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Technology Stocks : DBD: oversold at these levels?
DBD 8.680+1.9%4:00 PM EDT

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To: Joseph S. Lione who started this subject9/11/2000 11:12:36 AM
From: Shawn M. Downey   of 79
ATM Magazine - September 8, 2000


Surprises may be welcome at a birthday party, but they’re about as
welcome as a paper jam in an ATM program.

Based on this truism, Diebold, Incorporated in May introduced an
ATM franchise program designed to remove any element of surprise
for the retail merchant.

“With this program, there is full protection and information disclosure
for the merchant. Everything is clearly defined. There are no
surprises,” said Deb Volkmann, Diebold’s retail program manager,
noting that Diebold is required by the Federal Trade Commission to
spell out all the details in what is called a uniform franchise offering.

Volkmann said that too many merchants have experienced “an
unanticipated removal of an ATM from their business” when their
monthly transaction volumes failed to cover the costs of their lease
payment, service and other expenses.

For a fee of $84 a month, Diebold will install either a CashSource
Plus 200 or CashSource Plus 200P machine, and will provide
service, status monitoring, transaction processing and monthly
reports. The fee will be waived if transactions exceed 150 a month.

Diebold encourages retailers to opt for the CashSource Plus 200P
model, which features a cash provisor module that allows a merchant
to load his own cash without opening the chest.

“The provisor allows him to recycle his own cash through the ATM,
and hopefully get some of it back at his business, while minimizing
any theft or security issues,” Volkmann said.

Diebold shares revenues with the retailer, using a sliding scale based
on monthly transaction volumes. Revenue sharing kicks in at 150
transactions a month, for which merchants receive 40 percent of the
surcharge. Diebold will pay a maximum of 95 percent of the
surcharge if transactions exceed 750 a month.

While other programs offer a far greater cut of the surcharge,
merchants also generally end up paying more, Volkmann said. “If
they’re buying the hardware or paying extra for the service, they may
not be able to reach the monthly transaction volumes necessary to
make a profit.”

Diebold is marketing its franchise program through direct mail,
telemarketing and a small sales force in its retail division. In addition,
the company is establishing alliances with groups like the National
Association of College Stores.

Although Diebold was the leading supplier to U.S. financial
institutions last year, the company hasn’t experienced much success
in the retail market with a third-party distribution model. Diebold is
betting that the franchise program is different enough to at least
catch the eye of jaded retailers.

The Holiday Inn North Canton (Ohio) is an early participant in the
program. According to general manager Jeff Hach, the hotel never
had an ATM before. While he had been approached by several ISOs,
he was leery of working with companies he didn’t know.

“I just wasn’t comfortable with the idea of feeding my money into
their machines and not knowing what kind of recourse I’d have if
something went wrong,” Hach said.

With Diebold, he added, “I know who they are and where they are. I
know they’ll make things right if there’s a problem.”

At the Professional Football Hall of Fame in Canton, Ohio,
transaction volumes have increased since Diebold installed a
CashSource Plus 200P, said business manager Mark Butterworth.

He attributes the increase to a reduction in downtime, largely due to
the hands-on nature of the machine. “We have little, if any,
downtime because we can go out, throw some money in the machine
ourselves and get it operating again. The average Joe can work (the
ATM),” he said.

Diebold’s program entails “a lot less red tape” than a previous,
less-than successful relationship with a third-party distributor,
Butterworth said.

Butterworth said the Hall doesn’t expect to make a large profit off of
the machine, which sits at the entrance to its retail store. Instead, the
Hall sees it as a service to those touring the facility, who will
hopefully withdraw cash and spend some of it on souvenirs.

“We know we’re not going to get 1,000 transactions every month.
We’ve had enough every month to cover the monthly fee, which is
great,” he said.
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