Super ATMs Coming to a Location Near You

Here is a story about a machines that don't do nearly as many things as our new CCARDS machines will do. We like these machines being out there in the marketplace because people become accustomed to using machines to perform banking tasks previously done only with person to person contact in a traditional bank. Story follows:



Hat Tip: Digitaltransactions.net

(May 8, 2008) Non-bank ATM network operator Cardtronics Inc. has been trying to pump up transaction volume on its advanced-function Vcom machines ever since it bought them last July from 7-Eleven Inc. as part of the 5,500-machine ATM fleet the convenience-store giant unloaded for $137.3 million. Next week, part of that strategy takes effect when the 26 million members of credit unions belonging to the Co-Op Financial Services network will be able to make envelope-less deposits at the machines.

The 2,200 Vcoms, manufactured by NCR Corp. and located in 7-Eleven convenience stores, are capable of imaging checks, sparing the depositor of the need to enclose checks in and fill out a deposit envelope as is required for a traditional ATM deposit. Jack Antonini, president and chief executive of Houston-based Cardtronics, revealed the pact this morning at Cardtronics’ first-quarter earnings conference call. He also mentioned Cardtronics’ previously disclosed deal with another credit-union network, Financial Services Center Cooperatives Inc.

“Between the two of them, 30 million customers will now be able to make deposits 24 hours a day,” he said, adding that “we’ve got another very large bank in the queue.”

Jim Hanisch, executive vice president at Rancho Cucamonga, Calif.-based Co-Op Financial Services, tells Digital Transactions News that the Cardtronics deal helps put credit unions at the forefront of a new banking service in which most of the headlines have gone to giants such as Bank of America Corp., Wells Fargo & Co., and JPMorgan Chase & Co. Co-Op first began testing an image-capable ATM at California Center Credit Union in November 2005 (Digital Transactions News, Dec. 7, 2006). Some 150 of the network’s 5,400 ATMs now offer imaged deposits. “We’re beyond test,” says Hanisch.

Co-Op and Cardtronics did not disclose revenue arrangements, but the credit union to which the depositor belongs will pay interchange to Cardtronics as the ATM owner, according to Hanisch. The Vcoms are Citibank-branded, but Citi won’t be a party to the transactions.

While there have been some reports of imaging ATMs not working as they’re supposed to, Hanisch says Co-Op’s members have had few problems. The advantage for consumers is faster deposit verification and access to funds. For deployers, imaging ATMs need less servicing than traditional models. Hanisch says deployers typically send couriers to pick up checks from imaging machines only once or twice a month compared with daily for regular ATMs. “The hardware is relatively expensive, but it also changes the service dynamics for the ATM and it also makes it substantially more viable to place an ATM in an off-premise location for deposit taking,” he says. Co-Op also is working on a home-based deposit-capture service.

Cardtronics will be promoting image deposit as it seeks more business from financial institutions. “It’s an area that has a lot of banks very, very interested because it’s a cost saver and it’s a significant convenience improvement for their customers,” Antonini said.

The underperformance of the Vcoms contributed to Cardtronics’ first-quarter loss of $4.59 million, up from $3.45 million in the 2007 period. The Vcoms generated operating revenues of $1.24 million but had expenses of $2.27 million. Cardtronics is trying to reverse the Vcoms’ losses through cost reductions from contract renegotiations, bringing outsourced service functions in-house, and replacing low-volume Vcoms with traditional ATMs in some 7-Eleven stores. To build transaction volume, the company will concentrate its Vcom advertising efforts in about 15 major cities. Marketing efforts will highlight the Vcoms’ functions, which, besides imaging, include electronic bill payment.

Co-Op recently signed deals giving its 2,800 credit-union members’ depositors surcharge-free access to 350 Cardtronics machines in Costco Wholesale Corp. stores and all Walgreen Co. drug stores in Florida.

Meanwhile, boosted in large part by the 7-Eleven deal, Cardtronics today said its average number of transacting ATMs increased to 32,475 in the first quarter from 25,228 a year earlier. Some 3,674 machines are in the United Kingdom and Mexico. Total transactions grew 87% to 83 million from 44.4 million. Monthly cash-withdrawal transactions per ATM grew to an average of 553 from 412 in 2007’s first quarter, good for a gross profit of $290 per machine compared with $224 last year. More than 9,500 machines sport bank brands, Antonini said. In those branding deals, the bank and Cardtronics work out revenue arrangements to replace the surcharge fees—Cardtronics’ chief revenue source of revenue—from surcharge-free transactions initiated by the partner banks’ customers.

In all, Cardtronics reported first-quarter revenues of $115.1 million, up 61% from $71.7 million in the year-earlier quarter. While it is still profit-challenged, Cardtronics doesn’t plan to raise its surcharges to $3 as some big banks have. “We have not made any moves that extreme; we’d be concerned about our transaction counts being negatively [affected] if we did that,” said chief financial officer J. Chris Brewster.

Technorati Tags: financial kiosk, remittance, electronic transactions

Automation is Washing Money Orders Away

Source: John Adams of Bank Technology News

"Prepaid cards are the new vehicle of choice among the unbanked who have long endured high money order fees. Payments firms better take note."

The amount of walk in payments for bills is decreasing in the face of more availability of stored value debit cards to the unbanked and underbanked. As people are able to transfer money to and from their cards at much less cost than the price of a money order and with more convenience the market movement is obvious.

Companies affiliated with International Personnel Management, Inc. (IPM) will maximize their entry into one of the fastest growing markets in the world.

Click here to read more.

Latin America is Ready for EMV Cards

From gtnews.com.

An excellent entry point to the Card transaction market with partnership from IPM.

Smart cards that comply with global payment standards are set to take the Latin American market by storm now that previous barriers to the adoption of EMV cards - high cost, the small card user base and lack of guidelines in the region - have been overcome.

The use of EMV cards (smartcards that comply with the global standard for payment systems) is exploding in some Latin American applications, such as prepaid wireless and closed-loop stored value cards. But the conversion from magnetic-stripe cards to EMV cards in the region's banking sector, which was loudly predicted five years ago, has not yet happened. InfoAmericas believes the region will see watershed change, with rapid EMV card adoption over the next few years.

Two important obstacles that stood in the way of this transition are now being overcome. The first was the lack of uniform acceptance guidelines in a region dominated by international banks. Until recently, there were no well-established specifications that could allow smooth adoption of the EMV standard across terminal platforms that vary from country to country. The second obstacle was the enormous cost of transitioning to EMV technology given the relatively small card base and its concentration in the affluent market. The benefits to financial institutions, retailers and cardholders were not seen as sufficient to justify the switch, especially considering that EMV cards are also more expensive to produce than magnetic-stripe cards. The market was stuck in a gridlock situation where no EMV terminals were being installed because there weren't enough EMV cards in circulation, and banks were not issuing EMV cards because there weren't enough terminals.

Debit and Credit Cards Reach Critical Mass

Now, however, sustained growth in the debit and credit card market has finally established the critical mass necessary to drive EMV implementation. Twenty-five million new credit cards have been issued since 2001, while the number of debit cards in circulation expanded by more than 30 per cent. This has created the economies of scale needed to support implementation of a variety of EMV card solutions and products.

Previously, the most compelling arguments for adopting EMV cards did not apply to the Latin American market. The card base was too small for issuers and retailers to benefit from the enhanced customer profiling capabilities that EMV cards offer. Fraud was also seen as insufficient justification, since until 2003 the incidence of card fraud in the region was among the lowest in the world.

Other less prominent factors also contributed to the reluctance to adopt EMVs. Many Latin American banks were in the midst of consolidation or acquisition, which was poor timing for any new technology. Banks were focused on expanding their market presence through expanded ATM networks and promotion of financial services. Retail loyalty programs were also limited, as a result of shaky economic recoveries and a generally unsophisticated and untested consumer market.

Fraud Reduction is the Leading EMV Driver

The Latin American card market has grown rapidly over the past few years as it shifted focus towards new lower socio-economic segments and multiple card possession. The expanding card base fostered an increase in fraud, which in turn strengthened the economic case for EMV card adoption. Although the fraud-loss rate in Latin America remains below 0.4 per cent, it is nearly five times higher than in the US market, and growing an alarming 12 per cent a year.

A recent InfoAmericas study revealed that only about half of the banks surveyed believed that the level of card fraud in their portfolios had already reached unacceptable levels. On the other hand, 73 per cent stated that, within the next three years, fraud levels will reach a point where they cannot be offset by portfolio growth, leading to the adoption of EMV cards. Pilot tests conducted by Visa indicate that counterfeiting can be cut by 70 per cent and fraudulent use of lost and stolen cards could be chopped by 90 per cent with EMV cards. Visa and MasterCard are also in the process of changing the rules that allocate responsibility for fraudulent charges, and they will apply these new rules to Latin America beginning in January 2006. After that, the cost of any fraudulent transaction that could have been prevented with EMV technology will be shifted from the card issuers to banks not using EMV.

The Largest Untapped Stored Value Card Market in the World

When reading this article from the Shanghai Star about the cash based economy of China and the desire or in fact the "imperative" of a card based economy, one realizes just how big an opportunity exists for stored value card provider companies.

Even though this article was written in 2003, one can realize that the extremely large and growing Chinese market is far from having a society where stored value and credit cards are ubiquitous.

At International Personnel Management, LLC (IPM) we stand ready to facilitate the entry into the Chinese economy for secure card based transactions.

Stored Value Remittance Card Systems

Reference the PR Newswire and the MiCash, Inc. website.

The MiCash Card is not by any means the only card system that performs stored value, purchase and remittance functions. The MiCash Card is an example of the types of capabilities that we at IPM are able to implement worldwide.

Through a partnership of existing providers and technologies a robust remittance, merchant and customer system can be beneficial to many populations in areas around the world. International Personnel Management LLC has the expertise to bring together the proper technologies with the decision makers and civil society to implement workable systems.

The Need for Banking the "Unbankable"

In our increasingly digital world there are many people who need a credit or debit card of some sort to participate in or do business. Most hotels now will not permit someone to stay as a guest unless they have some sort of bank card for the hotel to scan.

Gone are the days of having a tab at a local merchant. Merchants demand and customers need an instant method for conducting business transactions.

Another use for debit and stored value cards is to permit people to essentially carry a bank account in their wallet. Employers now have the option of direct depositing pay checks directly to the employee's card. Stored value cards now actually have a bank routing number in addition to the account number so that money can be wired to the card.

Money can also be transfered by the cardholder from one card to another card anywhere in the world. One can see the potential for unbanked immigrants in many countries around the world sending money back to their home countries. These card-to-card transactions are much less expensive to the user than using older methods such as wiring money through Western Union.