ATM market boom spurs fraud instances

MUMBAI: Rapid development of banks and financial institutions in emerging markets in the BRIC countries signify exceptional growth in the automated teller machine (ATM) markets, a study said.




New technologies as well as customer-friendly applications including mobile top-up, ticketing and bill payment will increase ATM transaction volumes.






A Frost & Sullivan study finds that world ATM markets earned revenue of $2.21 billion in 2005 and estimates to reach $2.88 billion in 2010.





“China, Brazil and India have been identified as being the fastest growing markets in the ATM industry,” notes Frost & Sullivan Research Analyst Aravindh V. “The Indian market is growing at 100 per cent year-on-year.”





Vendors are focusing on manufacturing ATMs locally in these regions to maximize customer service, address cost concerns and gain a superior understanding of local market dynamics.





“In spite of incorporating new technologies and exciting applications into their devices, ATMs are merely used as cash vending machines as consumer awareness on these functionalities is very low. However, the biggest challenge for industry participants is mainly that of back-end and multi-channel integration.”





With the proliferation of ATM facilities there are also increasing instances of fraud. The traditional magnetic stripe based cards are particularly vulnerable to criminals, and excessive fraud rates at ATMs is threatening to stunt the expected growth of the industry especially in regions such as Brazil, Mexico and Thailand.





Unless banks and retailers restore customer confidence, the ATM industry could witness a severe blow with growth rates significantly being lower than anticipated.





The negative effect of ATM fraud is particularly evident in Brazil, where ATMs offer an advanced range of facilities to customers. Banks and financial institutions hesitate to invest heavily in ATMs unless the threat of fraud diminishes.





In the United State, majority of the off-premise ATMs are subjected to ram raids while skimming is the most prevalent form of fraud in Canada.





To counter this, card associations such as Visa and MasterCard are taking preventive measures to win back consumer confidence on ATM transactions. This includes setting deadlines for the industry participants to upgrade to 3-DES compliant machines from 2006.





Further, ATM deployers are employing other security features to reduce fraud, such as smoke canisters and dye markers.





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