Roughly six months after the launch of the world’s first bitcoin ATM, this sector of the bitcoin industry has expanded dramatically, with more than 15 manufacturers competing for prime installation space in major cities and commerce centres around the globe.
However, a new report from the Electronic Funds Transfer Association (EFTA) and the ATM Industry Association (ATMIA) suggests that these entities could soon have powerful new competition in the market, competition that would potentially further accelerate bitcoin adoption in a way that the digital currency’s own native businesses may be unable to replicate.
The report, the second digital currency-focused collaboration between the two organisations, offered up a wide array of research on bitcoin, including a basic overview of the technology and the burgeoning bitcoin ATM sector.
It also provided an interesting new conclusion to the discussion, stating:
“Bitcoin and digital currency integration could become a profitable value-added service for [traditional] ATM operators, provided take-up of virtual currencies and digital cash continues to increase.”
EFTA and ATMIA went on to suggest that established ATM networks – both those operated by financial institutions (FIs) and non-FIs – could gain ‘first-mover advantage’ in the bitcoin industry by leveraging their financial resources and technical capabilities to court this market.
While the suggestion may seem far-fetched, though, it’s actually in line with recent trends in the ATM industry, according to EFTA CEO Kurt Helwig, who told CoinDesk:
“ATMs today, they’re multi-functional, the whole thing is about an omnichannel user experience. They’re not just spitting out cash anymore, they’re providing an array of services in order to meet the consumer demand for convenience.”
Furthermore, given that there are roughly 2.5 million ATMs globally, the addition of these networks, he says, could radically expand access to bitcoin.
Natural fit
For Helwig, bitcoin’s integration into traditional ATMs makes sense for both the emerging digital currency and for ATM providers.
Most importantly for bitcoin, Helwig suggested, is that by integrating with established ATM networks, the technology can benefit from the high level of consumer trust that ATMs have successfully cultivated.
Helwig indicated this union could serve a way to hedge against the uncertainty that arises when consumers use a new technology, stating:
“I think that ATMs are a natural fit for something like bitcoin. A mix of the old and new. ATMs are a proven, safe, convenient, consumer-friendly channel that consumers understand very well, and something that consumers around the world have a great deal of confidence in.”
ATMs operated by major financial institutions and third-party businesses, in turn, would gain access to a new and potentially loyal consumer base.
Given this suggestion, it’s possible they could even reap the same rewards as notable merchants that have successfully leveraged the promotion and business of the bitcoin community.
Who will be first?
Of course, while there is the potential for benefits to be had for both parties, Helwig suggests it’s too early to tell whether FI or non-FI ATM providers would seek to implement bitcoin functionality first.
However, he suggested that both are probably considering the possibilities, saying:
“I think at this point, at an early stage, I think both are looking into this as a potential channel with which to grow their business.”
Helwig is also still unsure of which country would be likely to lead this transition, though EFTA senior consultant Bob Bucceri suggested that the US may be the best candidate, telling CoinDesk:
“I’m comfortable with the regulatory structure in this country. We give the market a chance to shake it out and if it doesn’t, regulators step in. I think that’s why we’ve become a good incubator for a lot of financial technology.”
Teething troubles
Perhaps most notably, Helwig and Bucceri see a parallel between bitcoin’s recent struggles with bad actors and the early days of the traditional ATM market. Helwig explained:
“[In those days], the bad guys that were cutting corners and not following established procedures to make a quick buck were quickly drummed out of the business, but not before making some very very negative headlines. […] In many ways, bitcoin is suffering the slings and arrows of being first to market here, not unlike [early ATM entrants did].”
Both EFTA members indicated that the organisation is still working to determine its stance on bitcoin and digital currencies. Still, Bucceri went so far as to say that he is “optimistic” about bitcoin adoption, and that regulation will ultimately bring safety and security to its marketplace, adding:
“It goes back to this idea of safety and soundness, it’s a leap of faith when someone puts a card in an ATM. [But] that whittling out process with ATMs took place 10 years ago. You don’t have a lot of new coverage on the ATM, its a part of everyone’s life these days.”
However, just what part the traditional ATM sector will play in this transition, and if bitcoin can achieve the same success, remains to be seen.
Traditional ATM via Shutterstock