Whether it's passive income or building a financial empire. The ATM business is here to stay. And with that being said how much do these business owners make from these cash machines. And how does it compare to other that are out there??
Sooo here's the scoop, Independent ATM's are nothing new in the business world. Yet it's not talked about as a starter business in most cases. We’re all looking for a way to generate income passively. ATM's or automated teller machines are seen everywhere but have you ever thought about the company or entrepreneur that operates that machine. There is an entire industry structured around the ATM business. Typically the fees for an ATM ranges between $1.00 to $8.00 dollars. The national average for ATM fees were $1.97 in 2008 and $4.35 in 2014. ATM fees are increasing at a significant rate over the last ten years. But, how much would you really earn from an ATM?
How much will you make with ATM fees?
ATM fees are split between various parties or partners in the ATM ecosystem. The three main parties in every ATM business are the ATM owner, the venue owner and the ATM processor. The ATM owner (“you”) are the one that’s buying the machine and placing it at a specific venue or place. The venue owner is the person you’ve contacted and negotiated with to place your ATM machine. Lastly, the ATM processor is the company that is handling the processing or paperwork to document and allow the ATM to function. These three parties are the ones that will share the fee that everyone pays.
ATM processor contracts will typically provide terms in the form of a “surcharge rebate and a fee between $0.10 to $0.50 per transaction.” What does this mean? A surcharge is the “ATM fee” you charge to use your ATM to withdraw cash. The surcharge rebate is the ATM processor referring to how much of your “ATM fee” is returned to you. You should expect a 100% surcharge rebate or a full return of your ATM fees charged. ATM processors may attempt to eat into your profits by providing a percentage less than 100% or by adding “network accessing fees.” (E.g., $0.25, $0.50 or $0.75)
The venue owner will typically receive either a monthly percentage of the gross income of the ATM. Obviously, this amount is a negotiation between you and the venue, so the cost per transaction is negotiable. If the venue is highly desirable, you may be willing to offer up to 50% of the ATM fee or surcharge fee because it would generate a significant amount of fees. But, the typical fee share is between 30%-40%.
What are the Startup Cost?
The cost to purchase a new ATM is between $1,600 and $3,000 dollars. You may purchase a used ATM, but you must be absolutely sure that it is “EMV” compliant. Older ATM machines are not EMV compliant and these machines are illegal to use based on updated legal requirements to protect user’s ATM Pin numbers. Buying an old machines to comply with EMV is likely cost prohibitive, so I would suggest purchasing a machine that is always compliant. A compliant used or refurbished ATM will usually start at $1,000 or more. The machines may be purchased outright in cash or it may be financed over time. Theoretically, the cost of the ATM would be recouped within 6 months or half a year. But, assume that it’ll take 2 years to conservatively recoup your investment. ATM processor setup fees are rarely charged or billed. Most ATM processors will not charge startup fees, they will recoup their costs through the life of the contract. It is common for ATM processors to have multi-year contracts ranging from 2 to 5 years to make sure that they are able to recoup their setup costs. Cash upfront to fund the ATM machine is necessary. This is a one-time investment. Every dollar that is withdrawn will be returned to you through the customer’s bank account. Thus, this is better described as a deposit because you never lose these dollars. The money is literally working for you. Also, you’re able to insure the money deposited in the ATM in case of theft and loss. I’d highly recommend insuring your machines and funds deposited. Other than the ATM machine, the only other actual expense would be miscellaneous tools to install the machine if you decide to do it yourself and gas or travel expenses to meet potential businesses that would allow you to place your ATM.