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  A Win-Wi


n Situation:


ISOs,

Merchants And ATMs

by Phil Britt

   While many merchants are familiar with POS terminals and their benefits, far fewer are knowledgeable about ATM machines, according to Samantha Guthrie, President of Automated ATM Solutions, Pleasant Hill, CA. They donít know that ATMs provide revenue rather than expense, are safer than a cash register and may offer customers stamps, coupons and other conveniences in addition to quick and easy access to cash.

Merchant Education ó Key To Sales

   The ISO who educates the merchant about these conveniences can generate a few hundred to a couple of thousand of dollars for the sale of a machine ó or a monthly lease income ó as well as residual income from ongoing transactions.
   "The ISO who has a pre-existing relationship with a merchant [from the sale of a POS terminal] is in the best position to sell the merchant an ATM machine," Guthrie said. "The ISO just has to decide who to hit first."
   However, because the ATM requires more of an education process as mentioned earlier and is more costly than a POS terminal, the ISO should plan on a longer sales process for the ATM. According to Guthrie, the sale might require two to four visits over two to three months. But many of these merchants have more than one location or more than one location. So investing time in making the initial sale can quickly pay off in future sales as well.
   The revenue vs. expense equation is perhaps the simplest way to sell the machine once the merchant understands the concept. The machines generate revenue, in some instances paying for themselves in as little as a month.
   "We call it two feet of revenue," Guthrie said. "Even if all a convenience store has is two feet of space at the end of an aisle, the merchant can put an ATM there and generate revenue from previously unused space."
   Even if the ATM replaces some shelf space, thereís less expense in maintaining an ATM than in maintaining an inventory of foodstuffs or other items typically found in convenience stores.
   The ATMs are safer, too, according to Guthrie. Rather than filling a cash register with large amounts of cash that a gunman can easily access, ATM cash is contained in a well-protected vault that has several security features to thwart unauthorized access.
    "Itís a win-win situation," Guthrie says.
   Some newer ATM machines also dispense prepaid calling cards, stamps and coupons in addition to cash. However, itís the convenience of cash for customers and the income for the merchant that will sell the machine, not the additional bells and whistles that are just starting to come into the market, according to Guthrie.

Pricing The Sale

   There are several different ways to construct the sale to the merchant (or to a third party who leases the ATM space from the merchant). For example, Automated ATM Solutions works with a number of "sub-ISOs" ó ISOs that sell numerous ATMs but donít have the critical mass (typically fewer than 100 ATMs) to efficiently do their own processing. Instead, most ISOs of this size should look for deals that provide them with residual income for every transaction, according to Guthrie.
   Each sub-ISO earns the entire surcharge, plus a percentage of other fees. The higher the number of transactions on a sub-ISOís machines, the higher the percentage that ATM Solutions pays to the sub-ISO. The sub-ISO might sell the $4,000 machine to the merchant for $5,000, or, more likely, Guthrie said, lease it to the merchant for $100 a month. The merchant keeps 95 percent of the surcharge, while the sub-ISO keeps 5 percent of the surcharge plus the percentage of the percentage of other fees from ATM Solutions.
   If the merchant decides he wants the sub-ISO to fill the machine with cash rather than doing it himself, the sub-ISO may give the merchant 50 percent of the surcharge, keeping the other half, plus the fee.