While the new compliance standards have been on the ATM industry’s radar for many years. Fully understanding the intricacies of the new rules could be an overwhelming task for many storeowners.
By Pat Pape, Contributing Editor.
The ATM industry is currently facing the most complicated, but critical challenge it has ever encountered—managing the technical, new regulations of the Americans with Disabilities Act (ADA) which go into effect on March 15, 2012.
Approximately 54 million Americans—or an estimated 19% of non-institutionalized U.S. civilians—have some form of disability, according to the U.S. Census Bureau, and the Department of Justice recently issued updated ADA regulations regarding ATM accessibility for that segment of the population.
The new requirements, which become law in just five months, include voice guidance capabilities for the visually impaired and physical accessibility requirements for all disabled users. The detailed ATM standards outline machine height and reach requirements for display screens, numeric PIN pad design and Braille instructions to initiate the voice guidance feature.
Stores with two or more ATMs in the same location must ensure that at least one is completely compliant with the ADA regulations. When a store has an interior and exterior ATM, each piece of equipment is considered to be in a separate location, and one ATM at each location must be compliant.
Depending on the particular ATM, the required changes may be as easy to manage as a software update or as extensive as a total machine replacement. Minor upgrades to newer ATMs could cost around $1,000. Vendors currently offer fully compliant ATMs, and replacement of an aged and outdated ATM could run as high as $3,000.
Who Owns Your ATM?
According to Leon Majors, president of the Payment Systems Practice of Phoenix Marketing International, a Rhinebeck, N.Y., marketing services firm, many convenience retailers may own their store’s ATM and not even know it. As a result, the upgrade requirements will be the retailer’s responsibility.
“They need to review their contracts,” Majors said of storeowners. “If they’ve had an ATM for five years and made monthly payments, it’s quite likely they own it, so the upgrade decision is theirs. Recently, ATM prices have come down, so new units may actually cost less than what store operators originally paid.”
Even if a convenience store doesn’t own its ATM, the machine must be compliant or the storeowner could be liable. No one is being assigned to check every machine to ensure compliance and all machines will continue to work after the 2012 deadline, but most industry experts expect to see lawsuits related to the ADA regulations.
“Sadly, ADA compliance will probably be resolved through lawsuits,” Majors said. “Storeowners will be the initial targets of those lawsuits. Providers will likely be named as well, but the first impact will be on the store owner. They are responsible, and they should make sure to ask their provider if they are compliant.”
Worth the Expense?
The average ATM is upgradeable at some price. “Very old machines—those 5-7 years or older—may not be,” said Majors. “Some upgrades are half the cost of a new machine, so some owners have opted to replace.”
Businesses may choose to remove non-compliant ATMs that don’t generate enough transactions to justify an upgrade. “Most convenience store machines do, but many smaller retailers’ ATMs may not,” said Majors.
There is a variety of criteria store operators should consider before making a final decision, said Dean Stewart, senior director of advanced solutions product management for Diebold, a technology company headquartered in Canton, Ohio, and focused on self-service and security capabilities.
”First is the age of the equipment,” Stewart said. “It needs to be determined whether the cost of upgrading an old machine is worth it versus the residual value of the ATM itself. Second is strategic use of the machine. If a financial institution is making an investment in an upgrade, are there other factors they should consider? For example, do they desire to move to deposit automation or other advanced ATM functionalities? Regulatory issues are a factor as well.”
Some locations with low-volume ATM transactions may still want an ATM for customer convenience. “In those cases, the bill will likely fall solely on the merchant,” Majors said. “Total cost of the nationwide project can’t really be estimated as there are too many variables and options, but total cost of upgrades to retail machines, not including bank-owned units, is in the tens of millions of dollars.”
Permanently removing a low-volume, non-compliant ATM from a store is not difficult if the machine is freestanding, and that should not disrupt business. However, the job should be done by the ATM provider, Majors said. It is not a job for a do-it-yourselfer.
When it comes to ADA regulations, the timing is right for John Miller, president of Colonial Pantry, an eight-store chain headquartered in Champaign, Ill. All of his stores have ATMs, but “they’re older ones that need to be replaced,” he said. “Replacing them should be a business decision.”
Colonial Pantry’s third-party ATM supplier believes the current equipment generates enough activity that the machines should be replaced. “The Disabilities Act has changed as time has progressed,” said Miller. “For people who are lucky, like my supplier, and have older ATMS that need to be replaced anyway, they will be replaced with the proper products.”
Majors believes that this is a good time for all retailers to review their ATM processing contracts to ensure they are getting a good deal. “This is especially true if they have locations generating 500 or more transactions each month,” he said.
Changes are now underway in the ATM industry, mostly in connection with bank-owned machines, and there is much work to be done in less than a year. “Two-thirds of all ATMs have some compliant features,” said Majors, “but less than one-third were fully compliant at the end of 2010.”
Many convenience retailers are now upgrading or making plans to upgrade their ATMS. At Tulsa, Okla.-based Quik Trip, most of the ATMs are bank-owned and the majority are already compliant, said Mike Thornbrugh, spokesperson for the approximately 600-store chain.“The others will be soon. We’ve got a head start, so we should be OK.”
The store engineering team at Kwik Trip in La Crosse, Wis., meets this month with ADA specialists to discuss all ADA regulations that impact the stores. “We will find out then what we will need to adjust, not just for ATMs, but for anything we should adjust,” said John McHugh, who manages corporate communications and leadership development for the chain. “Last spring, in preparation, we went on the road and trained every store leader, assistant store leader and department head on the Americans with Disabilities Act Amendment Act.”
According to Majors, all business owners should look at how the new ADA regulations impact their entire operation, not just ATMs. “Merchants need to make sure they meet all the standard ADA physical requirements, too,” he said. “We think there’s a pent-up base of lawsuits waiting for these regulations to be implemented, and if there’s anything else about the store that’s in violation, it needs to be corrected.”