Despite Challenges, Survey Finds Majority Of Us Iads Plan To Grow

With new ADA (Americans with Disabilities Act) regulations requiring U.S.-based independent ATM deployers (IADs) 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 the number one issue IADs are concerned about.

Yet despite an uncertain economic climate and the challenges facing IADs such as ADA, and Europay, MasterCard and VISA (EMV) regulations, shrinking revenue from surcharge and ATM saturation, 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.

Established in 1995, Kahuna ATM Solutions is a prominent leader in the ATM industry. Kahuna provides a complete line of ATM products and services to meet the needs of ATM IADs and financial institutions. Kahuna’s Affiliate network of independent distributors and operators contracts for the processing and management of more than 18,000 ATMs across the United States, accounting for over 40 million transactions annually.  

IADs Biggest Fears, Worries & Concerns
The survey revealed the three biggest concerns for IAD’s today are compliance mandates, network changes and the increasing 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,” says Bauer.

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 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 during 2012-13.

“Our Affiliates are very concerned about the financial strain of EMV upgrades coming on the heels of ADA compliance,” says Pamela Philipps, Vice President of Affiliate Development.

The number one concern in last year’s survey – network changes and increasing cost of doing business -again topped IAD’s concerns, coming in second.

In October 2011, the National ATM Council (NAC), a trade association representing ATM deployers and operators in the United States, filed suit against Visa and MasterCard in the U.S. District of Columbia. Three more lawsuits filed in the same court on behalf of ATM deployers quickly followed. The lawsuits allege Visa and MasterCard have conspired with banks to limit ATM operators’ ability to set fees. The lawsuits were recently consolidated and will proceed as one case.

The ATM Industry Association (ATMIA) has also been working on this and other legislative and regulatory issues. In 2011, ATMIA created the Independent ATM Deployer Committee and is raising money through their U.S. Defense Fund to tackle regulatory and legislative issues affecting IADs.

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, an overwhelming majority of survey respondents (67.2%) 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 nine percent said they plan to hand off more responsibility to another person in their company.

“The continued optimism in our industry an particularly with our Affiliates is encouraging,” says Philipps.  “Although we are engaged in conversations with a small number of Affiliates who are looking to transition away from their ATM 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 small 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 Philipps.

“As our industry changes, there has never been a more important time for ATM operators to align themselves with a company like Kahuna,” says Bauer. “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 like Kahuna.”

ATM Products & Services
A vast majority of IADs currently provide their customers with more than just transaction processing at the ATM. The survey revealed the number one products/services other than transactions IADs are offering at the ATM today was credit card processing followed by branding, and kiosks and surrounds. Coming in a close third and fourth were professional support/management services and pre-paid cards.

“There seems to be more interest from IADs in being able to provide their customers with a robust offering of products and services,” says Mark D. Smith, Vice President, Kahuna Financial Solutions.

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.

Smith agrees with the survey results but 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. Let the ATM be the cash dispensing mechanism and focus on what else you might do to serve your client away from the ATM,” he says.

Philipps concurs saying, “It’s great to see how IAD business models are evolving.” However she also cautions IAD’s that teaming up with reputable vendors is the key to successfully launching additional products and services centered around the ATM.

What Now?
So what now? How do you successfully grow your ATM business when industry trends point to an oversaturated ATM market, decreased profits, and increasingly complex and costly regulations?

According to Philipps, “Choosing the right partner, one who can help you adjust to meet the needs of your business model and provide the right support – ‘as much as you need and a little as you want’ might just be the difference between success and failure in today’s competitive environment.”

To download a copy of the complete survey results or to learn how Kahuna can help you reduce expenses and maximize your profitability, visit www.KahunaATM.com or call 1-888-357-8472.

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