PJ: In December, Better ATMServices andVisa launched a pilot program in which consumers could buyVisa-branded gift cards from ATMs that belonged to three creditunions in Arizona. What did Better ATM Servicesand Visa learn from the pilot?
Nuttall: The pilot began inearly December and included the 2011 holiday gifting season. At themost elemental level, an early lesson we learned was that many peoplewake up Christmas morning still needing to buy Christmas gifts! Wehad been pleased to see people quickly respond to ATM-issued VisaGift Cards, but were quite surprised to see a spike in Gift Cardsales on Christmas morning. This speaks precisely to the time-valueconvenience of the 24/7 service of ATMs. We have also seentremendous response to the new, flexible Visa cards, which haveworked well at the point-of-sale. We found it very interesting thatthese new cards have elicited comments about convenience from thepoint of view of reducing the bulk of the wallet or purse—consumerstell us it’s a great added benefit and they wish more of theircards were like it. Consumers are engaged by a coupling of primarydrivers – time and place convenience and value for their money. People enjoy the added plus of getting a free cup of coffee or acoupon for food or other services with each card dispensed from theATM. Instead of focusing on fees, consumers are focusing on value -“bang for their buck” – and convenience. We have learned,yet again, that if you build it right, they will come and come backfor more driving ROI, strengthening brand awareness and, ultimately,moving market share.
PJ: Is there varianceapproval from Visa and what does that entail?
Nuttall: Our efforts withVisa are strictly governed by their requirements in systematicallyintroducing new products to consumers. Much of that effort isstrategic and quite confidential in nature.
PJ: At the moment, the ATMsjust dispense a $25 card. Are there plans to add reloadable productsor closed-loop cards from retailers?
Nuttall: The product linesand capabilities will constantly expand. We’ve already placed theinfrastructure to allow the ATM user to select the value they wish toload on the card. However, open loop cards are just one application. As you can imagine, many closed-loop card programs would benefitgreatly by having their products placed in ATMs that service theirtarget market. ATMs, by their very nature, are located in convenientlocations that serve particular audiences. Better ATM Services’technology can be leveraged for virtually any prepaid product,including open-loop, closed-loop, transit, event passes, and more.
PJ: At the moment, Better ATMServices isworking with Diebold, NCR and Triton. Will other follow such asWincor and Fujitsu? What’s the response from the ATM manufacturer’sabout this product? Will the cards be a standard addition to themachines or an add-on?
Nuttall: The more brands andmodels that can be adapted for handling both cash and cards, thebetter the entire market and consumer base will be served. BetterATM Services is carefully integrating and testing its technology withthe major ATM brands and will continue to expand. ATM manufacturershave been enthusiastic about a concept that allows their robust cashmechanisms to be used for other valuable products. This increasesthe value of ATMs to banks and independent deployers and creates morereasons to grow existing ATM placements. In some cases, thetechnology to load and activate cards will be available directly fromthe ATM factory. In other cases, a field-installable kit will beavailable. These are very simple, inexpensive kits that require nomodifications to existing cash cassettes or bill dispensermechanisms.
PJ: What is Better ATMServices’ timeframe for the rest of the year regarding thegift cards initiative? Will larger banks start offering the cardssoon? Might agreements ramp up as the holiday season approaches?
Nuttall: Many of our effortsare governed by strict confidentiality agreements. As you canimagine, opening an entirely new distribution channel is asignificant strategic move by both the financial institution and thecard network. You can expect to see expanding card programs andincreasing numbers of institutions augmenting their ATM capabilitiesusing Better ATM® Services’ technology.
PJ: Any concern about thegrowing popularity of digital gift cards and how that might affectBetter ATM Services’ plans with the plastic kind?
Nuttall: Digital gift cards,mobile pay, and other innovations will likely grow. History shows usthat robust payment systems tend to continue for generations. Beyondthe unbanked and underbanked, an enormous market opportunity in andof themselves, prepaid products continue to have great consumerappeal and will continue to grow throughout the world. This growthand the enormous potential and capacity for growth appears to bemore-than compensating for any market share being absorbed by newpayment technologies. In fact, research on ATM-issued prepaid cardsdemonstrates that consumers did not necessarily reduce the number ofcards they were already purchasing from other venues, but rather,they purchased more cards than they would have simply as a result ofthe convenience of the ATM.
PJ: What industry changes on thehorizon truly excite you? How will Better ATM Services take advantage of these changes?
Nuttall: The act of issuingcards from the ATM is simply the tip of the iceberg. This, alongwith other payment innovations is opening the door for even morevalue-generating services. Beyond the opportunity to provide a widearray of ATM-dispensed products, there are also numerous developmentslooming on the horizon that will help consumers manage theirdisparate financial services. Think about it, the day of simply achecking account and a savings account are long gone. People are nowmixing a large number of services including prepaid products andonline payment systems such as PayPal and others for routinetransactions. This is creating a need to begin linking all this datatogether and helping the consumer better understand, manage, and evenbe rewarded by their payment vehicle choices.
PJ: The prepaid market size in 2012 is now forecast to be $549.7B,according to Mercator Advisory Group estimates. How much ofthat market might ATM deployers reasonably expect to capture in thenear term?
Nuttall: Today, some 27million ATM transactions are conducted each day, just in the UnitedStates. To the prepaid world, this represents an enormousopportunity. If just 1 of every 100 people conducting an ATMtransaction chose to get a card product with their cash or instead ofcash, that single choice would represent some 270,000 prepaid cardspurchased every day. Pragmatically, you can see how the incentivesand benefits associated with prepaid will drive adoption far higherthan the 1% example I just shared.
PJ: How much traction foryour products and services do you see in the FI space?
Nuttall: Financialinstitutions have largely watched their customers leave to purchaseprepaids elsewhere. Since FIs are indeed in the business of money,they cannot ignore the reasons why consumers continue the move toprepaids. Until now, it has been difficult for banks to offer costeffective prepaid programs and FIs have had to watch their customersgo down the street and get their “prepaid accounts” elsewhere. The reality is consumers could truly benefit by keeping thatrelationship with their FI. By moving their prepaid programs to theATM, FIs can now compete and even exceed the convenience, cost, andavailability of prepaid products offered by their competitors. Thisalso removes much of the headache of trying to manage these programsfrom the teller counter. We are seeing institutions throughout theworld catch on to this opportunity and we will be expandingsignificantly with FIs over the coming year.
PJ: What might be some otherareas in the ATM market that Better ATM Serviceswants to address?
Nuttall: Independent ATMowners are facing increasing pressure to open up new revenue streamsto keep their fleets viable against ever-increasing competitive andlegislative pressure. At the same time, FIs need to counter the drawagainst their customer base by competing more effectively in growingpayment categories. There is also benefit to be derived by invitingthe unbanked to begin participating in financial services throughprepaids. ATM-issued prepaid products really are a perfect method toachieve all these needs and goals. People use ATMs as a regularpattern and part of their lives. Many countries are already ahead ofthe US in ancillary services through ATMs and stand as proof thatconsumers want and will use ATMs for much more than simply cash.
Better ATM Services is a technology innovator in the ATM industry. We supply patented technology enabling the world’s fleet of ATMs to achieve new profitability by dispensing gift cards and other prepaid media, incentives and premiums directly from existing ATM cash cassettes with a minimal amount of modification. Cards are thinner and more flexible. They come on a 3-part sheet that fits in cash trays like currency. The card snaps off from the 3-part sheet, leaving two other cards, one card for customer service information and another with a coupon or special offer. These new flexible cards work well at the point-of-sale and have proven durable in rigorous testing. An in-market pilot program is currently underway offering Visa Gift cards at walk-up and drive-through ATMs in select locations throughout Arizona.
Click here to access Better ATM Services’ PaymentsJournal Buyer’s Guide entry.