Cardtronics' purchase of Cardpoint Ltd. in Europe helps the Houston-based ATM operator expand into more of the U.K. and enter Germany, two countries whose populations rely more heavily on cash.
"The payments industry has amassed a great collection of instruments that sound cool and may be cool but what serves people most is cash," says Steve Rathgaber, CEO of Cardtronics.
Cardtronics has made many acquisitions to push it into other countries, taking advantage of the high volumes of cash transactions overseas.
In the U.S. about 30% of transactions are done with cash, Rathgaber says. In the U.K., cash payments account for nearly 55% of all transactions and in Germany, cash payments are nearly 80% of all transactions, he says.
Cardpoint operates as Cashzone in the U.K. and Cardpoint in Germany. With this acquisition, Cardtronics is building on its ownership of Bank Machine Ltd. in the U.K. to create Cardtronics Europe. Cardtronics now owns or provides service to more than 80,000 ATMs in the U.S., Canada, Mexico, the U.K. and Germany.
"Certain countries such as Italy, Spain and Germany are still very cash-oriented," says Gareth Lodge, a senior analyst at Celent. "Germany has had a recent ruling capping the surcharging fees that banks could apply, so I would imagine that is an attractive market."
We've "had our eyes on Germany for several years, looking for the right vehicle to get in," says Rathgaber. Because Germany's ATMs are largely owned by banks, as an independent organization, Cardtronics sees an opportunity to expand German ATMs to more convenient locations for consumers, such as the company's retail partners like CVS and Target, he says.
Cardpoint "has done a decent job over the years in the U.K. of rolling out a broader ATM network in non-traditional places," says Alex Kwiatkowski, research manager for banking at IDC Financial Insights. The acquisition "is a good illustration of how cash in these markets still remains a dominant force."
Cardtronics' expansion could also lead the company to bring some uniquely European ATM features back to the U.S.
For example, in March Cardtronics acquired i-design group plc, a marketing and advertising software provider for ATM owners. I-design supports advertising and coupons on ATM screens and receipts. McDonald's, Neutrogena and British Airways use i-design in the U.K., and Rathgaber says the service could appeal to other markets.
ATMs in the U.K. also offer currency conversion at a fixed rate, and Cardtronics plans to extend this service to Germany, says Rathgaber. Cardtronics ATMs in the U.K. also allow consumers to pull out cash from a digital UKash account, but this will likely continue to be a local service, he says.
"It's interesting to see these other features however it more or less comes down to the traditional part of ATMs: can I have some cash, please," Kwaitkowski says. These added features show "the art of the technologically possible but that doesn't make it operational or consumer-desirable."