Operating an ATM Machine Business | How ATMs Work

I've been in the ATM machine business since 1992. Before retail merchants ever knew that they could own and operate an ATM themselves. It used to be that only a bank could operate an ATM Machine.

Then in 1992 scrip machines started working on debit networks. Suffice it to say, a scrip machine was simply a machine that accepted your ATM card, spit out a voucher (reciept) that you exchanged for cash at the counter.

By 1994 actual cash dispensing machines were available and scrip machines were banned from processing transactions on ATM networks (certain logos on the back of ATM cards).

Long story short, now just about anyone (unless you have a criminal conviction for a felony involving financial transactions) can own or operate an ATM Machine as a Business.

There is no magic potion or magic formula or secret handshake to get into the ATM business. Granted, there are several pit falls and traps that can cost you a small fortune if you're not careful. However, if you work with an experienced ATM company you can avoid most mistakes. 

Operating an ATM Machine Business is very similar to the vending machine business, the only real difference is an ATM machine only dispenses cash and deals with the banking regulations. The only inventory is twenty dollar bills, which are considerable smaller than bags of chips and soda cans.

The ATM Business is fairly straight forward: 

• You have a piece of hardware (The ATM Machine).
• You need a good location (retail store, parking lot, restaurant, condo complex, office building, hospital, medical building, airport, etc).
• You need to fill the ATM with Cash (yourself, the location manger or an armored car company).
• You need a reputable ATM Company (they have contracts with an ATM processor, sponsoring bank, move your money between banks, provide statements and online reporting) They should also provide technical support, but some don't.
• You need your own bank account, where funds are deposited if you load cash.

The income comes from the surcharge (fee customers pay to use the ATM) a portion of the interchange (the fee banks have to pay the network and processor) and then they deduct some network fees. This works out to a little bit more than the surcharge.

Many ATM companies try to make it seem complicated but good ATM companies will try and help you understand the business. If you run accorss an ATM company that wants to sell you locations, or find you ATM spots (an ATM Locator service) and get you to invest in them, I would think twice. If it sounds too good to be true, it probably is.

If I had a good ATM location there are only a few valid reasons why would I offer it to someone else. if I could operatie it myself and make a profit why am I willing to sell it to someone else? There are only a few good reasons.

1. Maybe the location is out of state from where I am. I would need someone locally to load cash or manage the machine.
2. If I was exiting the business completely
3. If I was selling a route
4. If I needed to raise cash to load other machines (maybe more profitable machines).

Knowing the rules, getting all the facts and crunching all the numbers can ensure that if you invest in an ATM location that you'll make a wise investment.  

Like any business you want to know how much you need to invest and what the return is. This is called the ROI. How long is it going to take to make back your investment and is the income better than other known investments.

Is the ROI better than keeping the cash in the bank in a regular savings account. Okay, as of this writing just about anything pays better than a savings account. Just like real estate, operating an ATM and having an ATM business is all about location, location, location.

If you select the right ATM Company to help you navigate the waters they can save you a lot of time, trouble and money.

The ATM Machine. Obviously a key component to your business. Buying the wrong machine, an outdated machine (not in compliance), or not getting a machine from one of the top three manufacturers (Triton, Hantle (formerly Tranax), Hyosung) can be a nightmare. Free standing, thru-the-wall or kiosk, what is the best for your needs?

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

Who loads cash: The ATM owner and the cash loader typically share the lions portion of the ATM revenue. So if you plan to own the ATM and load it yourself, you will obviously keep most of the revenue. Other than the cost of the space (you may rent it, sign a placement agreement for a portion of the income, etc). There are many types of deals you can make. Armored car service is only a viable option if the ATM does really well (over 500 transactions monthly). Armored car service is expensive and typically cost prohibitive for retail ATM machines.

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

A good ATM company should also provide 24/7 toll-free technical support. We see many ATM companies that don't offer this. However they appear to be a good deal because they offer an unusually high rebate. But what good is a high rebate if your machine has an error code or problem or you have an issue you can't get resolved because you don't have anyone to call to help you. Or when you do call, no one ever answers the phone. The extra few pennies you can earn from some of these ATM companies can cost you hundreds of dollars when it comes to needing service. Don't be penny wise and pound foolish.

How do you make Money Operating ATM Machines?

Your ATM charges the cardholder a fee (the surcharge). The ATM owner sets this fee. Depending on the ATM Company you sign up with you receive most or all of this fee plus a portion of the interchange. Banks pay a small fee to the ATM networks for connecting the cardholder to the bank, this is the interchange.

There are many variations and deals 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 does or the size of your ATM portfolio (if you have several machines), they will give you up to $0.15 of the interchange.

To manage your ATM's you should make sure the ATM company offers 365 day toll-free tech support 24/7. They should also provide you monthly statements and access to monitor your ATM machine online at no charge. Other benefits of a reputable ATM company include no monthly minimums, no monthly fees, and no statement fees. Small, inexperienced ATM companies that can't offer economies of scale may charge for services whereas others do not. Caviate Emptor, let the buyer beware!

Want to know more about the ATM business? Check out the links in the authors resource box below.