ATMs: Still Money Machines

In a credit/debit card-crazed society, cash remains king in convenience stores.

A CSD Staff Report

Make no mistake: While plastic is important, cash is, was, and always will be a key component in the profitability of convenience stores.

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That means ATMs, which allow shoppers instant access to cash, will remain an integral component in any convenience retailer’s business plan.

“ATMs are an important element in any convenience store’s business,” said David Tente, executive director for ATMIA, the ATM Industry Association. “Studies show that cash spending goes up considerably when there’s an ATM, and that often goes straight to the bottom line for c-store owners.”

Bruce Wayne Renard, executive director at the National ATM Council Inc., agreed.

“ATMs are a key positive ingredient to every convenience store’s business model,” said Renard. “ATMs provide c-stores with a meaningful monthly revenue source and a way for their customers to get cash to spend in the store.”

Having an ATM on site—and prominently promoting it with window signage and at the pumps—will help generate more foot traffic to the store.

“ATMs are also now capable of supporting in-store product advertising to help promote sales,” Renard continued. “And ATMs will be introducing new value-added services—such as expanded banking services, virtual gift cards and much more. No convenience store should be without an ATM.”

The ATM universe can be divided into two categories: Those operated by financial institutions, and those operated independently. Robin Gabriel, proprietor at Shell Food Mart in Hinsdale, Ill., has an independent ATM at her store.

“Our ATM is very important to our business,” said Gabriel. “We like to provide convenience in any way we can to our customers, so any reason to stop here and possibly make an additional purchase is huge. In addition, it brings in extra revenue to the business in per-transaction fees that requires very little effort or manpower.”

Sheetz, a family-owned c-store chain based in Altoona, Pa. with about 570 stores in Pennsylvania, Maryland, Virginia, West Virginia, Ohio and North Carolina offers surcharge-free ATMs to customers.

“All ATMs in our stores are surcharge free,” said Nicole Auman, consumer engagement manager for Sheetz. “If a customer is charged a transaction fee it comes from their financial institution that may not be set up in in our PNC ATM network.” Auman added that Sheetz is working to add as many financial institutions as possible to the network to limit usage surcharges to their shoppers. “As cash continues to be a need for consumers, having surcharge- free ATMs in our stores is an added convenience for our customers.”

But without a surcharge, how does the c-store profit from having an ATM in house?

“It drives traffic in to our stores and contributes to inside-spend,” said Auman. “This is a very important part of our business to have this convenience for our customers.”

Indeed, a surcharge could have a deleterious effect on a store’s business—especially if a nearby competitor offers ATM cash with no strings (or fees) attached.

“I know from experience that fees to push people away,” explained Ed Burcher, vice president, foodservice, at Fremont, Ohio-based FriendShip Food Stores. “In stores where we switched from fees to no fees and made that a piece of the core offer, our transaction counts were about five times higher without fees. And the same thing would happen when we switched from no-fee to fees. Transactions declined by about 75%.”

Until recently, the sole function of most independent in-store ATMs was to dispense cash in the form of $20 bills. But that’s all changing.

“Today we’re getting a lot of different capabilities for the retail ATMs,” explained Tente, noting applications that allow customers to send and receive money, whether they are banked or unbanked.”

While the ATM at Hinsdale Shell does include a surcharge, Gabriel has added features to the process to lessen the financial blow to her customers.

“We attach a coupon to the ATM receipt for an additional purchase made in-store,” she said. “Should that give the customer an incentive to make any sort of additional purchase, it would not only provide us with an additional sale; it would provide a service to offset the ATM fee.”

Gabriel would like to see additional features available in her ATM. “Perhaps alerting customers to upcoming events in the area or at that location might be nice,” she said. “Being able to purchase show tickets or event tickets at the ATM would be a nice idea.”

Since we live in an age of widespread fraud, the security of an in-store ATM is of extreme importance. PNC Bank provides ATMs for Sheetz.

“We employ the latest security technology to detect and avoid fraud,” said Sheetz payment products manager Linda Smith. “Our security team continues to work with PNC to keep up to date with current trends, and continuously learn and develop ways to improve security. Our most successful line of defense has been the vigilance of the store employees periodically checking and reporting suspicious activity.”

Many of Sheetz’s ATMs include pin-pad shields to block the view of a customer entering the PIN number from the site of a pin-hole camera that an identity-theft criminal may have installed. In addition, there is ASD (anti-skimming detection) technology in the reader, which alerts the ATM and operations if a foreign object is detected on the reader.

“When the ASD is tripped, the ATM will go out of service to protect the customers,” continued Smith. “Our ATM provider immediately dispatches service to survey the ATM and run tests to make sure there is no evidence of tampering.

If it is confirmed there is not a risk at hand, the fault is cleared, and the ATM terminal is brought to active again.”

In addition, all Sheetz ATMs have a CPP (card protection plate) in the reader that is intended to prevent deep insertion of the internal skimmers.

“PNC is currently testing an ADK (active dip kit),” said Smith. “This would emit an electromagnetic field that interferes with the skimming device. There is no timeframe for this technology yet. PNC is also rolling out a ‘wedge’ to the dip readers in the coming months that will make the installation of the insertion skimmers more challenging.”

Overall, the security of in-store ATMs earns high marks.

Renard explained that the National ATM Council has joined with Conexxus on a project to develop anti-skimming guidelines, which are helpful to c-store owners in protecting their customers’ card information from electronic theft. But nothing can top having well-trained and attentive store personnel on the list of security protections, as is a well-placed functioning video surveillance system.

“All ATM transactions in the U.S. require online PIN verification. Along with the implementation of EMV chip technology, this provides a good baseplate in most cases,” said Renard. “However, the introduction of biometric authentication at ATMs is on the way and will take security to a whole new level.”