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Expect Higher ATM Fees After Microsoft Kills Windows XP Support

NEW YORK ( TheStreet) -- Most of the world's ATM machines rely on Microsoft's (MSFT - Get Report) Windows XP to handle all the computations happening behind the screen you see. But Microsoft is finally ending technical support for ancient XP software and wants banks to switch to more modern, secure operating systems to run their cash machines.

Banks aren't prepared for what could happen next. So as Reuters reported many banks are signing deals with Microsoft to keep Windows XP technical support going past the April 8 deadline.

It turns out extended support doesn't come cheap. Reuters believes that banks are set to pay millions to keep XP-based ATMs running. Possibly hundreds of millions. And you can be sure those banks will want to pass along any newly added costs to consumers.

Shares in Microsoft were advancing 0.61% to $37.93 in premarket trading.


WATCH: Microsoft to Profit as Millions of ATM Software Becomes Outdated


There are currently an estimated 2.2 million ATMs worldwide running Windows XP. That comes out to nearly 95% of all ATMs on the planet. According to ATM-maker NCR (NCR), approximately one-third of those XP machines will be switched to another OS before the April deadline. That will leave a huge number still running non-supported software rather than something newer and more secure. Bank officials admit they're facing a shortage of qualified technicians who can  make the needed changes.

Windows XP was officially announced in August 2001 as the successor to the best-forgotten Windows 2000 and Windows ME. XP greatly improved software security, stability and efficiency, basically everything from previous editions. As soon XP was officially released for sale in October 2001, it became an instant hit.

When Microsoft originally announced the existence of its next OS, Windows Vista, in January 2007, XP sales and support was supposed to end within a year or two. But Vista was such a nightmare Microsoft was forced to keep XP alive way past its original expiration date.

Mainstream/consumer support for Windows XP did end in April 2009 but Microsoft decided to keep support going for business users. Until now. Microsoft recommends its Windows 7 as the alternative.

Microsoft explained: "There are certainly large enterprise customers who haven't finished their migrations yet and are purchasing custom support. The cost will depend on both the specific needs of the customer and what support they already have in place, so it's different for every customer."

One-fifth of the world's ATMs are located in the United States. Most U.S. machines can't handle new, more secure bank cards with embedded security microchips gaining popularity in other countries. So U.S. banks will also be dealing with hardware changes in addition to necessary software upgrades..

JPMorgan (JPM) will start converting its 19.200 machines to Windows 7 in July and hopes to finish the task by the end of the year. It will ask Microsoft to extend XP support until then. Bank of America (BAC) also intends to ask for an extension. Citigroup (C), said it's in the process of upgrading its 12,000+ ATMs worldwide.

-- Written by Gary Krakow in New York.

To submit a news tip, send an email to tips@thestreet.com.

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