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NexTran hopes to grab a major share of the market with its all-in-one cash machineSouth Hackensack

It’s a busy Saturday morning and a harried woman has errands to run. She needs to get cash, buy tickets for an upcoming concert, and refill her cellular phone card, all in 20 minutes.

A financial Mission Impossible? Five years ago yes, but with the cutting-edge advancements in computer and telephony software now available, consumers will soon be able to perform all these tasks from one familiar shiny kiosk—their local ATM.

“We’re dispensing phone cards out of the ATMs now,” says Eric Park, senior vice president and co-founder of NexTran Group, a South Hackensack-based ATM manufacturer. It sees a brave new ATM world where consumers not only get money but pay for or order a plethora of goods and services. NexTran’s point-of- transaction services now come standard on its new ATMs.

In November NexTran introduced its next generation ATMs for small convenience stories like 7-Eleven at a Las Vegas trade show. A cross between a typical ATM and a futuristic video game, the machines come equipped with full-motion sound and voice guidance, and seven language options. Besides spitting out cash, these super ATMs allow consumers to perform several prepaid transactions, including wiring money to another location, buying a prepaid telephone calling card or paying for movie tickets in advance. The machines can potentially pull in several hundred dollars in pre-paid media sales per month, says NexTran CEO and co-founder Tony Park.

NextTran and its processor subsidiary, Innobeta Systems, began developing multi-use ATMs in 2003, when they teamed with Euronet Worldwide’s PaySpot program. It lets consumers purchase prepaid wireless airtime and long-distance calling plans from ATMs and point-of-sale terminals. Consumers can recharge prepaid accounts from all major wireless national carriers and 20 regional carriers.

“What we’re doing is creating this multi-function ATM,” says Eric Park, who is also chief financial officer of Innobeta. “It’s making a lot more revenue than a conventional ATM is doing. Let’s say you’re doing a regular cash withdrawal transaction, you’ll now be able to buy a pre-paid phone card, cutting out all the middlemen.”

One industry expert says the ATM revolution will be in full swing over the next three to five years. “The new class of ATM machines that can speak, recognize machines, play videos and connect the consumer to a variety of services is already here,” says Jerry Silva, a senior analyst for TowerGroup in Needham, Massachusetts. “It’s a matter of the customer adopting the ATM as a feature-rich and convenient point of contact.”

Eric Park and brother Tony founded NexTran in 1998 as a reseller of ATMs. The company now manufactures, sells and services ATMs, processes ATM transactions and provides public Internet service. NexTran has installed ATMs in all major U.S. markets, including New York, Los Angeles, Chicago, Atlanta and Washington D.C. It operates in Latin America, Europe and the Middle East and has a 60% share of the ATM market in South Korea.

Eric Park says NexTran will rake in roughly $50 million in revenues for its current fiscal year, a 25% increase over sales of roughly $40 million last year. NexTran employs 100 workers, with 80 based in its South Hackensack headquarters. It operates branch offices in Pittsburgh, Portland, Oregon, Chicago, and Atlanta and plans to add five more cities in 2006.

NexTran now plans to blow its own horn about its multi-use ATMs with an aggressive marketing and advertising campaign aimed at its existing ATM clients. “It’s a new image that we’re trying to project,”says Eric Park. “We’re going out to all of our locations across the state and basically rebranding ourselves under the NexTran brand as the company that offers faster transactions and is the technology leader.”

The U.S. still lags behind the rest of the world when it comes to electronic commerce. Despite all the Web-enabled possibilities of the newest generation of ATMs, most machines still communicate using 30-year-old networking protocols that were originally developed by IBM for its mainframe computers in the 1970s.

The financial industry has also been slow to embrace new technological gizmos adaptable to the ATM, including computer chip-embedded smart cards that let customers perform a variety of electronic transactions. The reason for the roadblock: cost. “The issuing bank doesn’t want to pay $1 dollar for the smart card vs. 10¢ for the for the magnetic strip card,” says Eric Park.

But banks may be starting to change their minds. A 2005 survey by TowerGroup and the American Bankers Association projected that ATM spending by large U.S. banks would rise 12% to approximately $1.8 billion this year. According to the business technology research firm Source Media, banks installed more ATMs than nonbanks last year, for the first time since ATM operators were allowed to hit consumers with surcharges.

Meanwhile, NexTran wants to cash in on another new ATM technology that company executives say will reduce a bank’s operating costs by 30% and slice a customer’s ATM wait time by more than 50%. By installing a wireless Internet Protocol (IP) attachment in place of a standard wired telephony dial-up, an ATM machine can process transactions more than three times faster that the standard wired system. “What used to take anywhere from 20 to 30 seconds will be cut to eight seconds,” Park says.

He says wedding IP technology to ATMs has become practical as production costs have fallen. “Because of modems, Internet Protocol and hardware got much cheaper,” Park says. “We were able to deliver a much faster solution for less cost than a [telephone] dialup.” NexTrans’ Internet connection is provided through Verizon, Nextel and Transaction Network Services.

For banks and ATM vendors, the big advantage to IP is cutting costs. Equipping an ATM with IP can take a big cut out of its monthly operating costs. A dial-up installation costs from $300 to $500 to install and roughly $35 a month for a phone line that dials an 800 number.

NexTran charges ATM operators a one-time $500-to-$700 installatioin fee.

“The monthly Internet charge is now only $20 versus the $35 they paid for a local dial-up line,” Park says. “It is a cost-savings service for everybody. The ATM companies, the banks, whoever today is in a deployment business in ATMs, will save a lot of ongoing costs.”

The other big advantage to an IP-equipped ATM is speed. Since an IP connection is always on, transaction authorization typically occurs in 3-to-5 seconds compared to 15-to-20 seconds for a conventional telephone dial-up system.

“That’s particularly important during peak times in retail environments, such as 6 a.m. to 8 a.m. and 5 p.m. to 7 p.m. drive times,” says David McCrary, a sales vice president for the ATM division of eFunds Solutions, a finance company based in Toronto, Canada.

Jeff Bippus, senior business manager for Mac’s Convenience Stores, a Canadian chain of gas stations and convenience stores says his company streamlined its operations by eliminating the telephone lines that were used for dial-up ATM connections. Removing the roughly $50 per location adds up to a significant saving when multiplied over hundreds of locations, Bippus says.

Eric Park acknowledges that NextTran’s ATM conversion to IP won’t happen overnight. “As companies retool, we’re going to replace [ATMs] with ones that have IP,” he said. “The existing ones that we’re going to have to convert are maybe going to take a little longer.”

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