The rise of contactless and mobile payments services is continuing to erode the profitability of the world's largest ATM operator, Cardtronics.The company's half-year results filed with the US Securities and Exchange Commission on Friday show the Australian and New Zealand division suffered a 19 per cent decline in pre-tax profit in the six months to the end of June.The local arm posted a first half EBIT of $US7.2 million(A$9.7 million) compared to $US8.98 million for the same period last year.Cardtronics entered the Australia and New Zealand ATM markets early last year after it acquired the operations of global rival, DC Payments.According to disclosures in the SEC filing, the main driver of the earnings slide was a 12 per cent fall in surcharge revenue to $US46.7 million($A63.2 million) on the company's ATM fleet.Cardtronics culled its Australian and New Zealand fleet by more than 700 machines in the 12 months to the end of June, apparently in response to declining transaction volumes caused by the boom in contactless payments. "We face indirect competition from alternative payment options, including card-based and mobile phone-based contactless payment technology in all of our markets," the company's directors stated in the SEC filing."Australia and the UK have reported increasing rates of contactless use."Prior to our acquisition of DC Payments and since our ownership of the Australian component of the business, we have observed declines in transactions at Australian ATMs, as cash-based payments have declined as a percentage of total payments in recent years."In the June quarter Cardtronics had 8,091 machines in its proprietary networks in Australia and New Zealand, compared to 8,816 for the same period last year.However, part of the earnings runoff from the proprietary fleet was retrieved through the company's growing managed services business, which expanded its fleet by 200 machines to 2008 units.Cardtronics' managed services portfolio includes ATMs displaying the HSBC and Bank of Queensland brands.The ATM giant's Australian managing director, David Heine, said the company was focused on growing the managed services arm."It's a competency we're intent on developing in the Australian market," he told Banking Day."And it's an important piece of our business that highlights a point of differentiation between Cardtronics and other providers in the market."Heine said the economics of ATM ownership were transformed last year when the major banks announced they were moving to zero pricing on cash withdrawals.Those repricings have stoked talks this year between banks about pooling their ATM fleets under a utility-business model.The plan, which has been widely discussed by major and regional banks, would involve the appointment of an ATM monoliner to manage the merged network.Cardtronics and a string of other ATM specialists such as Next, NCR and Telstra would be among the frontrunners to secure what could be a lucrative mandate.Heine declined to comment on whether Cardtronics was already engaging with the banks on developing the utility."It's certainly true for ADIs that ATMS are no longer a profit centre  - if they ever were," he said."If banks and other ADIs want to explore how a utility