Executive Profile Series with Todd Nuttall from Better ATM Services
PJ: In December, Better ATM
Visa launched a pilot program in which consumers could buy
Visa-branded gift cards from ATMs that belonged to three credit
unions in Arizona. What did Better ATM Services
and Visa learn from the pilot?
Nuttall: The pilot began in
early December and included the 2011 holiday gifting season. At the
most elemental level, an early lesson we learned was that many people
wake up Christmas morning still needing to buy Christmas gifts! We
had been pleased to see people quickly respond to ATM-issued Visa
Gift Cards, but were quite surprised to see a spike in Gift Card
sales on Christmas morning. This speaks precisely to the time-value
convenience of the 24/7 service of ATMs. We have also seen
tremendous response to the new, flexible Visa cards, which have
worked well at the point-of-sale. We found it very interesting that
these new cards have elicited comments about convenience from the
point of view of reducing the bulk of the wallet or purse—consumers
tell us it’s a great added benefit and they wish more of their
cards were like it. Consumers are engaged by a coupling of primary
drivers - time and place convenience and value for their money.
People enjoy the added plus of getting a free cup of coffee or a
coupon for food or other services with each card dispensed from the
ATM. 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 back
for more driving ROI, strengthening brand awareness and, ultimately,
moving market share.
PJ: Is there variance
approval from Visa and what does that entail?
Nuttall: Our efforts with
Visa are strictly governed by their requirements in systematically
introducing new products to consumers. Much of that effort is
strategic and quite confidential in nature.
PJ: At the moment, the ATMs
just dispense a $25 card. Are there plans to add reloadable products
or closed-loop cards from retailers?
Nuttall: The product lines
and capabilities will constantly expand. We’ve already placed the
infrastructure to allow the ATM user to select the value they wish to
load on the card. However, open loop cards are just one application.
As you can imagine, many closed-loop card programs would benefit
greatly by having their products placed in ATMs that service their
target market. ATMs, by their very nature, are located in convenient
locations 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 ATM
working with Diebold, NCR and Triton. Will other follow such as
Wincor and Fujitsu? What’s the response from the ATM manufacturer’s
about this product? Will the cards be a standard addition to the
machines or an add-on?
Nuttall: The more brands and
models that can be adapted for handling both cash and cards, the
better the entire market and consumer base will be served. Better
ATM Services is carefully integrating and testing its technology with
the major ATM brands and will continue to expand. ATM manufacturers
have been enthusiastic about a concept that allows their robust cash
mechanisms to be used for other valuable products. This increases
the value of ATMs to banks and independent deployers and creates more
reasons to grow existing ATM placements. In some cases, the
technology to load and activate cards will be available directly from
the ATM factory. In other cases, a field-installable kit will be
available. These are very simple, inexpensive kits that require no
modifications to existing cash cassettes or bill dispenser
PJ: What is Better ATM
Services' timeframe for the rest of the year regarding the
gift cards initiative? Will larger banks start offering the cards
soon? Might agreements ramp up as the holiday season approaches?
Nuttall: Many of our efforts
are governed by strict confidentiality agreements. As you can
imagine, opening an entirely new distribution channel is a
significant strategic move by both the financial institution and the
card network. You can expect to see expanding card programs and
increasing numbers of institutions augmenting their ATM capabilities
using Better ATM® Services’ technology.
PJ: Any concern about the
growing popularity of digital gift cards and how that might affect
Better ATM Services' plans with the plastic kind?
Nuttall: Digital gift cards,
mobile pay, and other innovations will likely grow. History shows us
that robust payment systems tend to continue for generations. Beyond
the unbanked and underbanked, an enormous market opportunity in and
of themselves, prepaid products continue to have great consumer
appeal and will continue to grow throughout the world. This growth
and the enormous potential and capacity for growth appears to be
more-than compensating for any market share being absorbed by new
payment technologies. In fact, research on ATM-issued prepaid cards
demonstrates that consumers did not necessarily reduce the number of
cards they were already purchasing from other venues, but rather,
they purchased more cards than they would have simply as a result of
the convenience of the ATM.
PJ: What industry changes on the
horizon truly excite you? How will Better ATM Services take advantage of these changes?
Nuttall: The act of issuing
cards from the ATM is simply the tip of the iceberg. This, along
with other payment innovations is opening the door for even more
value-generating services. Beyond the opportunity to provide a wide
array of ATM-dispensed products, there are also numerous developments
looming on the horizon that will help consumers manage their
disparate financial services. Think about it, the day of simply a
checking account and a savings account are long gone. People are now
mixing a large number of services including prepaid products and
online payment systems such as PayPal and others for routine
transactions. This is creating a need to begin linking all this data
together and helping the consumer better understand, manage, and even
be 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 of
that market might ATM deployers reasonably expect to capture in the
Nuttall: Today, some 27
million ATM transactions are conducted each day, just in the United
States. To the prepaid world, this represents an enormous
opportunity. If just 1 of every 100 people conducting an ATM
transaction chose to get a card product with their cash or instead of
cash, that single choice would represent some 270,000 prepaid cards
purchased every day. Pragmatically, you can see how the incentives
and benefits associated with prepaid will drive adoption far higher
than the 1% example I just shared.
PJ: How much traction for
your products and services do you see in the FI space?
institutions have largely watched their customers leave to purchase
prepaids elsewhere. Since FIs are indeed in the business of money,
they cannot ignore the reasons why consumers continue the move to
prepaids. Until now, it has been difficult for banks to offer cost
effective prepaid programs and FIs have had to watch their customers
go down the street and get their “prepaid accounts” elsewhere.
The reality is consumers could truly benefit by keeping that
relationship with their FI. By moving their prepaid programs to the
ATM, FIs can now compete and even exceed the convenience, cost, and
availability of prepaid products offered by their competitors. This
also removes much of the headache of trying to manage these programs
from the teller counter. We are seeing institutions throughout the
world catch on to this opportunity and we will be expanding
significantly with FIs over the coming year.
PJ: What might be some other
areas in the ATM market that Better ATM Services
wants to address?
Nuttall: Independent ATM
owners are facing increasing pressure to open up new revenue streams
to keep their fleets viable against ever-increasing competitive and
legislative pressure. At the same time, FIs need to counter the draw
against their customer base by competing more effectively in growing
payment categories. There is also benefit to be derived by inviting
the unbanked to begin participating in financial services through
prepaids. ATM-issued prepaid products really are a perfect method to
achieve all these needs and goals. People use ATMs as a regular
pattern and part of their lives. Many countries are already ahead of
the US in ancillary services through ATMs and stand as proof that
consumers 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.