ATM deployer’s business in RP 'working well'

MANILA, Philippines - From just five in December 2007, the number of automated teller machines (ATMs) that Electronic Network Cash Tellers, Inc. (ENCASH) has deployed has ballooned to 73, proof that its business model, adapted from the US, is working well in the Philippines. "Business is doubling," said Eric J. Severino, ENCASH president, in a briefing Wednesday. ENCASH is an independent ATM deployer, setting up ATMs, which are very costly, in rural banks and business establishments in areas where there are no commercial banks. It has also created its own ATM network, and is interconnected with the Megalink ATM network. A cardholder of a commercial bank residing in a rural area, therefore, need not travel far to to use his or her bank’s ATM to withdraw cash, for instance, if an ENCASH ATM is installed in a rural bank in that area. Rural banks, at the moment, are incapable of issuing their ATM cards, although they are gearing up to do so. Mr. Severino noticed how banks in the US are outsourcing their ATM services, being a non-core banking function, and decided to adapt the idea to the Philippines. From five in end-2007, the number of ENCASH’s deployed ATMs slowly grew to 21 in February, 34 in March and 60 in April. Mr. Severino told reporters Wednesday that the latest total is 73 ATMs, with 15 up for deployment. More machines meant more customers, more transactions, and more revenues. ENCASH charges a "convenience fee" of P25 per transaction. The number of withdrawals, for instance, rose from around 3,900 in January, 12,700 in March, 25,000 in May and to 51,000 in July. Withdrawals comprised roughly half of around 170,000 transactions ENCASH recorded in the first half. The aim for 2008, Mr. Severino said, is to deploy a total of 110 ATMs, and to tap business establishments such as gas stations, bingo halls, karaoke bars and convenience stores as partners. A requirement with non-bank customers, however, is they must be near enough so cash replenishment can be done efficiently. Mr. Severino said ENCASH’s expansion is and will be financed by a $3-million infusion by three foreign investors. While ENCASH’s wireless ATMs may be less reliable than the wired kind, the convenience they present to rural folks means they will continue to be in wide use. "Customers have a choice. It’s either our ATMs or go far to use the commercial banks’ ATMs," said Marga C. Estebanlar, ENCASH sales manager. Rural banks benefit as well, as they prep up ENCASH ATM users about the ATM cards they intend to issue in the future. "We are slowly educating the market and lowering the barriers to providing service to the communities," said Ms. Estebanlar. However, rural banks, which operate by a five-day workweek and wish to save on costs, need more convincing about opening the ATMs on weekends. "It’s a mindset we need to change," added Ms. Estebanlar. - BusinessWorld