The growth of surcharge-free ATM networks could force a strategic change among ATM independent sales organizations, a nonbank industry that began in the mid-1990s and flourished for the next decade by the lure of surcharge revenue. ATM ISOs deploy more than 200,000 ATMs nationwide. With few exceptions, the machines only dispense cash and charge users at least $2.50 per withdrawal. However, ISOs are facing increased competition from such surcharge-free networks as those operated by Allpoint, Credit Union 24, MoneyPass and Co-op Financial Services for their member credit unions and banks. As a result, ISOs should shift their support to multifunction machines that offer a variety of services, including bill payment, funds transfers, prepaid cards and concert tickets, contends Graeme Black, industry marketing manager for the global financial services group at NCR Corp. "We still value the ISO. We want to help them generate revenue in a different way," Black told CardLine sister publication ATM&Debit News Wednesday at the ATM Industry Association's 10th Annual Conference and Expo in Nashville, Tenn. Joseph P. Maneen Jr., director of U.S. sales  and sales operations at Wincor Nixdorf AG, agrees. "The time is right for ISOs to begin looking at multifunctional ATMs," says Maneen, noting many alternative services can be more profitable than surcharge fees. Both NCR and Wincor Nixdorf, two of the world's largest ATM manufacturers, set up large booths at the conference to promote their multifunction ATMs. Their attendance is unusual because both manufacturers concentrate on supplying ATMs to banks and credit unions, not to the ISOs who typically attend the conference. Surcharge revenue and ATM transaction both are expected to decline. Surcharged ATM transactions will decrease 6%, and ATM surcharge revenue will decrease 4% through 2011, says Nicole Sturgill, research director for delivery channels at TowerGroup Inc., a consultancy based in Needham, Mass., owned by MasterCard Advisers. Surcharge fees will continue to rise at a compound annual rate of 2% to 3% through 2011, Sturgill says.

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