Gift Cards Coming Soon to ATMs
ATMs aren’t just for cash withdrawals or deposits anymore. There’s a whole new use for the machines: dispensing prepaid gift cards.
Better ATM Services is rolling out new technology that lets users withdraw prepaid cards, discounts offers and coupons through ATM cash trays. It’s the latest distribution channel designed to put even more gift cards into consumers’ the hands.
“The ATM can now become a shopping destination for people,” Thomas Honey, chief development and marketing officer of Better ATM Services, said. “You are not limited by the hours of the day at which you can purchase a gift card.”
Here’s how it works: People use their bank cards, enter their pin number and select from a list of merchants from the menu. The machine releases a card sheet containing three detachable panels. The first panel is the gift card. The second and third sections can be customized by businesses to offer coupons, promotions or other discounts.
Better ATM Services is testing the concept in Arizona: Mi Amigo restaurants in Phoenix and Mesa; Maycayo’s in Scottsdale and the Tavern on Mill in Tempe. It’s licensing the use of its technology to retailers and financial institutions to offer the service.
This week, the company signed a licensing deal with Diebold, Inc, an ATM manufacturer, to offer the new technology in its ATMs globally. The majority of Diebold ATMs are housed in financial institutions.
Better ATM Services is also in discussions with a major shopping mall to test the technology, Honey said.
The firm developed the technology, in part, to meet the growing demand for gift cards and people’s on-the-go lifestyle needs. For consumers, the service offers another option to buy prepaid cards without the hassle of waiting in line to activate the card. Retailers can benefit from expanded distribution of the cards, Honey said.
About $80 billion was spent on gift cards last year, according to the Tower Group. That number is grow by rise 25% this year.
The addition of prepaid cards in ATMs will only fuel the gift card market. Beyond brick and mortar stores, gift cards are available online or in grocery stores, convenience stores or drug stores via gift card malls—the rack of gift cards from non-competitive retailers.
“What this does is open it up the sales potential,” Honey said, a payment processing industry veteran who was behind the Visa debit card. “This will only spur greater sales and the demand of gift cards.”
And the company has a market. There are more than 400,000 ATMs in the U.S. Two-thirds of those machines are located in malls, retails stores and other businesses, Honey said.
