Profit machines

An ATM in store will help cashed-up customers spend more.

As well as dramatically increasing the ease with which Australians can access their hard-earned cash, Automatic Teller Machines (ATMs) have also been remarkably successful at persuading consumers to spend more of that cash in convenience and impulse outlets.

And with tens of thousands of the machines spread throughout just about every town and city in the country that's got to be great news for C&I operators. Certainly it has got more and more of them considering the benefits of installing an ATM in store.

Consider the benefits

Indeed, it has long been established that there is a definite link between increase of store turnover to the installation of an ATM. It seems that the greater the need - that is the lack of nearby ATMs - the greater the increase in turnover ... normally anywhere from 5% to 15%. Research has shown that an ATM can increase foot traffic by up to 30%.

Experience has proved that customers feel safer withdrawing money inside a C&I outlet compared to outside in the street. An ATM will then increase sales by attracting walk-in traffic that intended principally to withdraw cash but then also made an impulse purchase. The Harris International Marketing survey in September 2007 reported that 70% of people that used the ATM in an outlet then purchased product in that store. Encouraging news indeed.

ATMs can also stimulate discretionary purchases by advertising on the colour LCD screen of the ATM where merchants can display current promotional offering.

When you also consider the benefits of decreased Eftpos costs, decreased cash handling costs, and the option to use the equipment as a sort of in-store bank - thereby reducing the amount of cash on the premises, it is not hard to see why ATMs have been catching on in a big way.

It's a great way to put cash in the pockets of consumers and every C&I operator loves to help consumers who have cash in their pockets. According to figures from the Australian Payments Clearing Association, the average ATM withdrawal is $175 ... and while there's no way of saying exactly how much of that is spent close to the point of withdrawal, it's a safe bet that it's a significant amount.

Free of charge … + rebate benefits

Most stores are now able to receive an ATM free of charge and to also receive an attractive rebate revenue based upon transaction volumes. Many choose to self-cash their ATMs as long as they have the cash flow to handle the number of transactions, because it allows them to use the ATM as a secure in-store bank. Fortunately, funds withdrawn each day generally return into their bank account within 48 hours.

If a store settles the ATM daily it is able to put the takings from the till into the ATM to keep it topped up while the ATM provider credits the store's bank account. This reduces trips to the bank for the C&I outlet operator.

Andrew Marsh, the Sales Manager of ATM Plus, is certainly convinced that C&I outlets should have an ATM, and, he says, a machine can bring big benefits to virtually every outlet.

"The site has to be a certain size in terms of foot traffic etcetera to be viable for an ATM deployer," he said. "However, the business benefit is very strong and not having an ATM may actual stop a customer going to a certain C-Store and choose instead to use another C-Store which does have an ATM."

Mr Marsh says that ATM Plus's standard deal is that an ATM is placed for free, with the merchant then cash filling the ATM.

"A minimum threshold is applied in order to allow for capital cost of ATM and one-off and recurring costs in installing and maintaining the ATM," he said. "The merchant is then responsible for the cash float, insurance for the machine and ongoing power."

'Lobby' or 'through the wall' models

There are many ATM deployers in Australia offering different sorts of machines. ATM Plus offers both 'Lobby style' and 'Through the Wall' models. Mr Marsh says the 'Lobby style' is generally best suited for convenience.

ATMs provided to convenience stores are designed to fit the relevant space and to be very easy to load cash and maintain. Often they are called retail ATMs or Convenience ATMs.

Cash ATM says its 'Cashpod' with a business level safe is a modern machine with loads of marketing applications – such as full advertising screens, couponing, and remote management software – and is therefore perfect for the modern convenience store.

"Putting a machine into a store has to work for everyone, including the ATM deployer, so most companies look towards a minimum of 300 transactions a month for a store to be eligible for a machine," said Cash ATM's General Manger, Jeremy Hearne. "There's no point putting in a machine if the turnover is not there ... the relationship will only end badly."

He says that, as a rule of thumb, if a store is doing 500 plus Eftpos transactions a month, then it's odds on that it will benefit from an ATM being installed. And he believes ATMs have many significant advantages over Eftpos.

"If a store uses Eftpos the store pays, whereas if the customer uses the ATM they pay, and the store makes money," he said. "Most stores will keep the Eftpos, but simply not do 'cash outs' as these defeat the purpose of the ATM; it's a good idea to let the customer decide."

Again, as a rule of thumb, it is probably true that if people are conducting transactions of more than $100 they will tend to gravitate towards using their Eftpos or credit facility. ATMs are about convenience and access to cash on the spot, not generally pre-determined spending patterns and obligations.

Australia's largest independent ATM company, Customers ATM, has also found that many of its customers have both Eftpos – for purchases only – and ATM facilities, to make sure all customers are able to complete their purchases.

"Having an ATM can reduce your store's Eftpos and credit card processing fees and also improve staff efficiency since cash transactions are processed more quickly than card transactions," said Customers ATM Managing Director, Tim Wildash. "The two complement each other and the ATM has the added value of attracting passers-by or people in the neighbourhood who need to get cash out into your store."

Customers ATM says its Nautilus Hyosung range of ATMs, including the 1800CE and Monimax 5600 models, are well suited for all sizes of C&I outlet.

"The 1800CE is suitable for smaller venues, with a smaller footprint and screen, while the Monimax 5600 suits larger venues, with its bank-style body and screen," said Mr Wildash.

"Importantly, both models are designed for speed, maximum uptime and minimum maintenance – allowing your ATM to do its job of bringing customers into your store and equipping them with money to spend there."

Some ATMs are bank-branded and Mr Wildash says these can attract even more customers into C&I outlets. He says Customers ATM has more bank branded ATMs than other providers, with options including Bank of Queensland, Bendigo Bank and Arab Bank.

"Bank-branded ATMs attract not only customers of that particular bank but also more people in general because of the perceived higher security associated with bank ATMs," he said.

"Once they're there withdrawing cash, they are more likely to spend some of it in store ... and once they know the ATM is there, they can keep coming back to use it."

Bank branding … to attract customers

Another of the major ATM deployers, GRG International which has a full joint venture with GRG Banking, the largest ATM manufacturer in China, also believes bank branding brings certain advantages.

"A bank branded ATM will drive customers to a particular convenience store, especially when their bank advertises the fact that they have a relationship with that convenience store brand," said GRG International's General Manager Sales & Marketing, Michael McNeill. "Customers also get used to seeing the ATM there and know that they can access cash at their regular shopping venue."

Simply put, he believes that an ATM placed in a convenience store becomes convenient for those in need of cash and that customers who have additional cash may be more susceptible to the marketing initiatives of modern convenience stores, hence increasing its sales.

"In this mature market many convenience stores have ATMs and we are at the point that if a store doesn't then customers may find another option," he said. "In order to compete in a crowded market you have to match a competitor's offer ... an ATM becomes an important draw card as regulars count on it being available and, if bank branded, then it will attract new customers."

Mr McNeill says the fact that GRG International is truly an international ATM business means it has access to both overseas engineers and international markets.

As previously mentioned many ATMs now have the ability to run advertisements on the transaction screen and, importantly, on an LCD screen above the ATM. Multiple advertising screens, some with printable ability for coupons, can drive business and allow C&I outlets to concentrate on certain stock items.

ATM in-store promotions

"Marketing and advertising on ATM screens is happening but is in its infancy and I'm not sure there are clear stats yet that categorically state that they stimulate sales," said Michael McNeill. "In my opinion the right mix will be found in the near future and it will have a positive effect on sales."

Tim Wildash from Customers ATM says his customers have been able to use ATM screens for in-store promotions for a number of years and, with his company's new Nautilus Hyosung ATMs, on-screen advertising will look even better and be deployed and updated faster.

"In addition, Customers ATM's joint venture company – Transaction Media – is leading the way in large-scale ATM advertising, selling campaigns to brands such as McDonald's, Nivea and Telstra BigPond," he said. "Our merchant customers can tap into the advertising experience we're gaining from this joint venture and utilise it for their own on-screen ads."

Jeremy Hearne from Cash ATM is similarly excited about the possibilities.

"An ATM will do as it's told and happily dispense cash for you no problems," he said. "It's the smart operators that get the extra miles out of the machine and use all the cylinders in the engine!"

What about security?

Of course, one of the key questions that convenience and impulse operators considering installing an ATM ask is one concerning security. However, deployers argue that the money in the ATM is in fact far more secure than that which is in the till during business hours.

They say that, as long as the ATM is properly designed, installed and managed, it should not increase security risks for a C&I outlet. Nonetheless, as with any cash holding machines, commonsense and caution is important.

Stores are generally advised not to locate their ATMs near windows although they still want to make sure they are easily seen within the store. Operators should also follow safe cashing procedures, which means being cautious when cashing the ATM – making sure there are no strangers around and ensuring both the internal safe and ATM door combination codes are kept secret.

If a store has a cash-provided model it means that the cash stays in the ATM but this is balanced by a higher level safe and increased security systems. However, if the merchant is providing the cash themselves they are advised to empty their ATM safes after closing each night; store their cash in their secure night safe; and leave the ATM door wide open so that people can see there is nothing inside while they are closed.

All ATM companies will advise of the correct location in-store to place an ATM and would-be thieves are generally all too aware just how near impossible it is to get the money out of the safe, and also that the machine is unlikely to be holding a fortune.

A camera dome and some well-placed security signs can also give extra peace of mind to C&I outlet operators.

Put simply, ATMs are a secure, value added service that can attract new business to a C&I outlet, increasing both in-store traffic and sales. When ATM customers come in to a store to withdraw cash they will often also make unplanned impulse purchases ranging from cigarettes and confectionery to bread and milk. The fact that the machines can also act as a bank for the cash coming through the store is yet another real bonus that can save operators both time and banking fees.

ATMs then can be a real business plus for a huge number of convenience and impulse operators who should relish the opportunity to serve their newly cashed-up customers. In many ways, the ATMs are the classic win-win option.