Emerging Markets and New Applications Breathe Fresh Life into ATM Markets

Frost: Rapid development of banks and financial institutions in emerging markets of China, India and Brazil signify exceptional growth in the automated teller machine (ATM) markets. New technologies as well as customer-friendly applications including mobile top-up, ticketing and bill payment will increase ATM transaction volumes.

World ATM Markets earned revenue of $2.21 billion in 2005 and estimates to reach $2.88 billion in 2010.

China, Brazil and India have been identified. The Indian market is growing at 100 percent year-on-year.

Vendors are focusing on manufacturing ATMs locally in these regions to maximize customer service, address cost concerns and gain a superior understanding of local market dynamics. For instance, NCR Corporation has production facilities in both China and India, as there is huge potential to be tapped.

In spite of incorporating new technologies and exciting applications into their devices, ATMs are merely used as cash vending machines as consumer awareness on these functionalities is very low, states Aravindh. However, the biggest challenge for industry participants is mainly that of back-end and multichannel integration.

With the proliferation of ATM facilities there are also increasing instances of fraud. The traditional magnetic stripe based cards are particularly vulnerable to criminals, and excessive fraud rates at ATMs is threatening to stunt the expected growth of the industry especially in regions such as Brazil, Mexico and Thailand. Unless banks and retailers restore customer confidence, the ATM industry could witness a severe blow with growth rates significantly being lower than anticipated.

The negative effect of ATM fraud is particularly evident in Brazil, where ATMs offer an advanced range of facilities to customers. Banks and financial institutions hesitate to invest heavily in ATMs unless the threat of fraud diminishes. In the United State, majority of the off-premise ATMs are subjected to ram raids while skimming is the most prevalent form of fraud in Canada.

To curb this threat, card associations such as Visa and MasterCard are taking preventive measures to win back consumer confidence on ATM transactions. This includes setting deadlines for the industry participants to upgrade to 3-DES compliant machines from 2006. Further, ATM deployers are starting to put other complementary security features in place to reduce fraud, such as smoke canisters and dye markers

World ATM Markets

Publ 20060517