Having been in the ATM business for nearly two decades, I have been able to unravel the mystery behind how ATMs work as a business. There is no magic potion, but there are several pitfalls and traps that can be avoided if you work with an experienced ATM company. It is very similar to a vending business, the main differences are that this vending machine dispenses cash and deals with banking regulations. The only inventory is twenty dollar bills.

The ATM business is simple. Let’s see all the parts.

• You have a piece of hardware (the ATM).
• You need a good location (retail store, parking lot, restaurant, condominium complex, office building, hospital, medical building, airport, etc.).
• You must fill the ATM with cash (yourself, the location manager, or an armored car company).
• You need a reputable ATM company (they have contracts with an ATM processor, a sponsoring bank, move your money between banks, provide online statements and reports). They should also provide technical support, but some don’t.
• You need your own bank account, where the funds are deposited if you load cash.
• Revenue comes from surcharge (the fee customers pay to use the ATM) a part of the interchange (the fee banks have to pay for the network and processor) and then deduct some network fees. This works a bit more than overloading (we’ll explain it later or you can skip to the end).

Many ATM companies try to make it look complicated, but if you’ve been doing it long enough, it should be a streamlined process. ATM companies that claim to sell you locations, or find your ATM locations and get you to invest in them, are likely scams.

Personally, if I found a good location to put an ATM, why would I offer it to someone else if I could put my own ATM there and make a profit? There are a few reasons, maybe I’m out of state and need someone locally, okay, that’s a good reason. But if I’m a local to the place I would never part with a good place unless I’m going out of business or selling a route.

Knowing the rules, getting all the facts, and crunching all the numbers can ensure that investing in ATMs makes a smart investment and a good business decision. Like any business, you want to know how much you need to invest and what the return is. This is the return on investment. How much time will it take and the income is better than other known instruments. Is the ROI better than keeping the cash in the bank in a regular savings account? Well, these days just about anything pays better than a savings account. Just like real estate, it’s all about location, location, location.

If you select the wrong ATM company to help you navigate the waters, the costs can add up and affect your ROI.

Automatic cashier. Obviously a key component to your business. Buying the wrong machine, an outdated (non-compliant) machine, or not getting a machine from one of the top three manufacturers (Triton, Tranax, Hyosung) can be a nightmare. Freestanding, through the wall or kiosk, which is best for your needs?

The location: Another key component to making sure you’re successful is checking how many people visit the location you select. Do you accept credit cards? Are they an all cash business? What are the other important questions? An experienced ATM company can help you answer all of these questions and more to help you determine if the location might have good potential.

Who loads cash: The ATM owner and the cash loader typically share most of the ATM revenue. So if you plan to own the ATM and load it yourself, you’ll obviously keep most of the revenue. Apart from the cost of the space (you can rent it, sign a placement contract for a part of the income, etc.). There are many types of offers you can make. Armored car service is only a viable option if the ATM works really well (over 500 transactions per month). Armored car service is expensive and typically cost-prohibitive for retail ATMs.

A reputable ATM company will help you with all of the above information, but more importantly, they should help you with your ATM ordering process, delivery arrangements, installation, training, and programming to ensure cash transactions are reliable and secure.

A good ATM company should also provide free technical support 24/7. We see many ATM companies that do not offer this. However, they seem to be a good deal because they offer an unusually high discount. But what good is a high refund if your machine has an error code or a problem, or if you have a problem that you can’t solve because you don’t have anyone to call for help? Or when you call, no one answers the phone. The extra few cents you can earn from some of these ATM companies can cost you hundreds of dollars when it comes to needing the service. Don’t be wise with pennies and foolish with pounds.

How do you make money with ATMs?

Your ATM charges the cardholder a fee (called a surcharge or convenience fee); you, the ATM owner, set this fee. Depending on which ATM company you sign up with, you’ll receive most or all of this fee plus a portion of the swap. Banks pay a small fee to ATM networks for connecting the cardholder to the bank, this is the exchange.

There are many variations and offers similar to credit card processing. An honest ATM company should give you 100% of the surcharge and depending on the number of transactions your ATM makes or the size of your ATM portfolio (if you have multiple machines), they will give you up to $0.15 from the exchange.

To manage your ATMs, you need to make sure that the ATM company offers free technical support 365 days a day, 24 hours a day, 7 days a week. They must also provide you with monthly statements and access to monitor your ATM online at no charge. Other benefits of a reputable ATM company include monthly minimums, monthly fees, and statement fees. Small, inexperienced ATM companies that cannot offer economies of scale may charge for services, while others do not. Caviate Emptor, buyer beware!

Do you want to know more about the ATM business? Check out the links in the authors’ resource box below.