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© 2014 Networld Media Group | Sponsored by Elan

A tighter regulatory climate and ongoing payments industry ATM upgrade requirements mean that it increasingly makes sense for financial institu-tions to outsource the management of their ATMs. With a managed service provider looking after its ATM fleet, an FI can focus on core revenue-gener-ating activities.

“With all the current ATM industry regulations, such as PCI DSS (Payment Card Industry Data Security Standard), which are very difficult to comply with, and the need to upgrade to Windows 7 and EMV, it makes sense to outsource your ATM management,” said Adam Hobelmann, senior vice president at Chesterfield, Missouri-based ISO Welch ATM. “Ten years ago, it wasn’t as hard to operate your own ATMs and do everything yourself.”

“An ATM managed services provider can help ATM deployers with compli-ance issues such as ADA (Americans with Disabilities Act), EMV migration and PCI,” said Dan Gruber, solutions consultant for managed services at Elan Financial Services, an ATM services provider based in Pittsburgh, Pennsylvania.

ATM deployers who are found to be noncompliant with PCI DSS or who suffer data breaches face substantial fines from the payment card schemes as well as potential liability for the cost of any resulting fraud.

“Elan is responsible for ensuring that its managed services clients’ ATMs are PCI compliant,” said David Krzic, Elan’s senior ATM product manager. “We’re very proactive in maintaining compliance in that area.”

Elan also checks that its managed services clients’ ATMs have braille de-cals, that ATMs are compliant with ADA height and side reach requirements and that the voice guidance works correctly.

Stricter regulatory enforcementATM deployers need to be aware that an already-stringent regulatory envi-ronment is about to become tougher.

ATM managed services provide you with total control and visibility into the cost, status and reliability of your ATM network.

How Banks Benefit from Using an ATM Managed Services Provider

By Robin Arnfield ATMmarketplace.com

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“An ATM managed services provider can help ATM deployers with compliance issues such as ADA (Americans with Disabilities Act), EMV migration and PCI.” — Dan Gruber, solutions consultant for managed services at Elan Financial Services

How Banks Benefit from Using an ATM Managed Services Provider

2© 2014 Networld Media Group | Sponsored by Elan

ATM security is top of mind for the Federal Financial Institutions Exami-nation Council (FFIEC), a group of regulatory agencies comprised of the Board of Governors of the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Adminis-tration (NCUA), the Office of the Comptroller of the Currency (OCC), and the Consumer Financial Protection Bureau (CFPB).

On October 7, 2013, the FFIEC issued a Press Release concerning Micro-soft’s discontinuation of support for its Windows® XP operating system as of April 8, 2014 and the regulator’s expectations that financial institutions would upgrade their ATMs by that date or come up with a documented plan for how they effectively mitigate the risk. In April 2014, the FFIEC issued a warning to FIs to strengthen their ATM security and card issuer authoriza-tion systems against the risk of cyber-attacks.

“Regulators are looking specifically at how financial institutions are main-taining the security of their ATMs,” said Laura Jones, senior vice president and director of risk for Elan. “We actively monitor the guidance coming from these regulatory bodies, and I expect much more focus from them in this area during audits in the years to come.”

Regulators are not the only group with oversight responsibility. Payment networks like Visa® and MasterCard®, who sit on the PCI Security Stan-dards Council, also require adherence to PCI standards through their operating regulations. Encrypting PIN pads (EPPs), software patches, and access to cardholder data via the ATM are all areas that are subject to network regulation. A financial institution can face strict fines or even loss of membership in the network if it fails to comply.

EMV™Starting in October 2016, counterfeit card fraud liability will shift to ATM acquirers that don’t accept MasterCard-branded EMV cards at U.S. ATMs. Then starting in October 2017, counterfeit card fraud liability will shift to ATM acquirers that don’t accept Visa-branded EMV cards at U.S. ATMs.

Once MasterCard and Visa deadlines have passed, if an EMV card is used fraudulently at an ATM that doesn’t support EMV, the acquirer will be liable for the issuer’s fraud losses.

A financial institution must complete three steps in the migration to EMV. First, it needs to issue cards that contain EMV chips. Second, it has to ensure that its ATM card readers are EMV-capable. Third, the ATM acquir-ing network must be configured and tested end-to-end for EMV compliance.

How Banks Benefit from Using an ATM Managed Services Provider

3© 2014 Networld Media Group | Sponsored by Elan

“With either type of program, an FI can be assured of receiving the expertise and technology to prepare its ATMs for the future.” — Troy Cullen, president of Elan

That step involves testing the total hardware and software solution, from card acceptance at ATMs through the acquiring switch to the authorization of all on-us and off-us transactions — and back again.

An ATM managed services provider such as Elan can help clients with ev-ery step of their EMV migration. “We have updated our managed services clients’ ATMs with EMV card readers and already loaded EMV-ready soft-ware onto their ATMs,” Krzic said. “Once Elan completes its EMV certifica-tion process, these managed services ATMs will be ready to support EMV.”

Windows® 7In April 2014, Microsoft® stopped providing updates for Windows XP. As a result, ATMs that haven’t migrated from XP to Windows 7 will not receive Microsoft security patches and will be in breach of the PCI DSS standard that requires ATM deployers to keep their operating systems updated with security patches to protect against known vulnerabilities.

Windows 7 includes built-in security features that banks will need, including a keyboard filter to prevent unauthorized use of functions, such as control-alt-delete, that could provide unauthorized access to their systems, and Session 0 isolation, which makes it more difficult for malware to gain entry.

An ATM managed services provider plays an important role in helping clients with Windows 7 migration. The provider will identify which ATMs in a client’s network need to be recertified post-update with ATM switch provid-ers and will provide any necessary training and support.

Future-proofingAn FI with a smaller ATM fleet can reap significant benefits by outsourcing ATM management. “If you have only 10 to 15 ATMs, for example, there is no advantage in running them yourself,” Gruber said. “Smaller FIs just don’t have the resources to manage their own ATMs, as they have so many other things to do.”

Elan offers a flexible, turnkey ATM program that provides complete client support and card management, Web-based reporting and administration and a service guarantee for all Elan transaction-management programs. A modified outsourcing plan, in which the FI owns the ATM and contracts with Elan only for needed services, is available as well.

“With either type of program, an FI can be assured of receiving the exper-tise and technology to prepare its ATMs for the future,” said Troy Cullen, president of Elan.

How Banks Benefit from Using an ATM Managed Services Provider

4© 2014 Networld Media Group | Sponsored by Elan

The ATM industry is going through a period of rapid evolution and, without the support of an experienced managed services provider, it can be challenging for ATM deployers to keep up with changes in ATM technology and services.

For example, to appeal to smartphone- and tablet-savvy millennials, FIs will need to provide new ATM capabilities, such as personalized user interfac-es, iPad-style touchscreen swiping and zooming and cardless transactions using a smartphone app.

A service that provides mobile-ATM integration appeals to tech-savvy customers because it allows them to save time by setting up cash with-drawals in advance on their smartphones. It also enables a more secure interaction, since the transaction can be completed without a card, which could be skimmed.

Additional revenuesInterchange fees paid to U.S. ATM operators have declined significantly in recent years. To compensate for the reduction in their interchange income, ATM deployers can generate additional revenues by providing new prod-ucts and services at their ATMs, such as bill payment, check cashing, dynamic currency conversion, advertising and prepaid cards. A managed services provider can assist ATM deployers in expanding the functionality of their ATM fleets.

In addition, an ATM managed services provider can help banks turn their ATMs into effective cross-selling tools through an ATM branding program. While customers are waiting for their cash to be dispensed, the ATM screen can alert them to products and services offered by their bank, such as a great rate on a new loan or savings instrument.

By showcasing its branding in a professional way at ATMs, an FI can increase transaction volumes and significantly improve customer retention and growth. Customers of one ATM branding company reported an average spike of 20 percent to 25 percent in ATM transactions after an ATM man-aged services branding implementation.

Other benefitsIn a highly competitive market, banks cannot afford to risk alienating cus-tomers through unplanned ATM downtime. A U.S. survey by ATM testing company Level Four, which is owned by Clear2Pay, found that 28 percent of respondents would be very likely to switch banks if they experienced recurrent instances of ATM unavailability.

• 23,000 ATMs

• 1,600 member financial institutions

• 28 ISO/IAD members

• 60 million MoneyPass cards issued by MoneyPass members

• 6 million MoneyPass ATM transac-tions per month

• MoneyPass cardholders saved an es-timated $150 million in 2012

MoneyPass key facts

• Scheduled and emergency cash replenishment; ATM machine bal-ancing; and consolidated electronic reporting for fast, accurate settle-ment and reconciliation

• First-line maintenance and ATM re-pair services that increase uptime by efficiently managing paper sup-plies, currency jams, cash receipts and more

• Consolidated reports in electronic format for simplified reconciliation and access to critical information when the client needs it

Elan’s cash-replenishment and ATM-maintenance services

How Banks Benefit from Using an ATM Managed Services Provider

5© 2014 Networld Media Group | Sponsored by Elan

By contracting out their ATM and network monitoring, cash forecasting and first- and second-line maintenance to a managed services provider, FIs can increase ATMs’ availability and productivity and boost customer satisfaction levels.

“When you outsource your ATMs and your cash management to a man-aged service provider, you get a single point of contact for everything, instead of having to deal with different companies,” said Paul Gooch, Elan’s assistant vice president and senior solutions consultant. “For its managed service clients, Elan is the single point of contact for cash in transit, mainte-nance, servicing and ADA compliance verification.” Using a trusted service provider like Elan to manage the complex and resource-intensive land-scape of ATM ownership can be a huge win for a bank’s bottom line.

Elan Financial Services, based in Pitts-burgh, Pennsylvania, is a business unit of U.S. Bank National Association. Elan has provided a full range of payments products and services to ISOs and financial institu-tions for over 40 years. Visit www.elanfinan-cialservices.com/atm-debit-fi/atm-process-ing.php#atmmanaged for more information about ATM managed services from Elan.

“EMV” is a trademark owned by EMVCo LLC.

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