ATMs take advantage of prepaid

ATMs take advantage of prepaid
August 17, 2004

Customers love prepaid services. Retailers can take advantage of this fact by offering prepaid services such as wireless top-ups, long distance, money orders, money transfer and ticket purchasing.

The machines that accept prepaid cards are as varied as the services they offer. Prepaid services are delivered by point-of-sale terminals, kiosks, and even ATMs.

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E*Trade Financial

Euronet Worldwide offers prepaid wireless top-ups and prepaid long distance under the PaySpot brand on both POS terminals and ATMs. PaySpot POS terminals, which are located mostly in C-stores, average 60 to 70 top-up transactions a month.

Transaction times give kiosks another edge over ATMs, said Steve Hensley, a software developer for KAL, which is working with ATM and kiosk deployers to offer prepaid services. "People are generally more tolerant of variable length transactions on a kiosk," he said.

Enter the ATMs

As more banks and other financial institutions begin to introduce prepaid cards, it makes sense to begin offering prepaid services at ATMs, said Michael Struttmann for EWI Prepaid Services.

Some 80 percent of EWI's current prepaid business is conducted via POS terminals, Struttmann said, but he expects an uptick in ATM and kiosk transactions.

Payments in the U.S.

- In 2004, 52% used credit or debit cards vs. 47% who used cash or checks.

- Of electronic payments, debit payments grew the most; credit cards remained static at 21%.

- More than 95% of food stamp benefits are issued on prepaid cards.

- Some states are experimenting with prepaid cards for distributing unemployment benefits and child support payments.

Sources: Dove Consulting/American Bankers Association study, Financial Insights and the U.S. Food and Nutrition Service.

James Anderson, vice president of payment services for Boston Communications Group (bcgi), believes that backing from financial institutions will help advance the concept of prepaid services such as top-ups at ATMs. "I'm a big believer that you need a strong brand, such as a bank brand, somewhere in the equation," he said.

Working with both E*Trade Access and NCR's iATMglobal subsidiary, bcgi currently offers Wireless Wallet top-ups on several hundred ATMs in retail locations.

Among the ATM's biggest strengths as a delivery channel for prepaid services, Anderson said, are consumers’ comfort levels with using the machines and ATM owners' strong desire to leverage a fixed-cost asset by introducing new services.

"It makes sense to add this functionality to existing kiosks," Anderson said about adding cash acceptors to kiosks, "but I'm not sure there's a strong business case in deploying dedicated devices. In a typical retail environment, I think it makes more sense to look at integration with existing POS devices or ATMs."

In the end, retailers should be flexible concerning the types of prepaid devices they bring into the convenience store, whether it’s POS, kiosks, or ATMs.

"Ultimately, the consumer will determine what's convenient for them," said bcgi's Anderson. "I think you'll have different products and services available through different channels."