ATM still reigns as 'cash king'

Despite the huge cost involved in putting up an automated teller machine (ATM), banks remain keen on expanding through this route, where countless benefits stand to be gained by the host banks, cardholders, retailers, ATM deployers and the economy, in general.

Based on results of a recent study prepared by the ATM Industry Association (ATMIA), the global non-profit trade organization for the industry, the ATM still reigns as the main distribution channel for cash, which accounts for 85 percent of all financial transactions worldwide.

With over 1.67 million ATMs in existence, the ATMIA said this number is expected to significantly increase as every 362 seconds, or every six minutes, a new ATM is installed somewhere in the world.

“Since 1967, the ATM has helped create the convenience society by providing cardholders with 24/7 access to their safely-banked cash,” the ATMIA said.

Aside from cash withdrawals and deposits, ATMs also enable cardholders to pay bills, inquire bank balances, buy tickets, top up mobile phone airtime, send remittances and transfer funds. All of these can be done beyond banking hours.

In fact, the ATM has grown into a $15-billion global industry, providing business and jobs worldwide for manufacturers, deployers, cash-in-transit operators and suppliers, the ATMIA pointed out. But as ATMs seemingly sprout just about everywhere—from bank branches to off-site locations such as malls, convenience stores, gas stations and even bars and restaurants—banks, particularly in the Philippines, are still unable to maximize their presence, particularly in underserved areas, mainly due to the steep cost and high risks in putting up such facilities.

Gauging from industry estimates, the country’s ATM market remains vastly untapped.

The ATMIA noted that to reach an optimal level of market penetration, there should be at least one ATM per 1,000 people. In the Philippines, there are over 7,000 ATMs nationwide in 2007, which translated to one ATM for every 12,000 Filipinos.

There are three basic ATM operators — Megalink, BancNet and ExpressNet. In 1990, Megalink emerged the first operational shared ATM network. Today, the three operators are interconnected under the prodding of the Bangko Sentral ng Pilipinas (BSP), the Philippines’ central bank.

In a technologically-laggard society such as that in the Philippines, the benefits of electronic banking through the ATM are far outweighing the disadvantages.

“ATMs provide simple access to cash by debiting the customer’s bank account, encouraging both financial discipline and proficiency in self-service technology. Moreover, ATMs save cardholders transport costs and time by bringing these services into convenient locations,” it pointed out.

At the same time, the ATMIA said ATMs can be used to reach the unbanked and underbanked through basic bank accounts for low income groups linked to an ATM card an important step towards greater financial literacy for the poor.

“ATMs have proved a form of free technology training for the public to become more technologically literate in the field of financial self-service. The simplicity of ATM transactions, proven by its worldwide popularity, gives citizens confidence and experience in using this important modern self-service technology,” the ATMIA stressed.