Oct 26

Written by: Paycorp News
Monday, October 26, 2009 

Extending access to southern Africa’s financial services is not only the domain of banks. Other players have successfully entered this market, such as ATM Solutions Group, a leader in the field of ATMs, electronic payments and transaction processing.

Its flagship subsidiary, ATM Solutions, has been in the industry for 10 years as a formidable player in southern Africa’s banking technology space, deploying almost 4 000 off-premise ATMs. Other Group subsidiaries include DrawCard – a Visa- certified third-party debit and credit card processor and the largest issuer of stored value cards in southern Africa, EFTPOS – a leading independent company in the card merchant services industry, offering customised development and integration services through multiple integrated electronic payment solutions, and BDB Data Bureau – which has in excess of 30 years of bureau experience in providing electronic funds transfer services and payroll solutions.

Group CEO and co-founder, Steven Kark, says of the core ATM business: “ATM Solutions has developed a model to deploy ATMs in retail and other offsite locations, working with the banks to extend their market offering.” Apart from providing convenience for customers, Kark says that it is helping to improve access to financial services in rural communities and small towns. “In the past, not every site that wanted an ATM was always able,” says Kark. “We believe if you want an ATM on your premises, you should be able get one.”

ATM Solutions prides itself on its multi-bank relationships and deploys ATMs with eight southern African banks. Kark says it is much more cost-justifiable for banks to work with them, rather than to roll out ATMs on their own, especially in lower volume sites.

The ability to customise ATM machines to enable them to be used as a marketing tool is seen by some as the next wave in ATM banking, though Kark says there’s already a place for a certain amount of customisation – ATM Solutions already offers advertising on-screen and on printed transaction slips.

Retailers pay a monthly fee for the ATM and, in return, ATM Solutions provides a full range of services including cash management, ATM monitoring and maintenance, security and risk management, transaction processing, switching and daily settlement and reconciliation. The host site also receives a rebate on every transaction the ATM performs and, if placed at a busy retailer, for example, the host can even make some money out of the deal. More importantly, says Kark, an ATM at a retailer will increase the business’s turnover, consumer traffic and the average basket size. On average, between 18% and 25% of the money drawn from the ATM finds its way back into the retailer’s till.

Although turnover might be lower at some locations than others, the overall volume makes up for that. Kark says it has moved away from a mindset of managing profitability on a site-by-site basis, but takes a more overall network view. “We changed the concept of self-service banking by providing access to cash where people need it,” says Kark. “The difference a nearby ATM makes to a community’s economy – by keeping the spending power of locals within that area – can prove to be phenomenal.” ATM Solutions finds the site, installs and maintains the machine and also provides cash-in-transit services, as well as offering the facility of a self-cashed machine.

The company manages security issues holistically, using technology such as multilayer encryption and a state-of-the-art locking mechanism that tracks access to its machines. All its ATMs have alarms and use a dip reading mechanism, whereby the customer inserts a bank card and withdraws it immediately before continuing to transact, thus reducing the risk of card theft during use. Its ATMs are mainly located in retail space (shops, petrol stations) – which provides additional security – a significant portion of those in rural areas and townships.

Kark first came across the idea of becoming an independent ATM provider while reading an article in Forbes magazine. The practice had grown in leaps and bounds in the US, Europe and Australia, and SA seemed a perfect market. “In the US, it is seen as a competitive disadvantage not to have an ATM in the store. In SA, we are still a cash-based society, so I knew it would be a winning idea. Southern Africans are often bad innovators, but good imitators. It was only a matter of time before the market saw that ATMs were not the sole domain of the banks. I think if we didn’t do it, someone else would have.”

At the age of 25, Kark approached US ATM manufacturer Triton Systems to distribute Triton ATMs in SA, and invested life savings to set up the business in 1999. Kark then approached Saambou Bank to sponsor the payment system, and the first machines rolled out in 2000. When Saambou was placed in curatorship in 2002, the business had 600 machines in the ground. “Initially, the banks were sceptical of our idea. When Saambou folded, our business model had been proven, so we were able to bring other banks onboard,” Kark says. Since inception, the company has deployed around 4 000 ATM machines, has about 300 staff nationally and has won the accolade of the SA Non-listed Company Award as jointly sponsored by Business Day, Proudly South African, KPMG and Wits Business School.

Kark says that the ATM is essentially a cash-dispensing tool, and anything that detracts from that function – providing fast access to cash – can be counter-productive. “If a transaction takes longer than one minute, then it’s not good.” Additional functionality, such as dispensing airtime and paying bills, lends itself to integration with an ATM, but you must be careful not to integrate ATMs with self-service machines that perform more complex, and thus slower, functionality – such as buying insurance or other financial services products. Because of its wireless technology through its South African processing centre, a lack of telecommunications infrastructure is not a problem.

ATM Solutions Group has become a broad-based payments provider through its various Group subsidiaries, which also include debit and credit acquirer EFTPOS and the market leader in stored value card, DrawCard. It started EFTPOS, which supplies multifunction credit and debit card machines, in 2004, with operations beginning early 2006.

DrawCard has quickly become SA’s biggest issuer of both proprietary and association branded stored value cards, with customers including some of SA’s top retailers, employers and shopping centres. It’s a Visa-certified third-party processor for five SA banks, and has a strategic partnership with international supplier Stored Value Systems (USA).

BDB Data Bureau was acquired from Nedbank, and has 30 years of bureau experience. Highly qualified and experienced in the domain of EFT electronic payments and payroll processing, BDB offers a robust, secure and scalable national network that delivers data reliably and timeously, ensuring continuity to all its customers.

Kark says that ATM Solutions Group is growing fast and is entering new markets. Of particular interest is that the Group now forms part of Transaction Capital (Pty) Ltd, one of the largest, truly independent service providers to the financial services sector in southern Africa. “Our intention of going from a reasonably good ATM deployer to becoming more participative and influential in the payments space generally is being realised.”

Kark concludes: “We have the infrastructure, the systems and the know-how to be a lot more active in the payments arena, and I look forward to further growth of our business.”

How to get an ATM in your shop

ATM Solutions will do a complete site review, looking at elements such as foot traffic, turnover, literate and volumes sold. E-mail info@atmsol.co.za to apply for your own in-store ATM.