Half a million strong: A salute to the much-maligned ATM

by Daryl Cornell, CEO, Triton Systems

Just last week, the ATM Industry Association reported that 500,000 automated teller machines have now been deployed in the United States.

Given that the number of bank ATMs in the U.S. has remained relatively flat at an estimated 125,000 terminals, the ATMIA figure means that 375,000 independently owned "white label" ATMs are operating in the United States today.

Wow.

This is a big deal for the U.S. economy for a number of reasons, including:

Cash ubiquity

White label ATMs serve as an economic lubricant, facilitating trade by offering cash nearly everywhere. These nonbank ATMs offer an additional 375,000 locations where customers have access to cash in or around shopping destinations.

Merchants benefit through increased store purchases as cash withdrawn from their own ATMs often returns to the till.

In exchange for a modest convenience fee, customers can avoid the hassle of driving to a bank branch for cash.

And banks win through reduced customer withdrawal demands, both at branches and at their the bank's own ATMs — all in exchange for a small interchange fee.

Talk about a real economic "win-win-win." Thank the retail ATM.

Efficient cash recycling

Merchant recycling of cash through retail ATMs is estimated to total more than $30 billion annually. Mostly $20 bills, these "deposits" to ATMs are electronically credited to merchant accounts.

The societal benefits of retail ATM merchant cash recycling are huge, considering that much of this cash otherwise would have to be transported to bank branches or cash centers in brown paper bags to be sorted and counted.

The reductions in traffic, fuel consumption and crime related to that $30 billion in annual merchant deposits are recurring benefits, as well.

The IAD community has long sold the retail ATM as a source of customer cash convenience, with much of the cash withdrawn used for in-store purchases.

Shared ATM convenience surcharge and bank interchange fees are also touted as reasons for merchant ATM deployment.

However, it could be merchant cash recycling that ultimately counts as the single greatest benefit of the retail ATM.

Bank efficiency

The proliferation of white label ATMs over the past 20 years has benefitted banks in a number of ways. Merchant-replenished ATMs have driven a sharp decrease in consumer demand for both cash withdrawals and cash deposits at bank branches.

In response, banks have culled facilities — by as much as 25 percent according to some estimates — over the past 20 years. Banks have also responded to the explosion in the number of white label ATMs by granting access to their own bank ATMs to noncustomers — for a fee, of course.

Experts estimate that branch banking costs constitute more than 50 percent of all bank operating costs, and that as many as half of all remaining bank branches could be obsolete by 2030.

The retail ATM has been a key factor in banks' ability to close tens of thousands of branches within the past several decades. While we won't hold our breath awaiting public praise of retail ATMs by banks, let's be honest about the fact that banks have been significant beneficiaries of the proliferation of white label ATMs.

As we celebrate the 50th anniversary of the first installed ATM, the United States can now boast of having half a million ATMs serving its citizens all over the nation — this while under nearly constant assault from confused regulators, politicians and pundits.

So, please join us in a salute to the much-maligned ATM.

This article was republished, with permission, from the Triton blog, atmAToM.