcoming Stefan Stuerwald
We are pleased to announce the newest addition to Dove Consulting, Stefan Stuerwald.
Stefan joins Dove as a Senior Manager focused primarily on payments-related technology. Stefan has 10 years experience in management consulting and industry, most recently as an IT Sourcing Specialist for Visa. Prior to his time with Visa, Stefan was Director of Contracting for Broadlane in their Strategic Sourcing Practice and an Engagement Manager at SRI International (Stanford Research Institute). He has performed work for Toshiba, Motorola, IBM, the Japanese government, and McKinsey.
Stefan can be reached at:
sstuerwald@doveconsulting.com or at
415-848-4623.
Upcoming Conferences
Join us in Hollywood, FL for SourceMedia's 18th Annual Card Forum & Expo on May 21-23. This annual industry event explores the latest trends in card-based payments—evolving technologies, new partnerships, changing consumer preferences, industry economics and the future of security standards.
On Tuesday, May 23, David Dove will moderate a panel discussion entitled “The Future of Interchange Fees” alongside representatives from Visa USA, IBM Business Consulting Services, Robins, Kaplan, Miller & Ciresi, L.L.P., and BetterBuyDesign. Later that morning, Chris Allen will moderate a panel discussion entitled “Keeping Thieves at Bay”, with TSYS, Fair Isaac, and Merrill Lynch, which will focus on emerging trends in payment card fraud, and strategies and systems for minimizing exposure.
BAI is hosting its annual TransPay Conference & Expo in Las Vegas from May 22-25. Bringing together all aspects of the payments business, attendees will learn about the latest developments in check processing, products and processes that access the deposit account, and new electronic payments products that have the industry buzzing.
On Monday, May 22, Tony Hayes and Joel Stanton will be leading a pre-conference forum that focuses on “Where ATMs Fit in Bank Strategy”. The session will address the most pressing questions about the ATM industry, including: What's the future for ATMs? Why own them? What investments should banks and credit unions be making in their ATM channel?