This post by Todd Nuttall, CEO of Better ATM Services, first appeared on www.atmmarketplace.com.
Coinstar (now called Outer Wall) recently purchased a creative kiosk/ATM fleet of about 400 locations for more than $350 million. Not your typical acquisition of a normal ATM fleet, there is much to be learned from this acquisition.
A little background: Eco ATM is actually a certified waste recycler that uses ATM mechanisms as its channel. Consumers place their used cell phones (or similar technology) into the units for evaluation and then accept a salvage value payment, which comes out of an ATM cash dispenser. More than one million phones have been recycled in this manner.
So, what makes this acquisition worth noting? It speaks volumes about the evolution of self-service and the utility of core ATM functionality, security, and convenience. Outerwall so highly values this emerging channel that it put a price tag on each existing location of nearly $1 million — simply as an indicator of what it recognizes as the real value and significance of the future expanded network of Eco ATMs.
What many in the industry noted with some interest requires a second look. Coinstar’s purchase makes an emphatic statement about the relevance of alternative products and their consequence for ATMs and revenue generation. It underscores the value of the ATM as a customer interface and, in this case, even the ATM as a “collection” point rather than its normal role as a distribution point.
This should come as no surprise, really. Industry thought leaders have long recognized that we have barely scratched the surface when it comes to evolving the core competencies of the venerable ATM and its role and value as a distribution channel.
That’s why the acquisition of NetSpend by TSYS for $1.4 billion is another exclamation point. It, too, highlights the inherent value and importance of thousands of distribution points and their role as multi-tasking, customer-commodity interface locations.
The NetSpend product itself is no longer a unique product, yet, the fact that it has garnered its place in thousands of locations and is recognized by millions of consumers drives a high value to its acquirer.
Taking a step back, many questions come to mind. What Is the CardTronics fleet of more than 50,000 ATMs worth for “alternative” products? Would the addition of non-cash products be as much of a value multiplier as we see with Eco ATM? How about the average IAD? Is it possible that the locations they command can be made more valuable than the actual income from cash transactions and interchange?
The answers are obvious. Commonly published figures indicate that there are about 2.3 million ATMs in the world today — one-fifth of them in the United States. Each of these locations exists for a reason. They are places people pass by every day on their way to work, shopping, entertainment, and are an integral part of their daily routine.
The consumer’s bond with ATMs goes directly to time and place convenience. Over decades, with the dramatic changes in lifestyle demands and technology, the importance of the ATM has not diminished. Rather, more than ever ATMs are an inherent part of the landscape wherever people are most prevalent and active.
The real takeaway here is what increasingly is becoming an industry mantra: The ATM is far from realizing its full potential. As these locations are leveraged for more consumer interaction, look for an increasing frenzy of brands, products and services, which are hungrily seeking the very customers who see and use these ATMs daily — and the revenues and profitability they represent.