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Better ATM Services (BATM) supplies patented technology that enables an ATM to dispense prepaid gift cards like currency via the ATM's cash tray using the machine's existing dispensing mechanisms. Better ATM licenses it's technology to both ATM and prepaid card industry participants to (1) provide a more secure, convenient and profitable distribution option with additional revenue opportunities and (2) operate within existing industry infrastructures and pricing models.

The BATM business model leverages the existing ATM and prepaid card infrastructures and business models to serve as an efficient and cost effective distribution option to help meet the exploding consumer demand for prepaid, stored value cards - especially proprietary cards offered by merchants. Of the approximate 395,000+ ATMs operating in the U.S. today, two-thirds are located in "off-premise" locations from financial institutions, mostly at merchants. About three-fourths of these off-premise ATMs (73%) are not bank owned or branded. Such networks of ATM installations are due to independent sales organizations (ISOs) that market, install and manage machines to help merchants meet consumer needs for cash. Dispensing and incoming interchange fees are shared between the ISO's sponsoring bank, ATM processor (or "driver"), the ISO and the merchant. Approximately 27 million ATM transactions occur everyday.

Prepaid, stored value cards are a recent phenomenon in America and are spreading rapidly around the world. Gift cards make up the largest segment of prepaid cards and are a more convenient gift alternative or means to manage ongoing purchases without being limited to the amount of cash a consumer carries. The Tower Group estimated that approximately $80 billion was spent on such cards in 2006. Another card industry management firm estimated that the average purchaser of gift cards purchased 4.9 cards in 2006. Expectations are that such volume will dramatically increase this year. Currently, consumers desiring to purchase such cards must either (1) visit a merchant location that sells its own card, (2) visit a supermarket or other mass merchandiser that has a J-Hook display of many cards and execute the purchase and activation at the check-out counter, or (3) go online to order a card to be sent in the mail. According to the Mercator Advisory Group, 568 million in-store gift cards were purchased in 2005 at card issuing merchant locations while 56 million gift cards were purchased via J-Hook and Internet distribution channels. All three methods are time consuming to the consumer as well as time consuming and costly to merchants. Distribution via multi-function kiosks and ATM "side-cars" are recent innovations. However, kiosks and side-cars are expensive and not very consumer intuitive. Kiosk and side-car hybrid penetration are limited as are the number of cards that can be stored and dispensed (150 flat cards vs. 900 Better ATM specified cards in ATM currency cassettes) and market acceptance of them is uncertain. Card distribution via ATMs alleviates both burdens in a more efficient and cost effective manner while enhancing revenue opportunities to the merchant, ISO, and prepaid merchant card providers and processors.

Business Model

BATM's business model focuses on patent licensing and certificating component players within both the ATM and gift card infrastructures so that they are enabled to profitably provide a more efficient, secure and cost-effective distribution alternative for gift cards and other non-cash media while adding functionality and value to the role of ATMs. Hence, ISOs, processors, merchant card providers and ATM manufacturers and ATM driver/processors are free to structure their offerings, set their own pricing and compete as they do today. BATM intends to license card producers to supply cards that meet BATM's specifications (pricing should be comparable to current standard credit and debit cards). It is not BATM's intent or role to compete with any licensed or certificated industry participant.

Card Sheets

Each gift card constitutes a single panel of three panels on a "card sheet" (patent filed). The card sheet has approximately the same dimensions of larger international currencies like the Danish Kroner.

Most ATM equipment utilizes fairly standard currency cassettes that accommodate currencies of varying size including BATM's card sheet dimensions. The plastic card sheet is about half the thickness of standard payment cards (14 - 15 mils or 0.0014 - 0.0015 of an inch). BATM's strategy is to enable the unbranded prepaid card market first in which card thickness is not an issue and then meet branded card system requirements. The cards enable additional revenue and marketing opportunities for advertising and promotion coupons for businesses as illustrated on subsequent pages.

Charter Commitment & Pilot Period

BATM is currently testing and certifying various ATM brands and plans to announce each manufacturer when certified. Concurrently, BATM is licensing ATM driver-processors and card manufacturers and will announce them as they are licensed. It's BATM's intent to limit the number of such manufacturers, ATM driver-processors and card manufacturers during the Charter Commitment and Pilot Periods (September 2007 through June 2008). A beta site program of five locations in the Phoenix area began in September to help introduce the concept to the consumer market and unearth any unforeseen technical and operational issues. BATM's pricing model calls for one-time license and certification fees for each new ISO, merchant card provider-processor, and ATM manufacturer with annual renewals. A one-time registration fee is charged for each newly activated ATM, along with a monthly fee. Preferential fee pricing considerations are given to Charter Period participants in the form of waiving initial licensing and registration fees for an initial two-year term. One-time ATM registration fees are also waived during this period. Monthly active ATM fees are set for $30 for a two-year term once activated.

Participant Benefits

All participants within both markets could benefit from BATM's concept and technology. Among the principal benefits for each participant are:

  • Consumers would have a more convenient way to acquire their growing appetite for gift cards either to help with their gift giving or own usage needs and in a way that is well known and understood.
  • Merchants would be the biggest benefactors by having a more cost effective, efficient and secure way to distribute their own (and perhaps others' gift cards) with the prospect of earning distribution and advertising/promotion commissions along with greater cash float, breakage, and assured future business for little cost.
  • ATM ISOs would generate new revenue streams through the expanded utility of existing multi-cassette ATMs while reducing cash demands and associated costs and would have more potential locations for placing ATMs.
  • ATM Driver/Processors would find new incremental volume in fee-based transactions and other services as the number of merchants and cards distributed grows. For those with prepaid card units within their organizations, business opportunities would expand correspondingly.
  • Merchant Prepaid Card Processors would have a fourth distribution alternative for the clients' gift cards that happens to be more reliable and secure. Along with alliances that could be formed with ATM ISOs processors could have the opportunity to move into the distribution of gift cards as another service offering and engage in advertising and promotion coupon distribution as well.
  • ATM Manufacturers would see increased sales of multi-cassette ATMs to handle cash and gift cards within the same machine, thus expanding the machine's utility and staving off more expensive multi-functional kiosk and "side car" alternatives.
  • Advertisers and Coupon Promotion Vendors would be attracted to the opportunity to provide promotional coupons for national firms (once card dispensed volume is in the millions) especially since the coupon can be tracked from day and point of dispensing to the day and point of redemption with demographic reliability.

 

Sample Card Sheets

 

For a compendium of secondary research and primary commentary pertaining to ATMs as a more convenient, secure, efficient and profitable option for distributing prepaid gift cards, transit passes, venue admissions and other proprietary payments cards, see the whitepaper, Prepaid Cards & ATMs: A Marriage of Convenience, Click here to view this whitepaper as an Adobe PDF file.



For more information, please contact:

Derek Cook
Better ATM Services, Inc.
6402 E. Superstition Springs Blvd, Suite 213
Mesa, AZ 85206
(480) 296-2033 Direct
(480) 346-0200 Fax
derek@betteratmservices.com