With pressure growing to generate additional ATM-related revenues, non-financial electronic transactions (including prepaid airtime top-up for mobile phones, Internet shopping and prepaid stored-value card recharge) are being aggressively explored by US cash machine operators as possible cost-effective revenue streams. According to TowerGroup, non-financial content currently accounts for a bare one per cent of total US ATM traffic.

This coincides with US wireless phone operators like AT&T Wireless (GO Phone), Verizon (FREEUP), and Virgin Mobile USA driving increased consumer adoption in the prepaid mobile phone market, particularly within new user demographics like the high-potential youth/student markets.

Today, ATM content like mobile top-up is in only limited US deployment, largely concentrated in non-traditional ATMs (like those found at supermarkets, convenience stores and gas stations, or owned by Internet banks and independent sales organisations). These ATMs have lower average transaction volumes than bank machines and thus a stronger need for alternate revenue.

TowerGroup believes that ATM networks and retailers will benefit from rising US adoption of mobile prepaid services, but that the ATM will be just one of several top-up channels used by consumers.

"The attention being paid to mobile top-up at the ATM is important, since its rise will lead to a significant incremental ATM revenue stream over the next five years," says Ed Kountz, senior analyst in the emerging technology solutions practice at TowerGroup. "However, prepaid mobile is itself indicative of a broader trend: the rise of new types of content available at the ATM and elsewhere, whose purchase can be partially or totally transacted outside of the established financial services payment networks."

Kountz notes that while the ATM will not become the dominant channel for a payment mechanism like mobile top-up over the next few years, it is still a critical venue to explore. "If ATM operators do nothing, they'll continue to face rising competition, slowing volumes and a payments market that is increasingly displacing both cash and the frequency of cash withdrawals. It makes sense for ATM operators to begin exploring the location, branding, marketing and content aggregation issues that exist in a space like mobile top-up. Targeted at the right user groups, mobile top-up and related services can prove an effective entry point into these larger issues."