How to Start an ATM Business: A Step-By-Step Guide

ATMs are everywhere.  That's because when you need cash in a hurry, they offer a convenient and quick solution. 

But did you know that many of those ATMs are owned by people like you and me?  

I am not talking about those ATMs that are clearly affiliated with a big bank or financial institution. I am talking about those ATMs in convenience stores or gas stations that don’t have big bank branding all over them. 

Turns out that these “independent” ATMs are a large part of the overall ATM marketplace. Of the 470,135 ATMs across the U.S., 278,394 are independent ATMs. That works out to 59.2% of the market.

Source: Akleg.gov

So, clearly, there is a huge market for independent operators of ATMs and a lot of money to be made in this space. 

So, how can you get started in this business? It’s actually pretty straightforward and we are going to walk you through it.  

This article will cover the following key steps to starting an ATM business:

Step 1Set Up Your Business and Create a Business Plan

Step 2Fund Your ATM Business

Step 3Find a Great Location For Your ATM (this is critical!)

Step 4:  Get Your First ATM

Step 5:  Select Your ATM Transaction Processor

Step 6:  Operate Your ATM Business

That’s a lot to cover, but before we dive into it, let’s answer some introductory questions you may have about the ATM business (including how much you can make and whether owning an ATM can be a good investment). 

If you want to skip the introductory stuff, you can jump ahead to the “Step-by-Step Guide to Starting Your ATM Business” by clicking here.

The information contained in this post is for informational purposes only. It is not a recommendation to buy or invest, and it is not financial, investment, legal, or tax advice. You should seek the advice of a qualified professional before making any investment or other decisions relating to the topics covered by this article.

What Is An ATM Business?

An ATM business is a business where one or more ATMs generate revenue for the business owner through fees charged to customers when they withdraw money from the ATMs.

How Can I Start an ATM Business With No Money?

On average, you will need around $5,000 to buy your first ATM and fill it with cash.  If you don't have that much money, here are some tips for getting the needed capital.

You can start an ATM with no money using the following methods:

  • Credit cards offering a “no-interest” or “low-interest” teaser rate.  
  • Peer-to-peer lending
  • Traditional bank lending
  • HELOC
  • Federal, state, and corporate grants for small businesses
  • Withdraw Roth IRA contributions
  • Borrow from your 401k

For the IRA and 401k options, there are tax and financial consequences of doing this, so you should consult with qualified tax and financial professionals before using these options.

If you are interested in the various grants I mentioned above, there are a ton of articles on the topic. I would google “small business grants” to learn more.

If you prefer to operate online, you may want to check out Fundera.  They are affiliated with Nerdwallet and offer small business financing options from a variety of potential lenders.  You fill out one application and they provide you with a list of lenders suited for your situation. 

 

Finally, if none of the above options provide you with enough money to get started, you may want to consider partnering up with someone else who can supply the needed cash in exchange for a share of the profits.  

How Do ATM Owners Make Money?

ATM owners make money from fees charged to customers when they make a withdrawal from an ATM.  

The average fee charged by an ATM owner is around $3 (more details on this later) and is usually split between the ATM owner and the owner of the location where the ATM is situated.  

The average split paid to location owners is between $0.50 and $1.00 per transaction. ATM owners may also make money through interchange fees, with the average interchange net income coming in at $0.10 to $0.20 per transaction.

Source: ATM Brokerage

What Is the Average ATM Surcharge Fee?

The average ATM surcharge from the ATM’s owner is $3.08.  There are also charges imposed by the customer’s bank for “out of network” withdrawals, which are on average $1.56.

Source: Bankrate

So, every time someone makes a withdrawal from your ATM, you get approximately $3.00 in fees, which can add up pretty quickly if you have a decent number of transactions per month.

What Is the Average Number of ATM Transactions Per Month?

The average number of ATM transactions per month is 180, according to ATM Depot.  

So we now know that the average fee is around $3 and the average transactions per month is 180.  All of that begs the key question:

How Much Money Can You Make Owning an ATM Machine?

With an average ATM surcharge of approximately $3 per transaction and an average of 180 transactions per month, your monthly gross revenue can be $540 for each machine. That equals $6,480 per year.  

Of course, these numbers are based on averages and your actual results may differ, but these numbers should give you a sense of what is possible.

And this is all for one machine. You can imagine the possibilities as you buy more. 

Is Owning an ATM a Good Investment?

Owning an ATM can be a good investment because the costs of buying an ATM are low compared to the potential returns that an ATM can generate.  Assuming an average new ATM cost of $3,000 and average gross revenue per ATM of $540 a month, the ROI can be upwards of 100% per year.  

Here’s the math:

The average new ATM costs between $2,300 and $3,000.

Source: Lieberman Companies  

As we just discussed, the average gross revenue can be $540 per month, which equals $6,480 per year. So if we paid $3,000 for the machine (which is on the high end) and made $6,480 in a year, the annual ROI is over 200%.  

Of course, we are ignoring the costs of doing business, such as revenue splits between the ATM owner and the location owner, costs of maintaining the machines, etc., but even if we split the gross revenue in half (which is very conservative, given that revenue splits are usually far less than 50%), the potential ROI stands at over 100% per year.  

That’s just eye-popping.

Step-By-Step Guide to Starting Your ATM Business

Ok, now that we got the introductory stuff out of the way, let’s dive into the step-by-step guide to starting your ATM business.

Step 1: Set Up Your Business and Create a Business Plan

Set Up Your Business

One of the first things you should do is set up your business.  

Get Your Name and Logo

Select a name and logo that you like and create a website (if you want your business to have an online presence). 

Having trouble figuring out a name?  Try Shopify's business name generator.  It's free.  

As for a logo, I have zero artistic ability and limited tech skills, so I like a simple and easy to use option.  

Looka will provide you a professional looking logo at reasonable prices.  You can choose from hundreds of logo designs (based on parameters and preferences you select) before settling on one you like.  You can also customize to your heart's content.  Check them out here.

Note: You want to make sure your name and logo are original to you and are not going to infringe someone else's intellectual property. If you are unsure, you can check the USPTO's trademark search tool as a starting point.   

Set Up Your Website

As far as your website goes, it does not have to be incredibly fancy or cost a lot of money to set up. There are a lot of resources available to help you with this. 

In fact, Google allows you to build your first business website for free.

Establish Your Business Entity

If your business is going to be a corporation, LLC, or some other business entity, you should establish that as well. You can hire a lawyer to help you or you can use many of the online resources that can help you set up your business entity.  

I like Incorporate because they can get you up and running quickly and easily.  They also have some great resources to educate you on what type of entity to choose and which may be the right state to choose for your new entity.  If you want to learn more, check them out below.

You should consult with your accountant and lawyer before taking this step, so you understand the tax and legal consequences of setting up this type of organization for your business. 

Create a Business Plan

A business plan is essentially a roadmap for your business. It is important because it organizes your thoughts relating to your business into an actionable plan. Some things to include are budgeting, identifying your target market and competition, pricing strategy, operational plans (how you plan to run your routes), and growth projections.

Don’t stress too much about getting it perfect. I would use it more as an organizational tool at this point.

Another benefit of having a business plan is that it can help you raise money from banks and investors. 

These folks will want to see a professional-looking business plan as part of their lending or investing process.  

If you are starting small and just want to begin with a single ATM, you probably don’t need to worry about this yet, but as you grow and want to buy more ATMS, your capital needs will grow. Having a solid business plan in place to present to banks or investors can come in handy when the day comes.  

Don’t know how to get started? The Small Business Administration has a great tool to help you write your business plan

Open Up a Checking Account for Your ATM Business

This seemingly simple step is actually a pretty big hurdle when it comes to your ATM business. Many banks do not like opening up accounts for ATM businesses.  

Why is this the case? 

ATM businesses are impacted by the Bank Secrecy Act (BSA). The BSA is a law designed to prevent money laundering. It requires banks to adopt certain procedures to identify and stop this type of illegal activity.  

Unfortunately, federal regulators view independent ATMs as a potential money laundering risk. Thus, your bank may perform due diligence on your business due to their Bank Secrecy Act requirements.  

Source: FFIEC

Some banks may not want to face this type of regulatory scrutiny and may choose to avoid dealing with ATM businesses altogether.  

That could make it hard to find a bank that will open a business checking account for your ATM business. You may have to overcome a lot of obstacles to get an account opened. Large money center banks in particular may be less willing to open these types of accounts, so you may want to try smaller community banks.

This Youtube video provides some helpful tips on getting a business account opened for your ATM business.