ATMs – a Profit Booster for Retail Merchants Amid COVID-19

Are you a retail merchant? Getting an ATM installed in-store can position you well for the post-lockdown recovery phase.

COVID-19 has not discriminated, crossing the vast oceans that separate the countries of the world and bringing the world economy to a virtual stand-still. As the pandemic has tightened its grip globally and domestically, concerns about the ultimate impact on the South African economy are mounting.

South Africa was already in recession when COVID-19 hit our shores, and most economists are suggesting that the balance of 2020 will be fraught with uncertainty and trepidation. Unfortunately, there will be many industries that will be hard hit. Now, more than ever, one of the fundamental concepts for all businesses is survival via stringent cost control and maximising revenue growth.

Marc Sternberg, managing director for Spark ATM Systems says, “To assist in righting the ship of the recession, we have seen through research and 15 years of experience that a merchant-cashed ATM stands as a beacon of support for many businesses. As a revenue-generating opportunity with little to no cost, the positives are tangible and the benefits to merchants and consumers very real.”

The merchant-cashed ATM model, one of several options that Spark ATM offers, differs from traditional cash-in-transit-filled ATMs in that the merchant hosting the ATM loads it with its own cash takings. This cash is then recycled back into the host’s bank account the day after it has been dispensed from the ATM. This benefits the host merchant in many ways, including:

  • Saving time by not standing in queues at the bank to deposit your money.
  • Reducing risk travelling with cash or paying for expensive CIT collection services.
  • The ATM attracts more foot traffic through the store.
  • Customers spend more money on site after withdrawing money from the ATM. Research indicates that between 15% and 30% of the dispensed cash will be spent on site.
  • Host merchant benefits financially from a rebate income per cash withdrawal.
  • Cash deposit fees are reduced.
  • The access to cash also results in a decrease in credit card usage and the corresponding reduction in credit card charges.

The benefits to turnover, as well as savings accrued from cash deposit fees and credit card charges, vary from site to site, but a merchant with a smaller business recycling R200 000 a month through their ATM could benefit over R15,000 per month. This is a saving and benefit that cannot be ignored, especially as South Africa faces a deep and prolonged recession. For many busier sites, the monthly benefit to the merchant can be over R50,000.

Additional non-financial benefits include:

  • The host merchant is providing a service to customers and the community by giving them access to cash and a convenient and safe place to withdraw money.
  • The store becomes a one-stop destination giving shoppers more time to spend on buying decisions rather than queueing at a bank.
  • Merchant-cashed ATMs offer safety and security for the customers and the host as large amounts of cash are not moving to and from the ATM via CIT guards.
  • A focus during the COVID-19 Lockdown period is delivering additional cash withdrawal points to SASSA social grant recipients who are now approaching 20m people per month. An ATM draws these consumers into the host site who then withdraw securely and spend on site.

“More retailers are seeing the financial benefits of hosting a merchant-cashed ATM on site, particularly in gaming, retail and hospitality. The market has grown rapidly over the last five years and Spark ATM Systems has been at the forefront of this growth,” says Sternberg. Established in 2005, Spark has become South Africa’s leading independent ATM deployer, with over 4,200 ATM installations countrywide.

Spark is owned by Cardtronics (NASDAQ: CATM), the world’s largest ATM deployer, which brings global expertise and financial backing to Spark’s operations in South Africa. Spark ATM Systems has revolutionised the service model to fill a gap in an otherwise under-serviced market.

“We install ATMs into retail, petroleum, gaming, tourist and hospitality locations. Now sites that achieve as few as 200 cash withdrawals per month may also benefit from hosting an ATM,” adds Sternberg.

As we navigate our way through the “new-normal”, the focus for all businesses will be cost-cutting measures and revenue growth. Hosting a merchant-filled ATM achieves both objectives simultaneously. Very rarely does one come across a revenue generating opportunity with little to no cost to the merchant. Lockdown Level 3 will see far more economic activity taking place in South Africa, essentially heralding a “South Africa is open for business again” headline.

Retailers need to position themselves as well as possible for the reopening of our economy.

Ask yourself: are you open for business?

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