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.
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:
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
- 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.
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.
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.
Step 2: Fund Your ATM Business
If you have created your business plan, part of that process should have included budgeting. So you should have a good sense of how much you want to spend and how you will get that starting capital.
Remember that the business is going to involve more than the purchase price of the ATM machine. You will need some cash to fill the machine too.
As we discussed already, you will need approximately $5,000 to buy an ATM machine and load it with cash.
We talked earlier about some of the “no-money” down strategies you can use if you don't have that much money to invest in the business. Of course, if you have some money, but not enough to buy a new machine, you may want to consider buying a used ATM .
We go into the pros and cons of buying used ATMS later in the article.
Step 3: Find a Great Location For Your ATM
The locations of your ATMs are going to be crucial to the success of your ATM business. As a rule of thumb, you want to focus on locations with high foot traffic.
Convenience stores and drug stores are the most popular locations for independent ATMs. Source: Akleg.gov
Other popular locations include gas stations, clubs, bars, hotels, office buildings, and cash-only establishments.
It is going to be very difficult to know exactly how a given location will perform. You should test out a location for a trial period of 3 months or so and see if it works. If it doesn’t, relocate that ATM to another location that may perform better.
When you are negotiating with the owner of the location, you should be upfront with them about your plan so there are no surprises down the road.
Don’t box yourself into a long-term contract with the site owner (at least at the beginning) because you may need the flexibility to pull out of a failing location.
If you want a little help finding locations for your ATM, you can hire an ATM location placement service.
This may cost some money but may be an option worth exploring if you are not able to find a suitable location on your own.
Here are a couple of companies that I found online that seem to offer nationwide ATM location placement services:
Step 4: Get Your First ATM
In order to start an ATM business, you need ATM machines.
Pretty obvious, I know.
You can buy ATM machines from a number of companies that specialize in ATM sales. Some of the prominent sellers of ATMs include:
- ATM Money Machine
- ATM Brokerage
- Mobile Money
- ATM Machines
- ATM Mega Store
- Best Products Sales & Service
You should look at the types of machines being offered and figure out which machine is right for you based on your budget, location, and strategy.
For example, if you are going to be targeting smaller businesses with less overall traffic, you may want to choose a machine that is less expensive and does not have as many bells and whistles. If your machine is going to be located outside or in a rough area, you may want a machine that has enhanced security features.
As we mentioned earlier, if you have a limited budget, you can also look into buying a used ATM machine. Obviously, buying a used ATM can save you money because the prices are generally cheaper than a new ATM, but you may find that you have larger repair costs and the older machine may not have the same benefits and features that the newer models offer.
If you are considering buying a used machine, check to see if it is EMV-enabled (i.e., permits chip-enabled technology). That’s because if your ATM is not chip-enabled, the liability for fraudulent transactions that happen on your machine may shift to you.
Newer machines tend to be EMV-enabled but some older machines may not have this functionality..
If you want to check out used ATMs, some of the companies I listed above offer this option as well.
Insuring Your ATMs
Because the ATM business deals with expensive equipment and a lot of cash, you may want to think about insurance coverage for your ATM business.
Now I am not talking about general liability coverage for your ATM business – that seems to run between $400 and $700 per year for $1 million in general liability coverage.
When referring to ATM insurance, I am talking about insurance for damage to the machine and loss of the cash inside (due to theft, etc.). If you are interested in this type of insurance, I have collected some providers offering coverage in this space.
The following is a list of ATM insurance providers:
Unfortunately, none of these companies provides the cost of ATM insurance on their website. Like with other insurance pricing, you will need to contact them directly for specific quotes.
Step 5: Select Your ATM Transaction Processor
An important part of your ATM business is making sure the withdrawals from your ATMs are properly processed. That means working with a reputable company that will process these transactions. These ATM processors serve as the critical link between your machines and the various payment networks, like VISA, Mastercard, NYCE, etc.
Many ATM processors also offer other services, including selling ATMs, repairing ATMs, providing software that tracks ATM transactions, and filling your ATMs with cash as needed.
For someone who prefers a one-stop-shop, a full-service ATM processor may be the right fit.
Some ATM processors will take a cut of your fees in exchange for providing processing services, while others will not. You will want to consider pricing, support, services offered, contract terms, and other factors that may be important to you before settling on an ATM processor.
Here is a list of ATM Processors:
Step 6: Operate Your ATM Business
Once you have your location lined up, your ATM installed, and your transaction processor in place, you just need to fill the ATM with cash when its reserves run low. Your ATMs are also going to break down from time to time, so we will also discuss how the repair and maintenance of these machines work.
How Often Are ATMS Refilled?
You will need to refill ATMs when their cash reserves run low. The exact frequency of refilling will be dictated by several factors, including the total cash capacity of the machine, the number of withdrawals from the machine, and how much you have available to deposit in the machine.
Most independent operators look to fill their machines no more than once per week.
Source: Connect ATM
Refilling your machines is going to be the most work-intensive part of owning an ATM business. You also face safety risks when you are carrying around large amounts of cash to replenish your machines.
If you own only one or two ATMs and they are in safe locations, this will not be a big deal, but as you expand your business, refilling your machines will become a bigger drain on your time and energy.
Fortunately, there are ways to outsource this function. We’ll discuss that in more detail a bit later.
How Do I Maintain an ATM?
ATMs are usually pretty durable, but as with any machine, they will break down or needs repairs from time to time. Many companies will service ATMs, including local companies. Or if you want to get your machine serviced by a company with a national reach, you can do that as well.
The following are a list of companies that service ATMs across the US:
Can You Make Your ATM Business Passive?
You can outsource nearly all of the functions of your ATM business, including loading cash into your machines. A simple google search of “companies that will load cash into ATMs” provides a laundry list of companies that offer this service. And as I mentioned before, your ATM processor may also offer this service.
Of course, this service comes at a cost, but if you have grown into a large ATM business, the convenience of someone else servicing a large route may be worth the expense.
Owning an ATM business can be a terrific way to earn a great income and get out of the rat race.
But as you can see by now, it’s not as simple as buying an ATM or two and waiting for the money to roll in.
If you want to succeed as an ATM business owner, you need to (i) find great locations for your ATMs, (ii) buy the right ATMs for your business, (iii) find a reliable ATM transaction processor (iv) and run your business operations effectively.
Related reading: If you would like to learn more about other route businesses, such as vending machine routes, FedEx delivery routes, or bread routes, check out my articles on each of these other route businesses below:
If you want to learn about other businesses that can be run passively, check my piece on businesses that run themselves. In that article, I cover some great businesses that can generate attractive levels of return without a lot of day to day involvement by the owner (obviously, ATMs are included in the list, but there are many more). Check it out here.