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06 April 2012

Survey: ATM deployers expect grow despite challenges

Results of a survey conducted by Kahuna ATM Solutions found that despite numerous challenges to their business model, a majority of IADs are optimistic about future growth.

Not only are the impediments many in number, they also are especially difficult in nature. With new Americans with Disabilities Act regulations requiring U.S.-based independent ATM deployers to upgrade or replace thousands of terminals going into effect in a few weeks, it's not surprising a recent survey found compliance mandates are their No. 1 concern. Also facing IADs are looming EMV regulations, shrinking surcharge revenue and the perceived saturation of the U.S. ATM market.

Yet, the majority of IAD's say they plan to grow their businesses in 2012.

"The survey results affirm what our team has been hearing during conversations with our clients and others in the industry," said Bryan Bauer, president of Kahuna ATM Solutions. "Despite the many challenges facing IADs today, small business owners continue to be committed to ATM deployment, and it remains a strong, viable industry in the United States."

The survey was conducted between December 7-31, 2011, on behalf of Kahuna ATM Solutions by financial services marketing and public relations consultant Alicia Blanda. Issues covered by the survey included: IAD concerns, their businesses' future, and products and services. Two-hundred twenty-eight U.S.-based IADs were polled.

Kahuna ATM Solutions provides a complete line of ATM products and services that currently serves more than 18,000 ATMs across the U.S., accounting for more than 40 million transactions annually.

The IAD fear factor

The survey revealed the three biggest concerns for IAD's today are compliance mandates, network changes and the resulting increase in cost of doing business, and ATM saturation.

"This year will be another telling year for our industry as we continue to respond to ADA compliance mandates and other government requirements that affect our businesses," Bauer said.

U.S.-based IADs agree. A majority of IADs survey respondents believe compliance mandates will negatively impact their business. ADA regulations, which go into effect March 15, have already cost IADs hundreds of thousands of dollars in 2011-12. With Visa's and MasterCard's recent adoption of EMV chip technology in the United States IADs are once again in a situation where they will have to spend money on capital investments in 2012-13.

"Our Affiliates are very concerned about the financial strain of EMV upgrades, coming on the heels of ADA compliance, will have on their businesses," said Pamela Philipps, Vice President of Affiliate Development

The No. 1 concern in last year's survey was network changes and the increase in the cost of doing business; this year, it ranked No. 2.

The third biggest concern IADs have today is ATM market saturation.

Looking to the future

Despite the challenges facing IADs, when asked what their business plans were over the next 12 months, a strong survey respondents (67.2 percent) indicated, for the second year in a row, they plan to grow their business. Twelve percent of IADs were unsure of their future plans and 9 percent said they plan to hand off more responsibility to another person in their company.

"The continued optimism in our industry and particularly with our affiliates is encouraging," Phillips said. "Although we are engaged in conversations with a small number of affiliates who are looking to transition away from their business, most of our clients are simply looking for new ways to add value to their merchant relationships while seeking to grow their portfolios. We are genuinely delighted with the positive attitudes and direction of our Affiliates and our company."

One way for small businesses to survive and grow in today's uncertain economic and regulatory climate is to outsource certain aspects of their businesses in order to streamline the administrative side of their businesses, says Bauer.

"One trend we've noticed is more smaller IADs looking to outsource their day-to-day operations in order to be more competitive; providing them with more time and resources to grow their sales operations," continues Phillips.

"As our industry changes, there has never been a more important time for ATM operators to align themselves with a company like Kahuna," Bauer added. "Equipment and processing options through our relationships with reputable vendors and processors are just the beginning of the services we can provide. Our dedication to creative and tailored solutions allows our affiliates to maintain their autonomy while benefiting from the relationship of an industry support catalyst."

ATM products and services

A vast majority of IADs currently provide their customers with more than just transaction processing at the ATM. The survey revealed the No. 1 non-transaction product or service IADs are offering at the ATM is credit card processing, followed by branding, and kiosks and surrounds. Coming in a close third and fourth were professional support/managemnt services and pre-paid cards.

Additional products and services U.S.-based IADs are interested in offering in the near future include ATM branding packages, video toppers and advertising at the ATM, according to the survey.

Mark D. Smith, vice president for Kahuna, advises IADs to be cautious about which ancillary products and services they offer.

"While ancillary products and services can help land new business or differentiate your business from your competition, it's important not to let those services supplant the ATM's main function," he said. "Let the ATM be the cash dispensing mechanism and focus on what else you might do to serve your client away from the ATM."


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