Cashless ATMs have been in the news cycle regularly, particularly in the cannabis space. These are more or less point-of-sale devices that mimic ATMs, but the devices can also land merchants in trouble as they violate ATM network rules.
Cashless ATMs have been in the news cycle regularly, particularly in the cannabis space. These are more or less point-of-sale devices that mimic ATMs, but these devices can also land merchants in trouble as they violate ATM network rules.
Recently, NCR Corp. made a major push to turn off services to cashless ATMs, which led dispensaries in Arizona, California and Massachusetts switching to cash.
A panel at ATMIA, held from Feb. 7-9 in New Orleans, discussed the issue. David Tente, executive director of U.S. and Americas, ATMIA, moderated the discussion with panelists Herman Trejo, sales director at NationalLink Inc., Kevin Watts, COO at Switch Commerce LLC and Phil Ricci, SVP, payment solutions, at Pathward.
Tente discussed how cannabis dispensaries lack access to banking and payments systems as cannabis is still illegal at the federal level. But "Cashless ATM" providers give them terminals that charge them fees and allow them to get around these rules, while not telling them that these machines "violate network rules and leave them open to fines."
These cashless ATMs create big headaches for ATM vendors, as Watts knows first hand after his business got an email from Visa three years ago about these ATM transactions that happened via POS.
"I've turned off about 7,000 terminals. It's draining my resources I'd rather use elsewhere," Watts said.
Trejo said these systems, "mimic ATMs very well" and they are "direct threats to our industry."
In particular, Trejo said the ATMs cause problems since networks look for reasons to regulate more, and these cashless ATMs give them more justification to do so.
And even though Watts noted that Switch Commerces uses analytics to try to find these cashless ATMs, it doesn't always work.
However, these ATMs are on borrowed time since they are continually being tracked down and turned off. In addition cannabis will soon be regulated on the federal level which will remove the need for these cashless ATMs, Trejo said.
Building on this, Ricci said there are two major problems with chasing down cashless ATMs. First, it takes a massive amount of resources to track them down. Second, it's not a heavily priced industry. Because of these two issues, it's a huge drain to track these ATMs down, for very little award.
Ricci said banks are already working on solutions to get cannabis payments solutions and once these solutions are integrated, these cashless ATMs will disappear.
"This is a today problem with a tomorrow solution," Ricci said. "If you're going to spend all this money, you sure as hell better have a plan." "Three to five years form now, those who build correct solutions will have a good share in the market and those who build stupid solutions will be looking at all the money everyone else is making."
"This too shall pass," Watts said.
In the meantime, Watts recommends that if you see one in public to take a picture and get in touch with the provider to let them know about this violation.
Trejo also said businesses should take this as an opportunity to build relationships with cannabis dispensaries or other users of these cashless ATMs.
"The bright side is you have the relationship with these locations," Trejo said.
Lastly, Ricci recommended that companies do not ignore cannabis, since it is quickly gaining recognition and is a massive industry.
"It's the new liquor," he said. "When this thing gets fully licensed, people will be stopping by the store to grab their bud and their bud."
Ricci said if you don't reach out to work with these businesses "you're missing the boat."
Originally Published by ATM Marketplace | March 10, 2023
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