April 8 , 2010 – Press Release
ATMIA and Tremont Capital Group Conduct Business Impact Study of Interchange Changes on ISO Community in the United States
The ATM Industry Association (ATMIA) and Tremont Capital Group, one of the nation’s leading consulting firms specializing in the ATM industry, have announced the completion of a proprietary business impact study assessing anticipated revenue losses for ISOs following MasterCard/Cirrus’s reduction in interchange effective in April 2010; the new system includes a three tier interchange structure.
The proprietary analysis, carried out by Tremont Capital Group’s CEO, Sam M. Ditzion, a widely respected industry consultant, was compiled using data from 25 ISOs representing nearly 137,000 ATMs across the country. In addition, Tremont Capital Group conducted interviews with a number of the nation’s largest processors and sponsoring financial institutions to develop a quantitative and qualitative picture of the scale of the likely impacts of the changes implemented by MasterCard/Cirrus. The survey data represent about 67% of the nation’s ISO ATMs and 34% of the nation’s total ATM base.
Tremont Capital Group determined that the nation’s ISOs, which have built up a significant majority of the off-premise ATM market, conduct an estimated 124.2 million MasterCard/Cirrus domestic cash withdrawal transactions per year. On average, an ISO in the United States currently routes an estimated 17% of its total transactions through MasterCard/Cirrus. The study found that the new interchange changes could result in a reduction of between 36% and 47% in the net interchange rate for domestic cash withdrawal transactions that are routed through MasterCard/Cirrus. Tremont Capital Group projected that, in one somewhat conservative scenario, the domestic ISO ATM industry could experience an interchange income reduction of up to approximately $19.7 million annually; in a more aggressive scenario, the domestic ISO ATM industry could see a net decrease of approximately $25.6 million annually.
The survey also identified several logistical challenges associated with the changes in addition to the expected financial losses described above, such as an inability to quantify the changes to interchange and a short lead-time for implementation. ATMIA and Tremont Capital Group will continue to facilitate negotiations between key stakeholders to attempt to minimize impacts.
“We have empathy for ISOs who will take a significant hit on their bottom line profits,” Mike Lee, CEO of ATMIA, a global non-profit trade association, commented. “We are advocating an analytical approach and we are keen to facilitate fruitful and intelligent industry discussions across the ATM value chain. ISOs have built up an enormous off-premise ATM infrastructure in the United States and deserve a real voice here.”
“The interchange rate changes recently introduced by MasterCard/Cirrus will significantly impact all ATMs in the United States,” said Sam M. Ditzion, CEO of Tremont Capital Group. “In order to proactively minimize the impact, all stakeholders must first understand the scope of these changes and then accurately quantify how they will affect their individual businesses.”
For more information, contact Mike Lee at mike@atmia.com.
ABOUT ATMIA (www.atmia.com)
The ATM Industry Association is a global non-profit trade association with over 1,500 members in about 50 countries. Its mission is to promote ATM convenience, growth and usage worldwide, protect the ATM industry’s assets, interests, good name and public trust; and provide education, best practices, political voice and networking opportunities for member organizations. In June 2003, ATMIA established the Global ATM Security Alliance (GASA) with the mission to employ global security resources in a united alliance in order to protect the ATM industry from criminal activity.
ABOUT TREMONT CAPITAL GROUP, INC.
Tremont Capital Group is the nation’s leading provider of business strategy consulting, valuation, and merger & acquisition advisory services to the ATM and related industries. To learn more about the services provided by Tremont Capital Group, please visit www.tremontcapitalgroup.com or call 617-482-8866.