ATM developer ENCASH eyes foreign partners for expansion

MANILA, Philippines - Independent ATM developer ENCASH is in talks with potential foreign investors for a strategic partnership as the outsourcing of automated teller machines (ATMs) remains in huge demand, the company’s top executive said.

ENCASH specializes in outsourcing ATM services and its accompanying infrastructure, mainly targeting thrift and rural banks, cooperative banks and cooperatives.

Eric Severino, ENCASH chief executive officer said among the prospective foreign investors are Microvest (USA), Planet Finance (France), Responsibility (Switzerland), Developing World Markets, SNS and Oikocredit.

To grow faster, we need a strategic partner or partners,” he said in a press briefing yesterday.

A member of the MegaLink network, ENCASH has already deployed 256 ATMs and registered transactions worth more than P5 billion at the end of August 2010.

The outsourcing specialist is aiming to hit the 300 ATM mark by the end of 2010, and double this year’s output next year.

Recently, it signed an agreement for the initial fielding of several ATMs to cooperatives allied with SeedFinance, a specialized financing firm with principal focus on microfinance institutions (MFIs), including rural banks and cooperatives.

SeedFinance is currently working with 73 MFIs with an aggregate clientele base of 1.2 million.

SeedFinance chairman Carlos Ani said fielding ATMs will reduce the cost of accessing credit for the rural folk. “Some spend more than a hundred pesos just to go to a rural bank located in a town center, but it will be reduced by less than a quarter if an ATM is located in a cooperatives center,” he said.

ATM transaction costs remain higher than the average cost in Metro Manila, but are still cheaper than transportation costs in the rural areas.

MFIs prefer to outsource their ATM services rather than invest in an ATM switch and the infrastructure that goes with the network. ATM units alone may cost approximately $2,000 and return on investment for one unit may take about a year.

Aside from banks and MFIs, ENCASH is likewise eyeing convenience chains, sari-sari stores and pawnshops, as potential outlets.