Are Decreasing Profits Affecting your ATM business?

According to a recent survey, decreasing ATM profitability is one of the biggest challenges facing the industry today. Contributing factors include an oversaturated ATM marketplace, skyrocketing costs, increased government regulations, decrease in the number of ATM transactions and more.

One factor that affects decreasing ATM profits is the growth in ancillary banking products. More and more people are migrating to an online banking environment and making fewer trips to an ATM. From the convenience of their home, they can easily transfer money, deposit paychecks, pay bills, etc.

Americans are increasingly relying on debit cards and straying away from cash transactions. According to a recent survey, debit card spending increased from 48 percent in 2003 to 59 percent in 2008. Not surprisingly, the percentage of debit card purchases is expected to surpass 67 percent by 2013.

Network fee increases and market consolidation are other key factors that play into declining business profits. In 1995, when the industry was first emerging, the top three networks had a market share of 39 percent. Today, the top three networks have the majority share at more than 70 percent. Networks have used this market power to take profits directly from IADs and redirect them to themselves or their own FIs.

To avoid paying extra fees, ATM customers are limiting the number of times they visit an ATM and increasing the dollar amounts being withdrawn per visit. Prior to the economic crash of 2008, the average withdrawal amount was $78 per ATM transaction. Today the average dollar amount being withdrawn from an ATM is $84.