Better ATM Services, a technology innovator in the ATM industry, is now offering an ATM-issued multibrand prepaid card, the myGIFT card.
AH: Better ATM seems to be instrumental in bringing the gift card into the ATM infrastructure. Tell us about your new product, myGIFT card.
TN: Better ATM Services has become the first provider of what we call an ATM-issued multibrand prepaid card. This is a big milestone for us. The unique ATM-dispensed myGIFT One Card Many Choices Discover Prepaid Card allows consumers to shop at premier, nationally recognized restaurant and retail stores.
AH: Where is the card available?
TN: During the pilot program myGIFT cards will be available at walk-up Banner Federal Credit Union ATMs at 11 select Banner Health ATM locations throughout Arizona.
AH: How much is the fee?
TN: There is a $1.95 fee with no additional fees and no other ATM fees.
AH: Is myGIFT a prepaid closed loop card or open loop?
TN: We call it a multi-merchant card. It is a multi-closed loop prepaid card that runs on Discover’s open loop network. Another way to put it is a “selective merchant” card. This particular card has nine different brands, including Macy’s, Lowe’s, Outback Steakhouse, and Bonefish Grill. We call it a selective merchant card because in the home improvement category, for example, it will work at Lowe’s, but not at Home Depot. The cards are redeemable to buy goods and services at these specifics merchants that accept Discover.
AH: Are there plans to change or interchange the brand groups in the future?
TN: Yes, we can bundle it differently. For this pilot program, we worked with Intelispend Prepaid Solutions, creator of the patented merchant filter process, to bring together these different brands. It’s the first ever best selection of the rack.
AH: Why do you think consumers will want to buy gift cards from banks rather than from racks in the supermarket?
TN: There is a need for brands to be sold at other outlets and not just from racks in supermarkets. We did research that shows a link between ATM and gift card users. Eighty-one percent who use ATM to get cash at a credit union also go somewhere to get prepaid cards. So why not keep business right here at the bank.
AH: Will the consumer be confused about a bank ATM dispensing a gift card?
TN: Not really. When you use an ATM card, there are options to choose from. There will be an option that says, “Purchase Gift Card.” You can choose the value you want and the number of cards you wish to purchase.
AH: What is the form factor? Is the myGIFT card plastic, like the traditional gift card?
TN: The new ATM-dispensed card is made of a thin, durable material allowing cards to easily pass through the ATM cash mechanisms and works like any other prepaid card. It comes out like a $20 bill and one portion contains the customer service instructions.
AH: There seem to be a number of partners involved in bringing this program to market. Please explain the entities involved and your role in making it happen.
TN: There’s the bank, of course, card manufacturer and ATM processor. Any bank can use licensing and add Discover technology to its existing line of services. Depending on consumer demand, banks can group things together. All it takes is a simple adjustment to existing ATM machines. In terms of Better ATM Services’ role, we are the bridge between the ATM, transaction processors, banks, networks (Visa, MasterCard, Discover), card companies and legal groups. Or call us the glue in the middle.
AH: I understand there is a charitable component.
TN: Yes, there is a good cause component. For every ATM-dispensed myGIFT Discover card sold through March 2013, 50 cents will be donated to Banner Health Foundation. Banner Federal Credit Union services the Banner Health conglomerate and these donations will have an important effect on the many men, women and children whose health and well-being are impacted by the critical health services provided by Banner Health. Really, the doctors and nurses at Banner Health love gift cards.
AH: What are the advantages of ATM delivery of gift cards?
TN: One advantage is the elimination of theft, since ATM is handled by a guard. Then there is the convenience of ATM locations. ATM is competitive with digital and internet purchases. It’s a PIN transaction using your bank card, ATM or debit, the same way as when you take out cash. The card forms are thinner and lay flat so if the gift card is sent through the mail, it is not easily recognized as a card. So the transport of the card to the recipient is more secure.
AH: In the future, what else can we expect to see delivered from the ATM machine?
TN: We can leverage a lot through the ATM, better than the cards that sell on a rack. There are lots of groupings; game cards, kids’ brands, restaurants, to name a few. All of these grouped targeted products can be made conveniently available.
AH: What is one of the best reasons to use ATM machines to deliver gift cards?
TN: There is no need to replace ATM machines and there are already millions out there, so we can leverage all kinds of things through this technology.
AH: Will banks be able to compete with retail stores where prepaid cards have been sold for a couple of decades and now online?
TN: While prepaid cards have historically been sold at convenience stores, box stores and online, 2013 will see more banking institutions enter the field, diversifying the distribution chain.
AH: But banks don’t appear to have storefronts. What will make consumers think of banks as a retail outlet to purchase a gift card?
TN: Consumers have been buying what is essentially a moving bank account through convenience stores because… well, they’re convenient. That won’t change. While banks as a storefront are not so convenient, their ATM machines are the perfect bridge – they are as commonly found as convenience stores (even more so) and they are perceived as an arm of the bank with the same kind of security.
AH: How do you re-educate prepaid consumers, who haven’t previously worked with ATMs?
TN: I don’t expect that to be a deal breaker. Underbanked customers are already kiosk users – they make utility payments with kiosks, for example. The behavior is not foreign to them.
AH: Do you think that by using ATMs, prepaid customers will become more comfortable with banks and cross over from retail stores to banks for their financial services?
TN: If all goes according to plan for Better ATM, ATMs that sell prepaid cards will turn prepaid customers into pseudo banking customers. And, as consumers become dependent on related banking-type features, they may be willing to pay more fees as long as they are clear. As for fees, consumers may accept and say, ‘I am happy to pay $1 for email notifications of balance. •
Todd Nuttall is CEO, Better ATM Services. Visit Better ATM Services online at www.BetterATMServices.com.