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The World of ATMs: Why data and cash still go hand in hand

Michal Maliarov
7
min read

Automated Teller Machines have evolved significantly since their introduction in the 1960s. Initially designed to dispense cash outside banking hours, ATMs now offer a range of services, from depositing checks to transferring money between accounts. Today, there are over 3.5 million ATMs worldwide that are visited by users on average at least 8-10 times a month. Even cryptocurrency ATMs are on the rise, with more than 39 000 used worldwide.  

Did you know? According to Astute Analytica analysis, the withdrawal segment leads the global ATM market, accounting for about 66.78% of the total transactions, leaving 33% for other ATM services. This reflects the ongoing high demand for cash.

Despite the rise of digital banking, global cash withdrawal amounts are still substantial, with countries like Japan and Germany showing a persistent preference for cash. Cultural trust in cash, privacy concerns, economic stability, and the immediate, tangible control over spending that cash contributes to its continued use. Users want transparency, wireless withdrawals and easy-to-find ATMs. Is the future truly cashless?

Top 10 Countries Most Reliant on Cash (source: Merchant's machine)

How does an ATM environment work?

The ATM market is a complex ecosystem involving banks, ATM providers, and end users. Since we mostly use the ATM services while travelling, let's use the following example to illustrate the complex flow of finances through the ATM environment:

Imagine you’re travelling abroad, and you need to withdraw cash from an ATM. You decide to withdraw €75. First, your bank processes your request, converts the amount to local currency, and deducts $109.03 from your account, which includes various fees: a $1.30 ATM surcharge, a $1.01 currency conversion fee, a $5 foreign ATM fee, and a $3 international transaction fee. The ATM network, like PLUS or Cirrus, steps in to facilitate the transaction, charging membership and switch fees. The transaction then goes through a processor, which could be a bank or a third-party service. This processor pays the ATM owner €75, after deducting a €1 surcharge and other interchange fees. Finally, the ATM owner, who could be another bank or an independent operator, dispenses €75 to you. This detailed process ensures that each participant, from your bank to the ATM owner, gets a share of the fees for the service provided.

Example ATM flow of €75 withdrawal

Of course, examples differ depending on the current situation. While the ATM owner, the interbank network, and the bank each apply their own fees to cover the transaction costs. Ultimately, the bank decides how much of these costs will be applied to the transaction.

"ATM fees are biting harder than ever. The average total fee a customer pays for an out-of-network ATM transaction rose to $4.73, a record high, Bankrate found, based on data from non-interest and interest accounts. $3.15, with the average fee the customer’s own bank charges the customer for the out-of-network transaction, $1.58"
Greg McBride, Bankrate’s Chief Financial Analyst

So for users, the convenience of ATMs comes at a cost. ATMs generate revenue through withdrawal fees, balance inquiry fees, and surcharges for non-customers. High fees, especially for cross-network transactions, can be rather unpleasant without transparent information delivery. For instance, Euronet has been criticized for excessive fees, sometimes going beyond 10% of the withdrawn amount.  

Innovation in the ATM market

The ATM market has seen significant innovation over the past few years, although simple cash withdrawal remains a vital component of the global economy. Modern ATMs now offer more user-friendly services. These include contactless transactions, where users can use their banking app or digital wallet through a near-field communication technology without ever touching a physical credit card in their pocket. With the evolution of mobile banking, convenient ATM placement has become a trend, expanding the ability to withdraw money from merely bank branches to supermarkets, airports and other public places. This trend in particular shows the importance of smart data use, including location and navigation features.  

To offer more secure and safe services, biometric authentication and enhanced security features have been implemented to combat fraud with another big trend slowly making its way into banking segment – AI driven safety features that can detect suspicious activity around ATMs. Speaking of fraud, ATM scams continue to evolve as well. Skimming devices, card trapping, and PIN phishing are persistent issues, although technological improvements are gradually mitigating these risks.

Did you know? By 2025, it is projected that over 30 % of ATMs will be equipped with biometric scanners, enhancing security and user convenience, including the integration of advanced interfaces like touchscreens and voice commands.

For users to make informed decisions about ATM usage, transparency is crucial. This creates the necessity for solutions like TapiX that provide enriched data, offering users detailed insights into fees, nearby ATM locations, and network optimization.

Why is data important?

Before TapiX: John, travelling in a foreign country, withdraws cash from an ATM. Unaware of the high fees, he ended up paying more than expected. He struggles to find a nearby ATM with reasonable fees and ends up wasting time and money.

After TapiX: John uses his banking app with data enriched by TapiX. He locates the nearest ATM with transparent fee information, saving both time and money. The banking app provides a detailed breakdown of fees before the transaction, helping John make an informed decision and guides him towards the closest ATM of his bank with free withdrawal and no additional fees.  

How can TapiX help?

The ATM Nearby solution from TapiX seamlessly integrates with your banking app, enabling your customers to quickly locate nearby ATMs. This integration ensures enhanced accessibility and convenience, improving customer satisfaction and engagement.

Detailed ATM Fee Information: TapiX enables banks to offer their customers a detailed breakdown of potential fees before making a transaction. This transparency eliminates unexpected charges, particularly beneficial for customers travelling abroad, thereby enhancing trust and customer experience.  

ATM Locator: The TapiX API provides a solution for real-time navigation to the nearest ATMs, optimizing routes and saving customers' valuable time. This feature enhances the overall user experience and supports customer retention by offering practical and reliable solutions within your banking ecosystem.

ATM Network Optimization: TapiX helps banks analyse transaction data to optimize ATM placements and branch network to better reflect the needs of their clients. Geolocation analysis helps with opening new branches to reach most clients, closing the ones with minimum impact or ensuring ATMs are located where they are most needed.

The future of ATMs is not just about dispensing cash; it's about integrating seamlessly with the digital banking ecosystem, enhancing user experience, and maintaining the delicate balance between cash and cashless transactions.

About author

Michal Maliarov

Senior insider

A creative enthusiast who has spent half of his life in the technology industry. Passionate about fintech, AI, and the mobile tech market. Navigating the thin line between the worlds of media and advertising for over 10 years, where he feels most at home.

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