Will the EMV rollout really mean fewer ATMs in the US?

By : Colin Gordon

March 18, 2016 12:30 PM

Could EMV implementation in ATMs lead to fewer cash dispense offerings? So says the Federal Reserve Bank of Atlanta’s team of experts on the Retail Payments Risk Forum.


In the US, the ATM liability shift will begin this year, first with MasterCard cards (October 2016), then with Visa cards to follow a year later (October 2017). According to the Atlanta Fed’s group of commentators, the ATM rollout will follow the same pattern as point-of-sale (POS) terminals did last year.


“The large ATM owners and operators will meet the October 2016 deadline, but many of the small and mid-sized operators, especially those owned by non-financial institutions will not, and will be faced with absorbing the loss of transactions made with counterfeit cards — a fraud loss they haven't experienced in the past,” they explain in their 2016 Payment Prediction.


Overall, the forum believes the ATM base in the US will contract by 10 to 15 percent because of “financial institution mergers and the cost of EMV upgrades.”


But can EMV really produce such an effect on ATM numbers? Looking at the experience of the UK, it would seem unlikely.


EMV was rolled out in the UK a decade ago, so there has been plenty of time to see the true effects of the standard on ATMs. Meanwhile, in 2006, 55 percent of spending at retailers was made on payment cards, compared to 78.5 percent in December 2015. In other words, along with the kind of EMV switchover concerns raised by the Fed commentators, soaring electronic payment volumes (often in place of cash) would, on the face of things, create a perfect storm for ATM numbers.


However, the reverse happened. Last year saw the number of ATMs in the UK swell to nearly 70,000, an all-time high. Importantly, the statistics show a rise in ATMs owned by non-financial institutions — exactly the opposite of what the Forum suggests will occur.


In fact, cash machines owned by independent ATM deployers (IAD) surpassed those owned by banks and building societies for the very first time last year. Independently deployed machines increased by 6.8 percent to 35,531 in 2014. In addition, the number of free ATMs rose 5.2 percent in the year to exceed 50,000 for the first time.


The global trend is still for more, not fewer, ATMs. The Fed’s Retail Payments Risk Forum may worry about fewer ATMs in the US because of EMV, but the experience of the UK suggests otherwise.


Further evidence from Retail Banking Research (Global ATM Market and Forecasts to 2020) into the US market estimates that, by end of 2016, there would be 431,500 ATMs installed with the market estimated to have 50,000 to 55,000 new ATMs shipped on average each year as financial institutions look to upgrade their ATM estate. Total cash withdrawals at an ATM also are forecasted to remain high at 5.5 billion. The average ATM handles around about 1,100 cash withdrawals per month with expectations that although this may decrease slightly, an average US ATM will still be handling over 1,000 cash withdrawals a month. ATMs in the US account for 14% of all those globally and, with $1.5 million withdrawn from North American ATMs every single minute, cash and the ATM would still seem an important self-service channel for consumers.

Colin Gordon

Financial Services SelfServ, Marketing Manager

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Colin Gordon is a Global ATM Marketing Manager based at NCR’s R&D Center in Dundee, Scotland. Colin is responsible for the marketing of NCR’s financial hardware portfolio with a specific focus on activities such as demand generation, sales enablement, market analysis and customer engagements for the ATM business.