Who Owns Your ATM?

by David Lott
Posted On: 9/20/2018

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 David Lott
Counting the number of ATMs in the United States has been a challenge since 1996, when independent operators (nonfinancial institutions) started deploying ATMs/cash dispensers. That was when Visa and MasterCard dropped their prohibition against surcharges. But a recent study sponsored by the National ATM Council largely overcame that challenge while also gathering some interesting results about the locational aspects of the independently owned ATMs compared to machines owned by financial institutions (FI).

The study was conducted earlier this year by a team of economics professors from the Department of Economics and Geography in the University of North Florida's Coggin School of Business. The study's primary objective was to determine whether the locations of independently owned ATMs and FI-owned ATMs were different in terms of demographics and socioeconomic status.

Using a database from Infogroup, the team identified 470,135 ATMs operating in 2016. About 41% of these were FI-owned, and the rest were independently owned. The majority of the independent ATMs are in retail establishments, with heavy concentrations in convenience stores, pharmacies and casual dining locations.
 
The research team plotted the locations of all the ATMs, overlaying demographic and socioeconomic data they obtained from the U.S. Census Bureau and its American Community Survey. Among the 10 main elements the researchers used were median age, unemployment rate, education level, household income, disposable income, and average home values.

They concluded that the independent ATMs "tend to be located in areas with less population, lower population density, lower median and average income (household and disposable), lower labor force participation rate, less college-educated population, higher unemployment rate and lower home values."

So what does this mean?

Well, it means that the independently owned ATMs are providing a vital service in rural and inner-city areas. Other studies -- such as the Federal Reserve's Diary of Consumer Payment Choice -- have shown that lower-income households (those earning less than $50,000) use cash as their primary method of payment. Therefore, these independent ATM owners are giving these households access to financial services that would otherwise be limited.

A post from December 2014 highlighted some of the challenges the independent operators were facing. Stand by for a future post that will provide an update on this part of our country's payment ecosystem.



»DAVID LOTT is a payments risk expert with the Retail Payments Risk Forum at the Federal Reserve Bank of Atlanta and has more than 35 years of experience in the retail banking and payments industries.  

David Lott wrote this blog for the Atlanta Federal Reserve Bank, which provided permission for its publication by Vending Times.