P.O.B. or Point of Banking or Point of Banking Terminal is now the correct term.

Merchants complain credit-card machine peddlers trap them into costly leases.

( Seattle Times, The Via Acquire Media NewsEdge) Oct. 19--Calvin Rooks took a break from painting a customer's house to consider the salesman's pitch: For just $20 a month, you can rent one of those credit-card scanners that will let your customers swipe and charge their home repairs. If it doesn't help your business, the salesman said, return the device in six months and find someone to take over the lease.

Rooks, who owns a small remodeling company in Seattle , signed up with Northern Leasing Systems. But when he got the bill a month later, the cost was more than double what he'd agreed to, he said, and the four-year lease he'd signed was "noncancelable."

Rooks says his options seemed slim: Either pay Northern Leasing about $1,500 to get out of the contract, or stop paying and tangle with the company's notoriously aggressive collections department, risking a lawsuit that could trash his credit.

Instead, he closed his bank account and filed a complaint against Northern Leasing and a local company that processes credit-card charges with Washington state's attorney general.

"This was all such a needless waste of time and money," says Rooks, whose complaint is pending.

Rooks is one of hundreds of small-business owners across Washington state and the country who report falling victim to sales schemes that lock them into expensive leases for credit- and debit-card processing machines, which they could have bought for hundreds -- even thousands -- less.

Rooks' complaint is among at least 84 logged by the state against three credit-card-machine leasing companies since 2005. The Better Business Bureau has logged more than 680 complaints nationwide against Northern Leasing and its affiliated companies, and hundreds of complaints against the company have been posted on consumer Web sites such as ripoffreport.com.

Most of the complaints in this state allege salespeople trap merchants into costly leases with hidden fees and small-print clauses the merchants say were disclosed only after they tried to cancel the lease.

Other complaints allege forgery, failure to provide the promised services and aggressive collection practices that tied up their phone lines with dozens of harassing calls a day.

A Seattle Times review of complaints filed in Washington showed the companies tended to release merchants from their leases if they complained to the attorney general's office.

Northern Leasing spokesman Philip Hauserman said the 17-year-old company has little control over the independent salespeople who supply the equipment the company finances, but that it has cut ties to salespeople who generate complaints.

Hauserman also said the complaints represent a small fraction of the company's 450,000 active leases, and are to be expected from a company its size.

While the Federal Trade Commission and some states, including Washington , have successfully sued leasing companies accused of misrepresenting their services, law-enforcement officers and plaintiff attorneys say the practice is still widespread.

"It's one big outfit with 5 million hydra heads," said Krishnan Chittur, an attorney who is seeking class-action status in a suit he filed against Northern Leasing in New York, where the company is based. "There's a whole lot of them all over the country. But the modus operandi is the same."

First, a sales call

Here's how it works, according to merchants who have complained: A salesperson calls or drops in, and typically promises the merchant he can get them a better deal on debit- or credit-card machines that most small businesses consider key to their survival.

After the papers are signed, the salesperson becomes hard to pin down, and accountability evaporates. Calls to the leasing company typically generate the same reply: The salesman is not our employee, and you signed a contract that we intend to enforce.

The salesman is, in fact, an independent operator who is paid commissions by the leasing company and who earns monthly residuals by another company that process the credit- and debit-card charges.

When the merchant does get a copy of the contract, he or she learns it's four pages instead of one, and the terms sometimes don't match those offered by the salesman.

Frustrated and angry, the merchant stops paying the lease and even shuts down bank accounts to prevent the leasing company from automatically deducting money. That's when the collections calls start.

If the phone calls don't work, the leasing company files suit in New York , making it more expensive for businesses located elsewhere to fight the lease than to just pay it off.

Northern Leasing, for example, the company that Rooks signed with, has sued more than 17,300 merchants in a New York supreme court since 2000, court records show. Spokesman Hauserman said the company has sued about 2 percent of its leaseholders over the past nine years for defaulting on their contracts.

Mel Foster, of Seattle, the salesman who signed Rooks to the leasing contract, insisted he spelled out every detail and was not responsible if Rooks didn't read what he was signing.

"The bad guys are the ones who don't give full disclosure," he said, noting he's signed up 800 accounts during his 20-year sales career.

Foster said he typically earns about $200 for each leasing contract but makes 90 percent of his income from residuals, paid as a percentage of the credit-card sales from the merchants he signs up in a separate processing agreement.

Buyers miss the catch

Chittur, the New York attorney, said a surprising number of merchants rely on the representations of the salesperson and don't realize they can't cancel or transfer without paying off the lease in full.

That's the position Lowell Parr found himself in after signing a five-year contract to lease an ATM from Lease Finance Group -- an affiliate of Northern Leasing -- for $199 a month.

A businessman for 20 years, Parr said he had hoped the machine would draw more people to his used-car lot in downtown Kelso. He spent about an hour with the salesman before signing the lease.

Parr, 56, said he did nothing to verify the salesman's claims, check out the leasing company or even think through whether a cash machine would bring more thieves than customers. The machine now sits unplugged in a corner, costing about as much in a year as one of the two dozen cars Parr is selling on his lot.

"You'd think I'd know better," he said. "It took a couple of months before I figured out this wasn't a smart move."

By then, he also learned he'd signed a "noncancelable" contract with Lease Finance Group and owed the entire amount covered by the lease.

"By the end of the contract, this thing is going to cost me $15,000," he said. "The machine alone will cost $12,000. I went online. I could buy a brand-new one for $3,500. And at the end of my lease, I won't even own the thing."

Parr said he intends to keep paying, knowing that if he stops, he could end up in collections or in court with ruined credit.

"Twelve thousand dollars," he said. "It would cost me more than that to have a bad credit rating."

Susan Kelleher, consumer-affairs reporter: 206-464-2508 or skelleher@seattletimes.com.

To see more of The Seattle Times, or to subscribe to the newspaper, go to http://www.seattletimes.com.

Copyright (c) 2008, Seattle Times
Distributed by McClatchy-Tribune Information Services.
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June 23, 2008 - Gene Fink paid more than $2,700 in credit card fees last month from the service station he owns in Aspinwall. "It is a very high expense," he said, noting that his automotive repair business is keeping him afloat. "People all think we're making a gazillion dollars now."

Fink's woes are shared by other station owners and are increasing as the ability to pay at the pump might be in jeopardy. A gasoline retailers association in Philadelphia is urging its members to stop taking credit cards because of the fees they must pay to credit card companies.

"Our members are getting killed. Credit card gas is costing our dealers in excess of 8 cents a gallon, and many are working on a 10- cent per gallon margin," said Ross DiBono, executive director of the 600-member Pennsylvania Gasoline Retailers Association.

In Western Pennsylvania, the 350 members of the Petroleum Retailers and Automotive Repair Association haven't gone that far yet, said the group's president, Hugh Campbell. But the organization might advocate cash-only purchases soon.

"The higher the price of gasoline, the bigger the problem," Campbell said.  Station operators nationwide say higher gas prices mean higher credit card fees for them, squeezing pump profits.

Amid complaints against the so-called interchange fee -- a percentage of the sale price paid to credit card companies on each transaction -- a growing number of operators are suspending credit card sales.  It's a two-edged sword, Campbell said.  "There's so many people who can't carry around $100 to fill up their tank," he said.

Mike Daley, 26 of Wilmerding has used a credit card to take some of the sting out of $4 gallons of gas. The sales rep for a security agency said he hopes cash-only pumps don't catch on.

"I'll go somewhere else," Daley said. "You gotta do what you gotta do."  The cash-only push comes as Congress considers legislation that would allow merchants to bargain collectively with major credit and debit card companies.

The proposed Credit Card Fair Fee Act has the support of the Pennsylvania Food Merchants Association and the National Association of Convenience Stores.  Jeff Lenard, spokesman for the Alexandria, Va.-based National Association of Convenience Stores, called the card bans "a last resort that demonstrates how desperate retailers are to get change."

Convenience stores paid $7.6 billion in credit card fees last year, while making $3.4 billion profits, the group said.  Although the percentage of the interchange fee is fixed, usually under 2 percent, the dollar amount of the fee goes up with the price of the goods or services. As gas tops $4 a gallon, that pushes fees toward 10 cents a gallon. Stations that typically mark up gas by 11 or 12 cents a gallon are seeing profits shrink or even reverse.

Fink said he buys gas from the distributor for $3.97 a gallon. He sells it for $4.05, but when someone uses plastic, Fink has to pay the credit card company up to 13 cents a gallon, nearly double his potential profit.  The average retailer last year made 1.5 cents per gallon on the 4,000 gallons sold a day, earning $60, Lenard said.

Independently owned stores that sell gas are feeling a double hit, said David McCorkle, president and CEO of the Harrisburg-based Pennsylvania Food Merchants Association, which represents supermarkets and convenience stores.  "The higher the gas price, the less they spend in other areas," he said.

George Bando has watched the profits on a gallon of gas at his Youngwood service station drop from 5 to 8 cents a gallon to just 2 cents a gallon.  "It's cutting the profit out of your gas," he said.

The credit card companies told The Associated Press that the fees are just part of the cost of doing business. Using credit cards at the pump offers convenience, security and can increase sales, representatives for Visa and MasterCard said.  Some retailers believe they have little choice but to continue to accept plastic.

Half of the 150 daily customers at Ron Yosi's Caste Village Automotive in Whitehall pay with credit cards.  "We don't have much of a choice in that," Yosi said. "A lot of people rely on their credit cards."  Tom Soisson, owner of Soisson Service Station in Connellsville, is trying to sell the service station his father started in 1944 and is considering closing its fuel pumps.

"We're an old, full-service station. I've tried to play the game for a while and hang in with the price, but my price is always higher," he said.

ATM Machines Headed for $20b Market

This will never happen with a Point of Banking Terminal!

Google Alerts for: automated teller machines ATM  

A swipe of faith
Toronto Star - Toronto,Ontario,Canada
Called Giving Kiosks, the machines are not much different from automated teller machine stations found in shopping malls and airports. ...
FTC Targets Vending Scam In Las Vegas Hispanic Community
AMonline.com - Fort Atkinson,WI,USA
The workshop was sponsored by the FTC, the US Postal Inspection Service (USPIS), the US ... prohibited from violating Section 5 of the FTC Act or the Franchise Rule ...
Chicago thieves hit Canton bank with homemade ATM cards
Asheville Citizen-Times - NC,USA
... teaming Chicago police to catch thieves who used homemade ATM cards to ... local accounts took place Monday and Tuesday at automated teller machines in Bridgeview ...
Six Men Indicted In ATM Thefts
NBC 4.com - Washington,DC,USA
GREENBELT, Md. -- Six men have been indicted in Greenbelt federal court on conspiracy charges in the theft of automated teller machines. ...
Businessman accused of running ATM sales scam
The Grand Rapids Press - Grand Rapids,MI,USA
... told of promising returns associated with the automated teller machine business. ... Sims allegedly approached investors about buying ATM machines and placing them ...
Six stolen ATMs recovered
Eagle Tribune -
... automated teller machines but noted they can hold up to $40,000. The chain of events that led to the search for the thieves began early yesterday when an ATM ...
METROPOLITAN DIGEST
Kansas City Star - MO,USA
... Someone vandalized two automated teller machines late Wednesday and stole an undetermined amount of cash ... Later, someone stole money from an ATM at the US Bank ...

 This once a day Google Alert is brought to you by Google.      Create alert. 

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Watch CNBC Video (8mb QuickTime)

US Navy Deploys Navy/Marine Cash, Cashless ATMs

Posted by Scott Loftesness on June 30, 2004 at 09:18 AM in Card Technology, Emerging Payments | Permalink

Electronic Point of Sale 101

Action taken against 200 operations, including 'cashless ATMs'

From Paul Courson

February 23, 2005

CNN WASHINGTON (CNN) -- Authorities have cracked down on scores of "scam artists" across the United States who cheated thousands of consumers out of millions of dollars with illegal business ventures, officials said Tuesday.

 A combination of criminal and civil actions have been leveled in state and federal courts against more than 200 questionable operations in 14 states, they said. Federal Trade Commission Chairman Deborah Platt Majoras said the coordinated push was called Project Biz Opp Flop, and noted that "business opportunity fraud is big business." "In the FTC's 16 cases alone, tens of thousands of consumers collectively lost over $100 million," Majoras said during a news conference at agency headquarters. The operations included vending machine businesses and work-at-home schemes involving refrigerator magnets, medical billing, Web design and envelope-stuffing, the FTC said.

 One scam peddled an expensive apparatus called a cashless automated teller machine, a seeming oxymoron that drew laughter from reporters.

 But telephone solicitors working a "boiler-room" style of operation teamed up to persuade victims to pay money for the machines, according to U.S. Attorney Marcos Jimenez. "They make it make sense to these folks," Jimenez told reporters. "Then they turn them over to distributors, or closers, who are these other professional scam artists who are trained and expert at closing deals and getting people to send them the $10,000, the $5,000 or whatever it is to start up their own cashless ATM business." Assistant Attorney General Peter Keisler said that in some cases people buy into a questionable business plan because there is no benchmark as to how much money can be made.

 "It's much easier than you think," Keisler said. "We've talked to these people, these are not unintelligent people. I think we all tend to be more easily persuaded by things we want to believe, and the people on the other side of these phone calls have really reduced this to a fine art." Many of the people taken in by the scams are reached at home, and they include the elderly and immigrant populations, especially those in need of fast, easy cash.

 Officials said that even when scam artists are caught, there is little hope to recover the money invested, because the criminals behind the activity often spend victims' cash on expanding the illicit business, and for illegal drugs and prostitutes. One case announced Tuesday involved a civil lawsuit against American Entertainment Distributors. The firm's leaders are accused of committing fraud by trying to sell machines that would reputedly be located in hotel lobbies to sell DVDs that a guest could play in the room. Authorities gave CNN audio recordings and transcripts of an undercover investigator's exchange with one of the accused company's principals. In it, the man is heard advising the agent to set up "a really big room," suggesting many telephone solicitors making the pitch to potential victims.

 To measure risk versus revenue in the proposed scam, the man said that "before anything happens, like about 30 complaints coming in, there's already $20 million in the [expletive] door."

Press Release

FOR IMMEDIATE RELEASE

Contact: Lorena Valencia

Communications Director

Got Cash? ATM

Chicago, Illinois 60680-4524

(866) 386-3499 (toll free)

ICAN Communicate! LLC Now offers POB Automated Teller Machines (ATM) Free of charge to Merchants  that Pay 25% of the Transaction Fee per Transaction through ICAN Communicate! LLC  ISO / MLS Sales Channel Nationwide.

Chicago, Illinois -- August 29, 2005 -- Smart Merchants Nationwide are Discovering That There is a Better Way to Offer Card Payment Options to Their Customers Without Costly Fees!  Point of Banking Machines.  If you have never heard of cashless ATM Machines, we would like to introduce to you the most cost effective way of offering card payment options, without buying or leasing expensive merchant accounts and equipment. With our program, you will make money instead of spending money offering the convenience of card payment options to your customers!

FREE NOTHING TO PURCHASE!  For most locations with a minimum of 200 daily foot traffic, Got Cash? ATM will place this ATM at NO COST.   Low cost leases available for those who don't qualify with minimum foot traffic with Free Placement. 

Place a FREE POB Machine in your retail location and let the money roll in. Our machine handles multiple payment types: debit, cash, EBT. With a transaction fee of $2.00. You will make $.50 every time someone swipes their card. No separate phone line needed. Got Cash?ATM will set up the Transaction fees to be sent directly into your bank account. 

Got Cash?ATM Electronic deposits are made to your Bank Account directly from our Bank Processor.  All your funds are FDIC insured! 

Here is how simple it is: We’ll place your new Cashless ATM away from your register (small countertop and floor models are available.) Your customer swipes his/her credit, checking or savings ATM card for the amount they need. Once approved, the money is automatically taken from his account and placed into the merchant’s account. The customer then receives a voucher from the terminal.

Example, if your customer selects a $10.00 amount, the voucher prints out, and they pay you with the $10.00 voucher. Your cashier gives them the change, as if they were using a $10.00 bill.  Your bank receives the full amount in 2-3 business days. All at no cost to you - EVER! We will even send you a rebate based on performance! 

You can Set the Total Amount that can be Received to any $ Amount You choose.  $40 ?

Replace Your Credit Card Machine!  

The average Credit Card Account on a $100 transaction will cost you 1.90% plus .24 cents trans fee or a Total cost - $2.14 per transaction.

The POB ATM on the same $100 transaction will cost the Merchant NOTHING % and trans fee or a Total cost - $0.00 per transaction.

 Plus We will pay the Merchant $0.50 per transaction.  

Clearly a better way to accept Customer Debit, Credit and EBT transactions.  

Safer than Cash Automated Teller Machines (ATM's).  Security, the terminal holds no cash. This eliminates the expense of armored car service or extra security measures. The terminal reduces the risk of financial lose through internal/external theft, or employee error.

$5.00 per month and we provide a hard copy printout that is mailed to the machine owner each month for the previous month's transactions, as well as toll-free tech support, paper supplies, machine replacement warranty (including shipping, both ways!) for as long as you're processing through us in the event the machine ever breaks down due to normal usage and On-Line Access to Your Account.

We provide decals for your business' doors, and a 12'' x 18'' double sided plastic window/outdoor sign that says "ATM, Cash Back With Purchase Only, Pin Number Required", hang down signage (to hang from the ceiling above the machine in your location), and a window sign that says "ATM Inside". The machine comes with a countertop kiosk that has signage on it. Banners, florescent ATM signs, and other promotional materials are available at an additional charge. Six Languages available.

The Got Cash?ATM POB ATM is an advanced and truly compact debit/point-of-sale (POS) terminal with a built-in fast printer. The Got Cash?ATM  exceptionally user friendly, and very fast due to its high-speed built-in thermal printer that eliminates the need for costly ribbon replacement, thus substantially reducing mechanical malfunction and increasing transaction speed. The NURIT 2085+’s large, alphanumeric LCD display and menu-driven software, together with four LCD "soft keys" and four programmable function keys, allow the user to access every feature of the terminal easily and quickly.  The Got Cash?ATM  a customized version of Lipman USA’s NURIT 2085 Plus. The unique software of this low cost POB ATM is ideally suited for POB ATM operation for merchants with limited counter-top, wall or floor space, and/or who do not need the advanced features of the Got Cash? ATM Flour Model Scrip ATM.

More information about this opportunity can be found at www.icancommunicate.com/atm_machines.htm .

industry evolution  

REPRINTED WITH PERMISSION BY TRANSACTION WORLD • DECEMBER 2004

Script vs ATM

WHAT’S IN A NAME?

by Dennis Ehling

Shakespeare asked, “What’s in a name? That which we call a rose by any other word would smell as sweet” (Romeo and Juliet, Act II, Scene 2). Can you make a rose into something else by simply changing what you call it? Shakespeare thought not.

Many in the ATM industry have been asking the same questions – albeit slightly differently – for several years now: “What’s in the name, ‘ATM’? If the terminal acts in every appreciable way like an ATM, it should not matter what you call it.” Can you turn an ATM machine into something else by simply calling it by another name?” Many in the ATM industry seem to think not, but the debate is apparently still ongoing, and one ISO, E.B.T. International (“EBTI”), is asking a California court to answer the question once and for all.

More specifically, EBTI is asking whether the large ATM networks, including STAR (which now is part of First Data Corporation as a result of the recent merger between First Data and Concord EFS) can, by calling a particular type of ATM a point-of-sale (“POS”) terminal instead, change the fundamental nature of the terminal and treat it differently than any other ATM. At issue in the lawsuit (E.B.T. International, Inc. v. STAR Systems, Inc., Los Angeles Superior Court, Case No. BC 312430) is the question of whether one of the larger ATM networks in particular, the STAR network, can determine that a Scrip ATM (a machine that, rather than dispensing cash automatically to the cardholder, issues a receipt which the store clerk redeems for cash) is not an ATM at all and, therefore, treat the machine as a POS terminal instead of as an ATM. The answer to that question is not insignificant. If Scrip ATMs should be treated like regular ATMs then, among other things, the owner or ISO who places a Scrip ATM is entitled to receive interchange from the ATM networks for each ATM transaction run through the Scrip machine. On the other hand, if Scrip ATMs can be treated like POS terminals, then the ordinary rules of interchange in the credit card industry would apply – i.e. the terminal owner and/or merchant would be responsible to pay interchange to the ATM networks (including the acquiring bank and the issuing bank) for each transaction conducted at the terminal.

There is no shortage of opinions on this question. Proponents of Scrip ATMs point out that, like any other ATM, Scrip ATMs provide the cardholder with the option to perform any number of traditional ATM transactions – including cash withdrawal from any type of bank account linked to the ATM card, balance inquiry, and account transfer (i.e. the transfer of funds between two accounts linked to the same card) – all initiated by the cardholder and all without requiring the cardholder to make a purchase. POS terminals, on the other hand, cannot provide a number of these features – POS terminals ordinarily do not allow the cardholder to make withdrawals from anything other than a checking account, do not allow balance inquiry or account transfer transactions,

IN AN ERA WHERE PRICE COMPETITION IS STEEP FOR ALL FORMS OF ELECTRONIC COMMERCE, DRIVING TRANSACTION VOLUME – PARTICULARLY AT LOCATIONS SUCH AS FAST FOOD OUTLETS AND CONVENIENCE STORES, WHERE INDIVIDUAL PER-SALE PROFIT IS RELATIVELY LOW – IS WIDELY RECOGNIZED AS A SIGNIFICANT KEY TO INDUSTRY GROWTH. 

are initiated by a store clerk, and require the cardholder to make a purchase to receive any cash back (if the merchant is willing to offer cash back at all). Proponents also point out that, like the owner of any other ATM, the owner of a Scrip ATM must make what amounts to a short term loan to the cardholder – a loan that is repaid if and when the ATM network refunds the withdrawn amount to the ATM owner (usually within a couple of days) – without any guarantee that the cardholder will use those funds to make a purchase from the store location.

Opponents point out, however, that Scrip ATMs do not provide for cash to be automatically dispensed to the cardholder – a store clerk is involved to actually dispense cash to the cardholder – and therefore might have lower operating costs that would put them at a competitive advantage over traditional ATMs. Opponents also argue that Scrip ATMs, because they are almost exclusively located in retail stores (such as convenience stores or quick-service restaurants), promote sales in those stores and, therefore, provide the store owner the same type of benefit which the store owner would receive – and pay the card networks for – with a traditional POS terminal. Of course, by that same reasoning, every off premises ATM (i.e. ATMs located somewhere other than a physical branch of the acquiring bank) should be treated as a POS terminal – from that perspective, at least, there is no substantial difference between a traditional ATM located in a fast food restaurant and a Scrip ATM in the same location – both theoretically encourage purchases by making cash more readily available to potential customers. In fighting EBTI’s lawsuit, STAR has argued that its member banks have a good justification for treating Scrip ATMs as something other than an ATM.

STAR has argued that, in order to comply with rules of the Federal Reserve (“Regulation D”) restricting the number of payments or transfers per month which an account holder can make out of a money market account to a third-party, banks need to be able to track whether a transaction is a withdrawal by the cardholder (for which there is no limit under the Federal Reserve rules) or a direction by the cardholder to the bank to transfer funds or make payment on the cardholder’s behalf to a third-party (for which there is ordinarily a 3 transaction per month limit under Regulation D). Citing to certain introductory comments made in a 1986 Federal Reserve publication, STAR has argued that the Federal Reserve requires banks to treat Scrip ATMs like POS terminals, and not like traditional ATMs, for purposes of Regulation D. However, when the question was put directly to the Federal Reserve in 1989, the Federal Reserve gave the exact opposite answer. In what is known as an Interpretive Letter/Ruling – where the staff of the Federal Reserve gives its opinion on how it will enforce a particular aspect of a regulation – the Federal Reserve staff stated: “Staff does not believe that the use of personnel of the retail establishment in dispensing cash, as opposed to dispensing cash through the terminal itself, so distinguishes these transactions from withdrawals at ATMs as to warrant different treatment under Regulation D. In effect, staff of the retail establishment will substitute for the cash dispensing mechanism of the ATM.”1 From the perspective of the Federal Reserve, at least with respect to Regulation D, there does not appear to be any reason that Scrip ATMs need to be treated any differently than traditional ATM machines.

Whether or not the Federal Reserve – or even any individual cardholder – can see a meaningful difference between a Scrip ATM and a traditional ATM with an internal cash dispensing mechanism may be irrelevant. STAR argues that it is a private membership organization – one established by and for its member banks – that is entitled to set its own rules for anyone who wants to participate in the network. Regardless of the technical legal merit of that argument – which is a question before the court in EBTI’s lawsuit and is not the subject of this article – the question remains whether STAR and/or any other ATM network can afford to continue to try to uphold a rule which treats Scrip ATMs differently from traditional ATMs. There is clearly a segment of the marketplace that finds Scrip ATMs (with their reduced space requirements, lower security costs and lower operating costs) more palatable than traditional ATM machines, which can be subject to “smash-and-dash” crimes and take up more space in a store location than Scrip ATMs require. Retailers willing to offer to dispense cash to cardholders also have significant incentives – in the form of customer convenience and an increased opportunity for profit from the receipt of interchange – to prefer Scrip ATMs over traditional POS terminals. In an era where price competition is steep for all forms of electronic commerce, driving transaction volume – particularly at locations such as fast food outlets and convenience stores, where individual per-sale profit is relatively low – is widely recognized as a significant key to industry growth. If competitive forces work, the demand for and distribution potential of Scrip ATMs could very well be too tempting a source of transaction volume (and, thus, revenue) for one or more of the ATM networks to leave on the table. 

Dennis M. P. Ehling is a partner in the Los Angeles office of Kirkpatrick & Lockhart LLP who represents financial institutions, processors, ISO’s and merchants in a variety of litigation and transactional matters involving the electronic payments industry, including acting as counsel for EBTI in the E.B.T. International, Inc. v. STAR Systems, Inc., lawsuit. He can be reached at (310) 552-5090.

REPRINTED WITH PERMISSION BY TRANSACTION WORLD • DECEMBER 2004

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