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ATM Evolution


Savvy retailers leverage their machines to increase revenues

Technology evolves in stages. Take, for example, the cumbersome and expensive cellular phones of the 1980s that weighed nearly 2 pounds and cost several dollars per minute to operate. ATMs were also once novel, large and costly. In today’s convenience store environment, however, these 2.0 machines are sleeker, easier to access and when positioned correctly can boost revenues.

“Our ATMs are a definite part of our business model just like soft drinks or ice, and we run it like any other profit center,” said Robert E. Duff, partner at Houston-based Landmark Industries, which operates 226 Timewise Food Stores. “We clearly identify their location in the store, try to place them where our customers feel secure, and work very hard to make sure they are always clean and ready for the customer.”

According to the website , there are approximately 2.2 million ATMs currently in use worldwide. Retail stores that install an ATM can expect a 20-percent increase in sales, with regular ATM users spending 23 percent more than non-users. The average withdrawal is $60 and a typical ATM user will use the machine roughly eight times per month, the site stated.

For c-stores with heavy foot traffic, these statistics support campaigns aimed at leveraging sales.

Duff explained that its first ATMs were rolled out in Timewise Food Stores in 1995. Today, the chain has 229 ATMs, with three of its stores featuring two machines. “Service to the customer has really only changed in the ATMs themselves, where they have continually become easier for the customer to operate,” said Duff. “Frequency of use varies dramatically from store to store. They differ from a dozen times a day to 75 times a day.”

While financial institutions originally subsidized the machines and their operation, Steve Montgomery, president of Lake Forest, Ill.-based b2b Solutions LLC, noted that c-store involvement has changed over the years. “ATMs were attractive to a c-store for two principal reasons. First, if a customer accessed cash, they would be more likely to spend some in the store. Secondly, they provided a revenue stream for the c-store owner,” he said. “Over time, several changes took place. Retailers began buying machines and providing their own cash.”

With c-store operators underwriting the investment, they were able to gain additional revenue, but they also assumed all related costs. “Another significant change is that some retailers determined that, for them, the ability to provide a service for their customers was more important than the fees they earned,” Montgomery continued. “We recently visited a chain with up to three ATMs in their locations, all of which had no surcharge for use.”

For Rocky Lee, who operates two convenience stores 100 miles apart in Falls Mills, Va., and Laudeville, Va., having an ATM in each location has been a learning process. “We have changed processors three times over the years and each time has been a profitable change,” said Lee, who first introduced ATMs in 1999. “For us, the ATMs sit there occupying very little space and providing a good convenience for the customer and a good return on investment for the business. I really can’t think of any cons.”

Lee’s customers are charged $2 per transaction. He shared statistics from a typical month: 89 ATM withdrawals totaling $7,760 in dispensed cash; the average withdrawal was approximately $90 and the service fees collected totaled $178.

“The customer traffic for our ATMs is about eight transactions per machine per day,” he said.


As was the case with cellphone technology that gradually morphed into the smartphone phenomena, ATMs are no longer merely a quick cash transaction portal.

For example, Huntington, Va.-based Go Mart began adding Huntington Bank ATMs this March to 88 convenience stores throughout West Virginia. This provided customers with the ability to access their bank accounts with no fees. Other companies such as Houston-based Cardtronics Inc. are elevating ATM technology by incorporating smartphone and tablet user interfaces, including touchscreen features and targeted marketing messages.

“Several c-store chains have found they can use ATMs as vehicles to advertise certain products — on the ATM screens, using wraps or screen toppers — to dispense coupons, sell prepaid debit cards, reload PayPal and other cards,” said Montgomery.

These enhancements, however potentially successful, often either prove expensive, time-consuming or both for small retailers. “We service the machines ourselves on an as-needed basis and that is the same approach we take for updating the machines, paying attention to new features offered with new machines and any changes in regulations pertaining to the machines that may require updating or replacing the machines,” Lee explained. “We haven’t done any ATM promotions for merchandise; it seems difficult to coordinate between ATM to point-of-sale.”

Even those c-store operators with hundreds of stores are slow to adopt ATM-based marketing platforms. “I am familiar with couponing through ATMs. Beside it requiring a more sophisticated, therefore more expensive ATM, we question the benefit and payback,” said Duff.


While enhanced ATM options run the gamut, Kunal Patel, co-owner of three convenience stores in Clarksville, Tenn., said it’s best to take small steps and determine customer feedback before making significant changes.

“We recently increased the limit of [the] withdrawal amount from $100 to $200 per transaction,” he said. “The ATM helps us increase our lottery business as we have several customers who use ATM to play lottery. We also have several other businesses around us that do not accept credit cards, so their customers come to our locations to use the ATM and in turn, it creates more foot [traffic] inside the store and eventually increases inside-store business.”

ATM Marketplace recently released its 2013 ATM Trends and Software Analysis report. Sponsored by KAL ATM Software, the study queried thousands of executives around the world about ATM practices. In the United States, 53 percent of respondents cited complexity in working with external providers as their most frustrating issue when trying to deliver their ATM channel objectives. This was followed by managing costs at 50 percent, and executing timely deliveries of updates and changes at 39 percent.

“Support for new technology was ranked as the primary driver for changing ATM software by respondents in the Americas at 38 percent, followed by increased security at 32 percent and providing an enhanced user experience at 30 percent,” the report stated.

While new technology is an attractive proposition, security remains a serious issue that can thwart forward-looking plans.

“We had an attempted robbery at one of our locations and the thieves tried to steal the whole ATM,” Patel recounted. “It caused a lot of damage to the store.”

Montgomery pointed out that the way in which ATMs are installed and situated in c-stores has changed over the years, which is due in large part to robberies. “In some cases, the initial [ATM] placements were outside the store, but the banks and retailers quickly learned that they were too vulnerable to theft and the machines were moved inside,” he said. Even a calculated defensive placement of machines, though, can leave the operator vulnerable.

“The ATM cons are without question the thieves that drive into the building in a stolen truck, knock the ATM from its bolted base and are gone in a matter of seconds,” said Duff. “Placement of ATMs in stores should always be done with this possibility in mind.”

Theft aside, Montgomery said c-store retailers should keep abreast of new ATM initiatives, such as the successful pilot program completed by Mesa, Ariz.-based Better ATM Services last year that supported an ATM-dispensed VISA prepaid program.

For Duff, Patel and Lee, adoption of such programs is not on the horizon. Rather, they will focus on existing ATM services and related benefits.

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