ATM Deployers Hurting for Funds While Facing EMV Deadlines
It is no secret U.S. ATM deployers are facing some major challenges with the onset of the EMV liability shift. Fraudulent card transactions are ramping up in the United States as thieves move their activities to one of the last bastions of the mag-stripe. Industry experts are warning against becoming the last in line for upgrades…and the main target for ATM fraud. And many IADs are looking at their balance sheets, wondering how they can possibly afford the costs of EMV compliance.
Their concerns seem well-founded as manufacturers begin rolling out upgrade kits and discontinuing many machines as too out-of-date to handle the new chip technology. Upgrades for hardware and software alone are priced upwards of one thousand dollars, often more. Add the costs of site visits, certification and replacement units, it is no wonder many businesses are balking at the task.
“Some ATM deployers are weighing the cost of fraud liability versus EMV upgrades,” said Super G Funding founder and CEO Darrin Ginsberg. “Many are looking at closing their doors. The costs are truly staggering.”
An additional problem for many companies is the difficulty in gaining access to capital with a viable structure and term to allow them to move forward with EMV implementation.
“The largest factor in lending difficulties for ISO and ATM deployers is that banks simply don’t understand the business model. Banks typically have strict credit criteria based on eligible collateral,” said Jon Engleking, Chief Operating Officer for Super G Funding. Equity investors are also a problem as the length of their investments is often questionable and contracts may require approval by these outside sources for large expenditures and/or major business decisions.
“Banks do not consider residual streams as a traditional eligible asset,” said Engleking.
Fortunately, there is a third option for ATM deployers looking to tackle EMV migration or simply grow their business – borrowing against residuals. They are often easier to get than bank loans and can be funded in five to seven business days.
“The availability of residual loans is good news for ATM deployers faced with the staggering costs of upgrading ATM equipment to EMV,” said Ginsberg.
Of course, EMV is not the only use for an influx of funds. Ginsberg is quick to point out that residual loans are also beneficial for businesses to invest in new technologies, additional revenue streams and other company expansion ventures in order to counteract the continued shrinking of interchange.
To educate IADs, Super G Funding has released a white paper, Lending Challenges and Solutions for Growing Your IAD in Today’s Economy. The paper further explains the difficulties ATM deployers face when seeking capital and the various funding options available.
Source: Triton ATM