Archive for the ‘Industry news’ Category

Tranax files for bankruptcy

Thursday, July 1st, 2010

After losing a $5 million court fight with former partner Nautilus Hyosung, ATM manufacturer Tranax Technologies has filed for Chapter 7 bankruptcy liquidation.

Tranax Technologies Inc., an ATM manufacturer that sells machines to independent sales organizations, has filed for Chapter 7 voluntary bankruptcy, citing debts of $1 million to $10 million. Tranax said its assets equal its estimated liabilities.

The Hayward, Calif.-based company filed June 11 in United States Bankruptcy Court for the Northern District of California in Oakland. In its bankruptcy filing, obtained by ATMmarketplace.com, Tranax listed 13 creditors, including Hyosung Corp. of America.

Tranax’s bankruptcy filing occurred less than a month after U.S. District Court Judge Vaughn R. Walker entered a judgment May 25, ordering Tranax to pay Hyosung America Inc. and its parent company, Nautilus Hyosung Inc., $5.01 million plus daily interest of $1,742.52 until Tranax pays its debt. Nautilus Hyosung had to wait 14 days from that date before taking action to seize property to satisfy Walker’s ruling. Walker issued his ruling May 6.

As noted in our earlier post, there may be more to the bankruptcy than first appears:

In 2008 Tranax was acquired by Hantle USA. This year, the company announced that Hantle would take over ATM marketing, while Tranax would focus on kiosks, scanners and ATM components. Hyosung is now suing Hantle USA, alleging that Hantle USA has taken over many of Tranax’s assets, making it difficult for Hyosung to collect the judgment.

Chapter 7 means Tranax will be shut down and its remaining assets sold off to satisfy creditors, including Nautilus Hyosung. But while the Tranax name will go away, Tranax’s line of ATMs and ATM products will continue to be sold and developed under the Hantle brand.

However, if Nautilus Hyosung persuades a court that Hantle improperly transferred assets out of Tranax in order to avoid paying Nautilus the $5 million court award, then Hantle USA or its parent could be on the hook for the money.

In any event, a name associated with the explosive growth of the non-bank ATM industry is going down in a lawsuit-inspired bankruptcy.

Tags: ATM, atm industry, ATM machine, ATM machines, Cash machine
Posted in Industry news, history | No Comments »

RBS won’t change end-of-day time after all

Thursday, July 1st, 2010

Back on June 7, RBS WorldPay announced it would be changing its official end-of-day close from 4 p.m. to 3 p.m. in order to accommodate new Mastercard-related procedures.

But here’s some good news: RBS has since determined that the change is unnecessary. So its end-of-day close will stay at 4 p.m.

Posted in ATM operators, ATM owners, Company news, Industry news | No Comments »

ATM Network contributes $3,000 to ATMIA fund

Tuesday, June 15th, 2010

ATM Network has donated $3,000 to an industry fund that will help educate consumers and legislators about the ATM industry, as well as explore options regarding fees charged by credit-card networks.

The donation comes after independent ATM operators faced two direct threats to their businesses in less than two months.

BACKGROUND
In early April, Mastercard unilaterally reduced the transaction fee it pays to independent ATM networks while tripling the fee it charges to process Mastercard-branded cards or use its Cirrus network. Bottom line: Mastercard will siphon an additional $26 million a year from independent ATM operators — a transfer of wealth from thousands of small-business owners all across America to one of the world’s largest financial companies.

Then in mid-May, during Congressional debate over a financial-reform bill, Sen. Tom Harkin (D-Iowa) proposed an amendment that would have capped ATM surcharges at 50 cents — making most nonbank ATMs unprofitable to operate. Its passage would have resulted in ATMs disappearing from business establishments of all kinds, as well as destroying several thousand jobs.

Thankfully, the Harkin amendment was defeated. But the prospect of it being reintroduced in some form, as well as worries about future moves by Mastercard, has prompted the ATM Industry Association (ATMIA) to address the problem head-on with the creation of a “defense fund”.

THE FUND
The fund, made up of voluntary contributions from members and nonmembers, will pay for two things:

1. Legal advice in the wake of Mastercard’s profound changes to the industry’s fee structure.

2. A “white paper” on the nonbank ATM industry, to better explain what it does, how it works, and why proposals like Harkin’s would be disastrous for it.

ISSUES THAT AFFECT EVERYONE
Why should anyone outside the industry care? Let’s take a look.

In the case of the Harkin amendment, it’s pretty simple: a limit on ATM surcharges would make many ATMs unprofitable to own and operate.

Sen. Harkin clearly doesn’t understand the economics of nonbank ATMs. He assumes the only cost associated with an ATM transaction is the cost of processing — a cost erroneously estimated at 36 cents by Harkin’s staff.

But that ignores the cost of the ATM itself, as well as the time and cost of installation, maintenance, insurance, supplies and cash. Harkin seems to think that merchants would be happy to install and maintain a money-losing ATM. That’s simply ridiculous.

In the case of Mastercard and Cirrus, anti-competitive behavior hurts everyone who uses an ATM. Mastercard’s fee changes mean processing a Mastercard or Cirrus transaction is more expensive for merchants than, say, processing a Visa card. That leaves merchants with few choices — including raising surcharges for everyone (even if you don’t use Mastercard or Cirrus) or removing the machine because it’s no longer profitable.

None of the available options are good for either merchants or customers. The ATMIA fund will help the industry explore legal, regulatory and market strategies that would let us avoid such harmful choices.

WHAT CAN BE DONE
ATMIA has asked each member company to donate $500 to the fund. ATM Network has donated $3,000. We strongly urge others to step forward, too. You can donate online at the following links:

ATMIA members
https://www.atmia.com/unitedstates/membership/membershiprenewal

Nonmembers
https://www.atmia.com/unitedstates/membership/join

Thank you for joining us in this effort!

Tags: ATM, ATM machine, ATM machines, ATMs
Posted in ATM operators, ATM owners, Company news, Industry news | No Comments »

Nautilus Hyosung wins lawsuit against Tranax

Friday, May 28th, 2010

A federal court has upheld a $5 million arbitration award against Tranax Technologies, ordering it to pay Nautilus Hyosung for ATMs and parts it received but did not pay for in 2006 and 2007.

The case stemmed from the contract dispute between Hyosung and Tranax that led to Hyosung dropping Tranax as it’s U.S. distributor and Tranax becoming an ATM manufacturer in its own right.

Starting in 1998, Tranax was the U.S. distributor for Hyosung ATMs. Then in 2006, Hyosung discovered that Tranax was substituting another manufacturer’s cash dispensers in some Hyosung models. Hyosung suspended shipment of the models in question; Tranax responded by suspending payment on all outstanding invoices.

Hyosung ended Tranax’s distribution contract in January 2007 and filed an arbitration grievance over the unpaid invoices later that year, alleging Tranax had breached the terms of its distribution contract.

In February, the arbitration panel ruled in Hyosung’s favor and ordered Tranax to pay the full amount of the unpaid bills, plus interest. On Wednesday, a federal court upheld the ruling.

Tranax did win one small victory: it had long sold Hyosung ATMs using the “Mini-Bank” trademark, and the arbitration panel ruled that Tranax owned that trademark. So Hyosung has stopped using the term in its advertising.

The story isn’t over yet. In 2008 Tranax was acquired by Hantle USA. This year, the company announced that Hantle would take over ATM marketing, while Tranax would focus on kiosks, scanners and ATM components. Hyosung is now suing Hantle USA, alleging that Hantle USA has taken over many of Tranax’s assets, making it difficult for Hyosung to collect the judgement.

Stay tuned.

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Inventor of “first” ATM dies

Tuesday, May 25th, 2010

John Shepherd-Barron, a Scotsman often credited with inventing the world’s first automatic cash machine, has died at age 84.

Whether you think he’s truly the inventor of the ATM depends a little bit on how you define “ATM.” The machine he invented bears little resemblance to modern ATMs:

The first automatic teller machine, now known as ATMs, was installed at a branch of Barclays Plc in a north London suburb on June 27, 1967.

Plastic bank cards had not been invented yet, so Shepherd-Barron’s machine used special checks that were chemically coded. Customers placed the checks in a drawer, and after entering a personal identification number, a second drawer would spring open with a 10 pound note.

Two years later, a completely different machine, invented by a completely different person, was installed at a bank in Manhattan. That machine was the first modern ATM, and all subsequent models were patterned after it, not Shepherd-Barron’s machine.

Shepherd-Barron also claims credit for inventing four-digit Personal Indentification Numbers (PINs):

Shepherd-Barron originally planned to make personal identification numbers six digits long, but cut the number to four after his wife Caroline complained that six was too many.

“Over the kitchen table, she said she could only remember four figures, so because of her, four figures became the world standard,” he told the BBC.

As with many world-changing inventions, the ATM was an idea being worked on by several different people at the same time. Barron’s machine came first, but because of the cumbersome interface, didn’t catch on. It was a company named Docutel, selling a machine invented by an American named Don Wetzel, who produced the first commercially successful ATM.

But both men can claim credit for an idea that launched a financial revolution. There are now nearly 2 million ATMs installed worldwide. And it all a little over 40 years ago today, in the minds of a Scotsman and a Texan.

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Senate passes financial reform — without ATM fee caps

Friday, May 21st, 2010

Good sense prevailed in the nation’s capital on Thursday, when the Senate passed the financial-reform bill — without even considering an amendment by Sen. Tom Harkin to cap ATM fees at 50 cents.

Thank you to everyone who called, faxed or wrote their senator to oppose this ill-considered amendment.

Tags: ATM, atm industry, ATM machine, ATM machines, ATM surcharge, Cash machine
Posted in Finance, Industry news | No Comments »

Harkin amendment blocked in Senate

Wednesday, May 19th, 2010

Republicans and Democrats alike prevented Sen. Tom Harkin’s ATM fee-cap amendment from reaching the Senate floor on Tuesday night. Democrats are trying to get the main bill passed before the Memorial Day recess, so they’re only allowing debate on amendments that have strong support — and preferably bipartisan support. Harkin’s ATM amendment does not pass that test.

The amendment is not dead — Harkin could try to bring it up again, either with this bill or with a different bill later on in the session. But at this point it seems unlikely to be part of the current bill.

Meanwhile, here are a few more people speaking up to oppose the amendment.

From a letter in the Des Moines (IA) Register:

I have to tell you, Sen. Tom Harkin, how disappointed I am with your proposed 50 cents maximum per ATM withdrawal fees. I’m a small-business owner in the ATM business, not a bank, but a hard-working, tax-paying U.S. and Iowa citizen.

It is an absolutely ridiculous statement that ATM withdrawals cost us a mere 36 cents, Senator Harkin. I have quite a few ATMs and drive more than 1,800 miles per week. I have the cost of gas, a vehicle, the cost of the ATMs, the interest for the cash in the ATMs, etc. I pay my locations between 50 cents and $1.50 per withdrawal as I lease the space in the locations.

Is Congress going to stop the person who charges $2.29 for a cup of coffee versus the store that charges 99 cents? Is Congress going to put a cap on Nike shoes when a merchant charges more than $200 for a pair of shoes that cost him $65, but the demand is there, so he can charge what he wants?

The biggest difference is my ATMs have a screen that asks the customer if they agree to the charges. If not, they hit cancel.

— Jeff “Ole” Olson, Guttenberg

And the Cato Institute resurrects a paper from 1998, the last time a senator (in that case, Republican Al D’Amato of New York) proposed capping surcharges:

Consumers have the ability to obtain money from their bank accounts without paying a surcharge. ATM surcharges allow banks and other ATM operators to deploy machines in more convenient locations than might otherwise be possible. Customers who are unwilling to pay a surcharge incur the cost of inconvenience, while those who value the convenience more than the cost of the fee have the option of paying for it. Senator D’Amato, Rep. Bernie Sanders (I-Vt.)–Congress’s self-proclaimed socialist–and numerous consumer groups have formed an unlikely coalition to put an end to ATM surcharges. If successful, that campaign would limit the options of consumers, since there would be no means to support the more convenient ATM machines. Prohibiting ATM surcharges would only harm consumers by slowing the expansion of ATMs and reducing the number of ATMs currently deployed without making anyone better off.

The 1998 effort failed, which is why you find privately-owned ATMs all over the place, complementing the bank-owned ATM networks. It looks like the latest effort will fail, too — which is good for consumers and good for business.

Tags: ATM, atm fees, ATM machines, Cash machine
Posted in ATM benefits, ATM operators, ATM owners, Industry news, history | No Comments »

Phil Rock statement on ATM fee caps

Monday, May 17th, 2010

Today, ATM Network founder Phil Rock sent the following letter to key senators regarding a proposed cap on ATM fees.

If you agree, please link to this post. You can also email a copy of the letter to your senator using the links at the bottom of this page. Or sign the ATMIA petition.

May 17, 2010
The Honorable Christopher Dodd
448 Russell Building
Washington, D.C. 20510
Dear Senator,
I am writing to urge you to oppose Amendment #3812 to S. 3217, the Restoring American Financial Stability Act of 2010, which places caps on ATM surcharges.
I own ATM Network, an independent ATM company based in Minnesota. For the past 14 years, my company has sold and provided transaction processing for nonbank ATMs; we now have more than 5,000 customers nationwide, including grocery stores, bowling alleys, bars, restaurants, amusement parks, nightclubs, stadiums, retail stores and gas stations.
The case for ATM fees is simple: Without them, most nonbank ATMs wouldn’t exist. ATM owners must buy the machine, maintain it, keep it loaded with cash and paper, provide it with power and a communication link and pay other costs such as insurance and installation. None of this is free. The fees are what make such an investment viable.
This amendment would immediately reduce the number of ATMs available, slash the value of existing investments in ATM equipment, hurt the bottom line of hundreds of thousands of small business owners nationwide and put thousands of entrepreneurs out of business.
The Harkin amendment is promoted as “consumer friendly”, but how do consumers benefit from seeing ATMs disappear from stores, restaurants and gas stations? How does the economy benefit by removing machines that dispense billions of dollars in cash annually — money that drives sales and boosts our economy? How does cutting jobs and hurting small businesses help anyone?
Government intervention in market pricing may be justified when the free market is unable to set fair prices. But in this case the free market is working just fine. ATM surcharges are transparent and easily avoidable, and the sheer number of ATMs means customers always have a choice. They can go down the street to a machine with a lower surcharge, or to an ATM owned by their bank. Or they can skip the ATM altogether and pay with credit cards or checks.
With so many alternatives, an ATM surcharge is a purely voluntary payment for convenience. Anyone who doesn’t want to pay the fee can either use an ATM owned by their bank or get cash the old-fashioned way: by standing in line at a teller window. Most consumers don’t want to do that. They have grown up in a world filled with ATMs, and they expect easy access to ATMs. They appreciate the convenience and choice that nonbank ATMs provide. Because of ATM fees, customers can get cash nearly anywhere, at any time. Without the fees, they won’t.
The Harkin amendment would take us 10 steps backward and be disastrous for small businesses across the country. It will hurt the consumers it purports to help and damage our economy just as we’re pulling out of a deep recession. I strongly urge you to oppose this amendment and avoid harm to hundreds of thousands of hardworking American citizens.

Sincerely,

Phil Rock
Founder and President
ATM Network
10749 Bren Rd. E.
Minnetonka, MN 55343

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Write to your senator
You can email your home-state senators, as well as the heads of the Senate Banking Committee, using these links:

Senator Christopher Dodd, Chairman, Senate Banking Committee

Senator Richard Shelby, Ranking member, Senate Banking Commitee

Senator Tom Harkin, amendment sponsor

Senate Banking Commitee

Find your home-state senators

Tags: ATM, atm fees, ATM machines, Cash machine
Posted in Company news, Industry news | 4 Comments »

ATM industry mobilizes to oppose fee cap

Monday, May 17th, 2010

Part of the financial reform bill making its way through the Senate could have a big effect on ATM owners.

An amendment sponsored by Sen. Tom Harkin, D-Iowa, would cap ATM surcharges at 50 cents. The national average is currently around $2.00.

The amendment is based on three fundamental misunderstanding about ATM fees:

That all ATMs are owned by banks or credit unions;
That the only major cost of ATM ownership is the cost of processing a transaction;
That ATM fees are not being properly set by the marketplace.

Let’s discuss those in order.

1. While banks may have other reasons for installing and maintaining ATMs, most ATMs in this country are nonbank. They’re privately owned ATMs in grocery stores, gas stations, bars, restaurants and other small businesses across the nation. The merchants that own the machines set the surcharge and keep all of it; it’s their compensation for the cost of providing convenient access to cash.

2. Those costs are real. Besides the cost of the machine itself, there’s the cost of supplying it with power and a communication link, the cost of maintenance, and the labor involved in keeping it loaded with cash and paper.

A $2.00 surcharge allows the typical ATM owner to pay off their initial investment in 6-10 months, and then earn a reasonable profit after that. With a 50-cent surcharge, it could take up to *3 years* to pay off the initial investment, and after that the merchant would earn only a small profit — maybe $100 a month for a typical machine.

No business owner is going to invest that much time and money for such a small return. So if a 50-cent cap were imposed, most nonbank ATMs would simply disappear.

3. The market works just fine when it comes to surcharge levels. Government intervention in market pricing might be justified when the free market is unsable to set fair prices. But in this case the free market is working just fine. ATM surcharges are transparent and easily avoidable, and the sheer number of ATMs means customers always have a choice. They can go down the street to a machine with a lower surcharge, or to an ATM owned by their bank. They can skip the ATM altogether and pay with credit cards or checks. Or they can do what they did before ATMs became widespread: stand in line at the teller window.

You may think that saying “ATMs will disappear” is alarmist. It’s not. How do we know? Because we’ve been there before.

Until 1996, ATM surcharges were illegal. The only ATMs available were owned by banks. Their ATM networks were money losers, but were cheaper than paying human tellers. But because each ATM lost money, they weren’t going to install any more ATMs than absolutely necessary.

Then in 1996, Congress legalized ATM surcharges. And the ATM industry was born. The number of ATMs in the country exploded.

The Harkin amendment will take us most of the way back to the pre-surcharge days, costing jobs and hurting the bottom line of hundreds of thousands of small businesses in the process.

That’s why industry groups are campaigning against it. It’s why the moderate Brookings Institution opposes it. Even independent observers like CNN have pointed out the downside.

The amendment comes up for a vote later this week. With luck, logic will prevail.

Tags: ATM, atm fees, ATM machines, Cash machine
Posted in Finance, Industry news | No Comments »

ATM dispenses gold instead of cash

Monday, May 17th, 2010

Okay, it’s more of a vending machine than an ATM, but if you don’t like paper currency, this machine is for you:

Abu Dhabi’s Emirates Palace Hotel became the first place outside Germany to install “gold to go, the world’s first gold vending machine,” said a statement from Ex Oriente Lux AG, the German company behind the vending machine.

“In addition to one-gram, five-gram and 10-gram bars of gold, the machine also dispenses gold coins,” it added.

Not only does the machine dispense gold, it’s also gold-plated. But that doesn’t mean it’s low-tech: it constantly monitors the gold markets and adjusts its prices accordingly.

But don’t expect to see one on your street corner anytime soon. The Emirates Palace Hotel is not your normal business location:

The Emirates Palace is often used by visiting foreign dignitaries, and its top floor is reserved for the rulers of the UAE federation’s seven emirates, each of whom has his own suite.

High-end, indeed.

The machines were first installed in some German airports last year.

And talk about security:

“The Gold To Go vending machine will fulfill the same safety standard as an ATM,” said Uwe Heusel, owner of WBA Heusel GmbH. His company used armoring made of special steel, Kevlar and various ceramic materials to harden the vending machine against vandalism or even explosive blasts.

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