Of all the day-to-day issues confronting the FI or ISO operating an ATM fleet, the most confounding are those that deal with the costs of cash.
There's the cost of moving it, managing it, keeping it safe from skimmers, hackers and creative criminals with tow straps and pickup trucks.
There's just one way to address all of those costs at once: Get rid of the cash. But then, what's the point of the ATM, right?
Aravinda Korala, CEO of KAL ATM Software, believes he has struck upon the answer to that conundrum. Today in Times Square, his company will debut its cashless Retail Teller Machine -- or RTM -- for hands-on trial by some of the world's toughest critics -- New Yorkers.
Just like a regular ATM -- only different
Anyone familiar with the early days of ATMs in the U.S. and the use of "scrip" will understand the cashless concept behind the KAL RTM. As with scrip, the RTM user requests a certain amount of cash at the machine, receives a voucher (scrip) and presents the voucher to a cashier for fulfilment.
However, where the similarities between scrip and RTMs begin, they also end, said Korala; what takes the RTM a quantum leap past scrip is what is happening in the background when the user requests a cash withdrawal.
"The RTM does a deposit transaction and puts money directly into the retailer's bank account," he said. "So 'Steve' goes in to the RTM, does a $100 transaction; money comes out of Steve's account and it goes into the acquirer bank's account. Simultaneously, the acquiring bank puts money into the retailer's bank account."
Deposits are transacted similarly. And, Korala said, the RTM does much more besides. "We are going with this to be a complete bank teller machine. Because this can do dispense, this can do deposit, this can do balance inquiry, this can do bill pay, this can do your whole kind of banking thing." The RTM can even offer video conferencing with a teller using the unit's 17-inch onboard liquid crystal display or an attached video topper, Korala said. And because it runs on the same KAL software that runs ATMs, the RTM interfaces with the bank's network like any other machine.
For FIs, a bigger footprint at a smaller cost
The RTM was conceived by KAL as a means for banks to expand their footprint across a geographic area simply, rapidly and at significantly less cost than with a fleet of ATMs -- to be exact, Korala said, at one-tenth the typical cost of operating an ATM for a year.
Initially, KAL expected the RTM to generate the most interest in developing countries such as India and China, where governments are pushing hard to move banking services into un- and underbanked areas. And while this has been true, Korala said, the RTM also has excited interest in developed countries where banks see it as a potential difference-maker in a very competitive marketplace.
"Last week I was in Japan and I presented to Japanese banks and they said, 'Wow, you mean for the same price that I'm spending on my ATM network, I can have ten times as many ATMs doing exactly the same transactions? ... So you mean I can have this in every hotel and every restaurant and every ... '" said Korala. "Absolutely; that's the concept."
The RTM offers benefits to merchants, as well, said Korala. Most obviously, it can attract additional foot traffic into a store. And for businesses such as convenience stores and sandwich shops that do a lot of cash transactions, the scrip function allows the retailer to move cash from till to bank account without an actual trip to the bank. Finally, the RTM allows the merchant to provide cash to customers without having to do it as a cash-out transaction -- which requires the customer to make a purchase and the merchant to pay a card fee. Also worth mentioning: It comes EMV enabled.
A step forward, but not a departure
Though the RTM is something of a departure for KAL, it doesn't mean the 23-year-old software company is suddenly "changing its spots," Korala said. "[W]e've got a patent on this [globally] and we are going to license the patent as well as the hardware design ... and we've decided that we need to build our own RTMs to begin with at least to make sure that we seed the market. But we're not going to become like NCR and Diebold; we're going to license it to anyone who wants to build it."
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