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A Thing

ISOs Head to the Great Outdoors

By Ann All, Senior Editor,

Originally published on, Sept. 2, 2003; reprinted with permission. copyright 2003 NetWorld Alliance LLC. All rights reserved.

Like most independent ATM deployers, Mark Dalton rarely stops thinking about his next ATM site.

He had a "Eureka" moment when driving into a strip mall in Franklin, Tenn., about 30 miles south of Nashville; and he saw a patch of grass adjacent to the road that looked empty.

The mall owner readily agreed when Dalton, the owner of DAS Express ATM, offered to place a drive-up ATM in a small kiosk on the spot.

"He liked the idea of generating some money with a piece of property he was doing nothing with," said Dalton, whose Franklin-based company owns and services the machine and shares surcharge revenue with the mall owner.

Wide, Open Opportunity

DAS Express is one of a small but growing number of ISOs that have installed exterior drive-through or walk-up ATMs. More ISOs are considering exterior placements, lured by increased options in exterior ATMs, lower prices for kiosks and the potential for high transaction volumes.

"I think ISOs are realizing there are some tremendous opportunities to make money," said Steve Lutt, Sales Manager for Heritage Industries, a manufacturer of ATM kiosks. "You'll normally do about five times the number of transactions at a drive-up ATM as you would at an interior machine."

Lutt said that ISO inquiries about ATM kiosks have picked up dramatically in the past two years. To cater to the market, Heritage tweaked its designs to support smaller machines such as the Qualtex WeatherMaster and lowered its prices, primarily by shrinking the size of the kiosks and eliminating extras such as bumper guards.

"A drive-up is the most convenient ATM there is," said Haze Lancaster, a founding partner in ATM USA, a Raleigh, N.C.-based ISO that has deployed a handful of drive-up machines.

Five months after installing two Tranax Technologies NanoCash ATMs side-by-side in a kiosk in a Portland, Ore., parking lot, ATM USA is generating 500 to 700 transactions a month at both machines, Lancaster said.

He expects the number to increase, although he's not sure by how much. He estimates that ramp-up to full transaction volume takes three to four times as long at a new exterior ATM site-up to a full year-but ATM USA took over in Portland when Wells Fargo pulled out.

Transaction records show that ATM usage by Wells Fargo cardholders has dropped, but Lancaster believes new users are beginning to take up the slack.

Transaction volumes at a walk-up ATM in Chicago's Wrigley Field neighborhood are 20% to 30% higher than at interior ATMs in the same area, said Brad Zerman, President of Qualtex, manufacturer of the WeatherMaster ATM and owner of a number of its own machines.

Qualtex last year became an authorized distributor of Heritage kiosks, one of about 80 across the country. Zerman has since sold kiosks to several ISOs, including DAS Express.

Incredible Shrinking Kiosk

To accommodate the dimensions of a WeatherMaster, which is smaller than the NCR and Diebold ATMs typically deployed by banks in exterior locations, Zerman said Heritage created a kiosk that is seven feet high, four feet wide and four feet deep. That compares to a more typical size of eight feet high, seven feet wide and seven feet deep, Lutt said.

Shrinking the kiosk means that machine maintenance and replenishment must take place outside the kiosk rather than inside, under the protection of a locked door. "Some ISOs don't mind filling the machine standing out in the open with the door open," Lutt said.

Kiosk prices vary widely, Lutt said, from $5,000 for a small basic building to $25,000 for a full-size, fully outfitted building. Aesthetic extras like canopies and lighting vary in price from $900 to $9,000 but can pay off in increased transaction volumes, he said.

"Your kiosk is like a billboard for your ATM, so you want to make it as noticeable as possible."

It'll Cost Ya

In addition to the price of the kiosk itself, ISOs often must pick up the tab for landscaping and other services not required in interior ATM deployments.

Dalton said his Tennessee drive-up costs less than the $30,000 he had projected. His investment included backlit signage and a brick overlay on the metal kiosk, which he said fit the upscale atmosphere of the neighborhood where the mall is located. "We really wanted it to look good."

Lancaster spent less than $15,000 for the Oregon drive-up, a price he said might intimidate many ISOs. "You could do three or four interior ATMs for that."

The previous deployer had done much of the site work, which kept Lancaster's costs down. He purchased a refurbished kiosk from Atlanta Computer Group (ACG). Woody Alderman, ACG President, said that a refurbished kiosk generally costs $6,000 to $7,000 less than a comparable new one. ACG is also a reseller of new Heritage Industries kiosks.

ACG has an industrial paint shop at its 35,000-square-foot facility in the suburbs of Atlanta and employs a part-time graphic designer to help deployers get the look they want for a kiosk. A larger-than-usual number of kiosks are currently available on the refurb market, due to a flurry of recent bank acquisition activity, Alderman said.

Like Lutt, Alderman said he's fielding more inquires from ISOs and has sold some kiosks to them in the past two years. "It's not a huge number but it's growing," he said.

Alderman believes more ISOs are evaluating exterior deployments as the "usual" interior sites-convenience stores, gas stations and the like-become less profitable due to declining transaction volumes and intense price-based competition.

It's Complicated

Dalton, Lancaster and Zerman agree that exterior deployments, in addition to being more expensive than interior ones, are more complex.

"Just about anybody can go into a store, bolt an ATM into the ground and bring it live," Zerman said. "But with an exterior machine, you've got to worry about finding a good contractor to help you with the installation and getting all of the appropriate permits."

Zerman believes that his company's WeatherMaster, along with exterior ATMs recently introduced by other retail-oriented manufacturers like Triton, are opening up new opportunities for ISOs to sell turnkey programs at sites once open only to banks.

"Without a card base, most ISOs couldn't justify the cost of a new NCR or Diebold through-the-wall machine," he said. "So before we came along, their best case scenario was a 10-year-old refurbished machine."

Dalton, for one, said he finds refurbished machines "not worth messing with," due to the lack of warranties and concerns over their capabilities to meet Triple DES requirements.

One of his biggest mistakes, Dalton said, was hiring the same construction firm used by the mall. "I thought I'd get a good price because they were already going to be out there, but my project kept getting put on the back burner."

Because of the delays, the machine sat idle for a few months. So Dalton used a large banner to direct drivers to the "live" ATM. He's also considering a receipt-based promotion that will offer some ATM users free movie tickets at a nearby theater-where his company also has an ATM.

Because exterior deployments have been so completely dominated by banks, Lancaster said more time, money and effort is required to sell property owners on the idea of exterior ATMs owned and/or managed by an independent.

But a proven ability to manage such machines is an effective sales tool when it comes to wooing malls and other marquee clients, Lancaster said. "You have to be flexible to get those accounts. They might want an interior machine, an exterior machine or both."

Site owners are generally more willing to lock into longer-term contracts with exterior ATMs, Lancaster said. This is a bonus-albeit one that could turn into a drawback if transaction volumes do not meet expectations. "You can't just pull up that machine and take it someplace else."

Because of their long histories of providing hardware and enclosures for exterior deployments, both Lutt and Alderman say their companies can offer advice to ISOs in, what for them, is a new market.

"Every exterior site is different. It's not like a c-store, where there are a lot more similarities than differences," Lutt said. "We work hard to help our customers address the needs of every site."

Originally published on, Sept. 2, 2003; reprinted with permission. © copyright 2003 NetWorld Alliance LLC. All rights reserved. Original:

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