History of the ATM Machine
For people interested in increasing their income, passive and low maintenance income sources are highly attractive prospects. One option that may come up is the opportunity to own an Automated Teller Machine (ATM).
Although almost ubiquitous today, the ATM was only invented in 1967. Located at a London bank, it allowed bank customers to cash in uniquely coded vouches given by bank tellers, and customers could only take out £10 at a time. By 1984, the ATM had crossed the pond and there were over 100,000 ATMs in the United States. With time and popularity came enhanced capabilities, and ATM started having features like color displays and added security measures like PINs. Starting in 2012, some banks even started to allow customers to withdraw cash from ATMs using only codes sent to their mobile phones, eliminating the need for debit cards.
More recently, a major change has come to ATMs in the form of EMV chip cards. You are probably already familiar with the new EMV chips in the credit and debit cards most Americans use, which have largely replaced the older magnetic strip cards. EMV chips are significantly more secure, and so reduce the potential for fraud at ATMs. While lower fraud rates are good for ATM owners, it is also expensive to upgrade older ATMs to be EMV compliant. In addition, any ATM owners who do not make this upgrade are liable for fraud that happens on their non-EMV compliant ATMs.
Who Should Own an ATM Machine?
So, if you are thinking about owning an ATM you should first ask yourself: is it right for me? While owning a literal box of cash definitely sounds nice, there’s actually a lot to consider when deciding if you want to own one.
First, you should really only look at owning an ATM if you have somewhere to put it. You not only need to have land on which to place the machine, but also a location that makes sense for a machine. Ideally, you need to have a high-traffic area near a business or shopping area. That way, you will have a steady stream of customers who are likely to need cash and so use your machine.
Many ATM owners are people who already have an existing business, such as a shop or restaurant. They buy an ATM both for the income from the machine, and to provide a source of cash for their customers to spend at their business. Some studies have shown that having an ATM can increase a business’s sales by up to 8%, and that 25% of the cash from an ATM on a business’s premise is used at that business. So, existing business owners get two sources of income from their ATM.
If you do not own a business that could be used as a location for an ATM, then you will need to find a local business that is willing to provide a space for the machine. In this case, the business owner and ATM owner will usually split the ATM fees, but other arrangements such as a flat rental fee are also an option. But whatever agreement you come to, if you don’t already have a business in which to place an ATM then you are going to see significantly less overall benefit from the machine.
What Type of ATM Should You Buy?
Assuming you have a place to put your ATM, your next question is what type of ATM you should buy. There are several vendors to choose from, including Triton, American’s ATM, and NCR. Each vendor has their own specific appeal – for example, NCR promotes itself as providing full-service hardware and software ATM solutions for businesses of all sizes. Definitely do research on which vendor is best for you, but generally, most ATMs are largely the same.
One option which might come up during your research is buying a used ATM. The clear upside of this is the price is much cheaper. However, it is important to remember the EMV chip requirements that are now the industry standard. If you buy an older ATM that does not meet these requirements, you will either have to spend significant money to upgrade the machine or be willing to accept liability for any fraud that happens on your machines. Neither of these is good options, so in general, it is best to go with a new machine or a used one that is new enough to meet EMV requirements.
Maintaining/Operating an ATM
After you have decided which machine you want to buy, you next need to understand what it takes to maintain and operate a machine. The most obvious maintenance that is needed is the fill the machine’s cash reserves. This must be done whenever the machine gets low on cash, as running out of cash can lead to bad customer experience and may lead customers to start avoiding your ATM. Depending on how many customers your machine gets, you may have to refill cash every other day or only once a week. In addition to refilling cash, you will also be responsible for fixing any problems that may come up such as hardware or software issues. Depending on how big these issues become, they can be major expenses.
It is also important to realize that refilling the cash in your ATM means that you have to have a ‘cash vault’. A cash vault is a reserve of cash that you always have on hand for when your ATM needs more bills. This causes inherent problems because 1) you cannot spend that cash on further expanding your business and 2) you have to make sure to securely store this cash, which can be a hassle in itself.
Given the challenges in maintaining your ATM, you should definitely at least consider outsourcing the maintenance of your machine. There are many ATM maintenance companies that you can hire, and many of them are the same ones from which you would buy the ATM. The cost and range of these services vary depending on the company and how often your machine needs servicing, so make sure to compare options before making your choice.
How Much Money Do ATMs Make?
It’s hard to say how much money you can make by owning an ATM since depends on the volume of transactions going through the machine. However, some estimation can be done.
If you have a high traffic area – say a shopping center with lots of restaurants – you might get 3 – 5 transactions a day. Most ATMs charge on average $4.61 per transaction, so you might be looking at ~$13 – $23 a day. With this volume, you would earn about $415 – $690 a month or about $4,975 – $8,300 a year. Of course, this assumes a high traffic area and even then these numbers are not guaranteed by any means.
After estimating your revenue, you need to estimate your costs. These are again variable, and this time is dependent on the decision you have made when setting up your ATM. So, while estimating these for everyone is not possible, we can at least create a list of the expenses to consider when calculating profit. The main expenses when owning an ATM are:
- Buying/financing the machine, which can run anywhere from $1,000 – $25,000 depending on if it is new, used, free-standing, etc. On average, though, new freestanding machines cost about $3,000.
- Renting the location for your machine, if you don’t already own a location. This is usually a portion of the ATM fees you receive but could also be a flat monthly rate.
- Maintenance and operations of your machine. This can be done by you to save costs or could be outsourced to an ATM maintenance company.
Risks of Owning an ATM
As with any business you own, you need to be aware of the risks before starting it. With ATM, the main risks are those of fraud and theft. By this, we don’t so much mean people trying to steal physical cash from the machine (people who have tried before haven’t gotten the best results), but more people using stolen debit cards or trying to use a card reader to collect your customers’ card information. The good news is that EMV chips have decreases fraud by over 50%, so modern ATM owners don’t have to worry nearly as much on this front. However, if you are considering buying a used ATM, or if you have an ATM that is not EMV compliant, you need to be very aware of the potential risk and cost of fraud because many card companies have shifted fraud liability to owners of non-EMV compliant ATMs.
It should also be noted that society and business, in general, are moving toward a more cashless future. Some countries like China are almost completely cashless, but at the same time, some American cities have actually made it illegal for businesses to not accept cash. While it is impossible to know exactly how this trend will affect ATMs’ profits, it’s important to consider in your business plans.
Is Owning an ATM Right for You?
Owning an ATM is actually a more straightforward business than most, but it’s not for everyone. The people who would profit the most from owning an ATM are those who already own a high-traffic business where customers use cash often, such as a small market, a restaurant, or a shop.
If you do not already own a business like this, then you will be looking at a lower profit from each ATM you own and would likely want to own a network of multiple ATMs to get enough income to make the setup worth your time.
One other option to consider is renting an ATM. The cost of renting an ATM will cut into your annual profit but will save you several thousand dollars upfront. In addition, most companies that let you rent an ATM will also take care of all the servicing for you. If you own a business are mainly looking at an ATM to help your existing customers, renting an ATM might be a better option.
As you start your search, you might find this guide helpful.
- Driver, Saige. “How Profitable Is an ATM Machine?” Business News Daily, Business News Daily, 18 Jan. 2019, www.businessnewsdaily.com/11229-profitable-atm-machine.html.
- Ann, Rissa. “ATM Machine Buying Guide.” Business.com, Business.com, 14 Jan. 2019, www.business.com/articles/atm-buying-guide/?_ga=2.164631999.1658209850.1580513045-3649661.1578862039.
- Gordon, Colin. “A History of ATM Innovation.” NCR, NCR, 21 Feb. 2017, www.ncr.com/company/blogs/financial/history-atm-innovation.
- “Benefits of an ATM.” ATM Global, AM Global, www.atmglobal.net/benefits.html.
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- Kossman, Sienna. “ATMs Changing to Accept EMV Chip Cards.” CreditCards.com, CreditCards.com, 31 May 2016, www.creditcards.com/credit-card-news/atm-change-accept-emv-chip-1273.php.
- Barrington, Richard. “Bank Fees Survey 2019.” Money-Rates.com, Money-Rates.com, 27 Aug. 2019, www.money-rates.com/research-center/bank-fees/.
- “How Much Does an ATM Machine Cost?” Cost Owl, Cost Owl, 2020, www.costowl.com/b2b/atm-machine-cost.html?fbclid=IwAR0C1NTgwc-tNI39Qi1pkgXMwHlvCLINDPm07NwqHdyK60rDSkIy4sDzn24.