ATM Kingpin Cardtronics Is Undeterred by Rising Cashless Payments—So Far

Evidence is emerging that efforts to convince more consumers to use contactless payments instead of cash for low-value transactions may be having an impact, at least in countries other than the United States for now.

That’s the take from Cardtronics plc, the giant ATM operator that owned nearly 45,000 U.S. ATMs as of Dec. 31.

The card brands have long paid for marketing campaigns designed to get more consumers to use their payments cards, and now their mobile wallets, to pay for purchases. With the introduction of Apple Pay in 2014, followed by Samsung Pay, Android Pay, and the card brands’ own digital wallets (Masterpass and Visa Checkout), there’s been a stronger push to persuade consumers to pay for low-value transactions electronically.

At least one U.S. ATM trade group took issue with a recent Visa Inc. campaign to award up to $500,000 to 50 eligible U.S. food-service owners if they converted their point-of-sale systems exclusively to electronic payments. The ATMIA said such efforts displace consumer-payment choice.

During a Cardtronics conference call this week to discuss its second-quarter earnings, an analyst asked how contactless payments affected the company in the United Kingdom, where 25% of all card transactions were contactless as of November.

“Tap-and-go has taken a bite out of cash utilization,” said Steven A. Rathgaber, Cardtronics chief executive. “We think it is a force to be reckoned with.”

One potential outcome of the growing use of contactless payments for what would have been cash transactions is less use of bank ATMs, Rathgaber said. “We think that pressure is going to cause banks to continue to whittle down branch count and whittle down ATM count of their branch sites,” he said. “We think the math on that shifts volume in our direction. And we think that enhances our margins over time because it’s largely on existing infrastructure rather than new placements.”

Australian consumers, too, are adopting contactless payments. In March, Mastercard Inc. said 82% of them made a tap-and-go payment once a week. Cardtronics in October bought DirectCash Payments Inc., a Canadian firm that has more than 11,200 ATMs in Australia and New Zealand. While the Australia deal may be challenging the popularity of contactless payments, “it’s also a great market in terms of the scale we instantly acquired, and that gives us an opportunity to sit at the table with the banks and … have a meaningful discussion about how we can serve them,” said Rathgaber, according to a Thomson StreetEvents transcript of the call.

As for the impact of contactless payments, especially for displacing cash transactions, in the United States, Rathgaber is not anticipating a big change yet. U.S. consumers have yet to widely adopt contactless payments. Recent data found that U.S. mobile-wallet adoption has stalled in recent months.

“So, the U.K. environment and the Australian environment are fascinating laboratories to see the future … that might come someday to the United States,” Rathgaber said.