Payment Alliance International, an independent distributor/operator of ATMs, has bought WRG Services’ ATM processing operation.
In the ATM industry, there are manufacturers (who make the machines) and Independent Service Operators, who distribute and handle transactions for machines. ATM Network, for instance, is an ISO — we provide the best machine for a particular client, regardless of manufacturer, and then handle the transaction processing for that machine.
It’s a model that works pretty well because at each stage the company’s interest is aligned with the customers. Manufacturers need to produce good machines at good prices in order to make sales to ISOs. And because ISOs make their money on processing (they’re paid a small fee per transaction by the customer’s bank), they sell machines nearly at cost.
Result: If they work with a reputable ISO like ATM Network, ATM owners get great prices on great machines, and processing is free.
WRG is different. They directly service more than 12,000 ATMs, which makes them an ISO. But they also make the WRG line of ATMs.
That left them with a conflict between their service business and their ATM business: the service business wanted to be able to sell any ATM at a low price, while the ATM business wanted to sell as many WRG ATMs as possible, at the highest possible price.
It’s unclear whether the PAI deal involves the ATM manufacturing arm. All the company statements refer only to the processing business, but both the companies and news reports act as if PAI is buying all of WRG.
If the deal involves just the processing business, it would resolve WRG’s conflict while giving them cash to build their ATM business.
But if PAI is taking over WRG entirely, it just transfers the problem to PAI. Would you want to buy your ATM from a processor that has a motive to either steer you to a machine that isn’t quite suited to your needs, or overcharge you for it?
We’ll update as we learn more.
Tags: ATM, ATM machine, ATM machines, ATM Network, ATMs, PAI, WRG
