If you haven't already been asked about your criminal background by the company that sold you an ATM or the one that placed an ATM in your store, you will be.
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It's all about due diligence, said Marilyn Kilcrease, and the networks are taking it seriously. Kilcrease, the president of Creative Card Solutions LLC, a Temecula, Calif., company that assists financial institutions with debit card implementations and ATM sponsorship, said Visa can charge companies up to $10,000 for every incomplete or inaccurate merchant background form, in addition to cutting off that merchant's access to its network.
"Right now, the acquiring bank does due diligence on the ISO," Kilcrease said. "But most of the problems have been with merchants that own the machines or merchants that ISOs work with."
The Nov. 1, 2005, deadline applies to all new ATM agreements signed with merchants. By Nov. 1, 2006, ISOs and distributors will be required to have updated information about all of the ATMs they have placed or sold, Kilcrease said.
"It's been an evolving problem" that has swirled out of control, she said. "When we started working with ISOs, we realized that many of them didn't know much about the machines," especially the machines sold to merchants.
Kilcrease estimates that about 200,000 off-premise ATMs in the United States are merchant-owned. The ownership of those machines has probably changed hands a few times, she added, leaving processors, the networks and sponsoring and acquiring FIs with little or no accurate owner information.
"The operator agreement says that banks and ISOs have to determine if a merchant has any 'significant derogatory' information" on file. And the industry loosely agrees that "derogatory" means criminal, Kilcrease said.
A safety net
Jim Weber, director of processing for Willoughby, Ohio-based Western Reserve Group Inc., said the new rules will benefit all parties involved. "We've always gathered information, but now we're gathering more pertinent information on the people themselves, both criminal and financial," he said.
WRG, which manufacturers and processes ATM transactions, is checking the backgrounds of its distributors and the ISOs it sells to and works with. However, Weber said, it's up to the distributor and ISO to know the background of the merchants.
Jeff Mumford of Largo, Fla.-based WRG distributor ECS ATM Sales & Service, said most c-store operators appreciate the checks, once they understand the rules.
"Most c-store operators have been really cooperative," he said. "I tell them, 'We need this information to protect ourselves, you and your customers.' And they understand that, because c-store operators want to be sure that they are providing their customers with secure transactions. The average c-store has 100 customers that use the ATM regularly, and you don't want anything to happen to those customers, whether you are the c-store that owns your own machine or whether you have someone else place an ATM in your store."
This article appeared in the C-store Self-Service Executive Summary, Winter 2005.
