I was a guest the annual meeting of the European branch of ATM Industry Association. This was a two day event in London (May 22–23, 2012). I was there thanks to Tom Harper, founder of ATM Marketplace, that is, a B2B website for ancillary cash machine equipment (established circa 1997). Although my interest was to meet Tom to finalise an outline for a forthcoming history of the ATM, the almost ethnographic experience of attending a practitioner conference was refreshing. What follows are some of my impressions of the first day (as I had an overseas engagement the rest of the week).
The conference was jointly organised by ATMIA and Dominic Hirsh’s Retail Banking Research. I have used some of RBR’s data in the past and it is indeed one of the most authoritative sources of information on cash machines, cards and payments. During one of the presentations it was shown how estimates of ATM deployed in Sweden were more accurate than those the Riksbank.
Of greater interest for this blog, is that RBR also organises an annual conference on security. That was a bit disappointing since I was looking to hear on it. Other topics off the agenda included SEPA, regulation enabling independent ATM deployers (IAD) and pressures to reduce interchange fees. I was told they had been addressed in the recent past. In this sense and surprising for a meeting of some 70+ presenters and 500 attendees, the conference was much more ‘on theme’ than an academic gathering of similar size.
So what were the themes? The main theme was self service kiosks, while sub-themes included the cashless society and EMV (interoperation standard for Europay, Visa and Mastercard chip cards).
As it has been recently heralded (yet again), one would think the cashless society would be the Cassandra of the ATM but, as argued in the Bloomberg blog, there are competing users with different interest shaping technological change. It was thus interesting to see the first plenary presentation by Ramiro Sánchez-Crespo, from la Caixa (Spain) entitled ATM in a contactless world.
During this presentation he told of a three stage project by this Barcelona-based bank (which is, by the way, the second or third largest domestic player).
The first trial took place in the small coastal town of Sitges. Interestingly, this town appears several times in the history of Spanish computing, I guess because of its demographics rather than chance. Here about 1,000 pre-prepared mobiles were distributed for a mobile-only payment trial. Feedback led to the introduction of mobile and contactless card. This time in the Balearic Islands. A third larger trial is currently underway across the city of Barcelona. This involves mobile, contactless and the deployment of a new, contact-less ATM model.
Note that since at least the late 1980s Spanish ATMs and particularly those of la Caixa have had wide functionality. One which goes beyond financial services to cinema and theatre entries, transport, etc. As a result of this and their continued used of passbooks, their ‘hardware is much more ‘bulky’ than your usually cash machine in the UK high street. So although the bank claims customer feedback led it to deliver ‘choice’ in mode of payment, I think they need a very big reason to let go of the ATM as a delivery channel.
Other presentations of interest involved a clash of business models by Swedish presenters. On the one hand, Nina Wenning (SEB) and Stefan Bergelind (Bankomat), told how after much trial and error Swedish banks have adopted a ‘hub and spoke’ system under Bankomat (which is also the name of the original cash machine in Sweden – see Building Bankomat). For me this ensemble was very much the same as LINK in the UK but with the added feature that the whole suite of services from the home bank will be available at the acquirer’s machine. For these chaps, interoperability in almost cashless Sweden was the name of the game. Specially as the proportion of paper money and coins in the Swedish money supply has once again begun to drop.
On the other hand, there was the presentation of Gunnar Jacobson, CEO of Swedish-based Kontanten, an IAD with operations across Scandinavia. He was very critical of his colleagues and the idea of a cashless society. First, he noted that it is high value bills which are rapidly disappearing from the money supply. Second, he noted that it is in the interest of banks to move to a solution based on fee generating activities such as credit and debit cards, as opposed to cost-driven management of paper money. Third, that there was a cost of bringing in activities in the ‘black economy’ into a cashless society and more often than not, retailers will be left with the burden of policing these activities. Fourth, he also raised issues about cash being most popular around universities (so the young are not necessarily the most technologically adept), security, anonymity, etc.
Finally, Leland Englebard (Head of Network Products, Mastercard – USA), confirmed that the USA will adopt EMV in 2017 and he estimated the move will cost approx. $13bn. Interestingly their effort was not to draft detailed technical standard or try to agree on a particular technological solution as much as a very long set of rules as to ‘who bears the blame’. On one extreme of this liability hierarchy is the fully compliant merchant and acquirer, who will bear no blame – presumably leaving the consumer to assume the loss. The farther away the transaction is from full compliance then the more likely one party will share a bigger burden. It will be interesting to see how resilient these rules are when they are first tested in the courts.
As for the reasons to adopt he mentioned being out of step with the main trading partners but also that some banks had seen three digit growth in fraud. He said: “Fraud is the greatest single issue.. and [the baddies] are well organised and technologically advanced”.
By the way, he also estimated that about 84% of total retail transactions are in cash worldwide. So much for the cashless society! Of course, China, Eastern Europe and Russia are the biggest growth markets for ATM manufacturers.