how to start an ATM business

How To Start An ATM Business [The Ultimate Guide 2023]

No matter how many online payment apps are there, cash will never go out of business. People require cash for making transactions on a day-to-day basis. And. the easiest way for people to get their hands on cash is through an ATM. You can walk into an ATM around the corner and withdraw money. But ATMs are not just a place to withdraw cash, they are a great investment opportunity as well. Not only do banks or financial institutions own ATM businesses, but rather you can also become your own ATM business owners. Yes, you’ve heard it right, you can start your own ATM business. These are not ATMs run by a financial institution, rather they are privately owned and can be seen all across convenience stores, gas stations, retail stores, etc. And in this article, we will tell you all about “how to start an ATM business” and run a successful ATM business.

What Is An ATM Business

Automated Teller Machines or ATMs as we have come to know them have been in existence since the late 1960s. They were developed because there was a need for cash beyond the usual banking hours. The world’s first ATM was unveiled by Barclay’s Bank in Enfield, London on 27th June 1967. Since then, they have spread across all corners of the world. The first ones could only be used to withdraw cash. Subsequently, they have evolved and can now handle a number of financial transactions such as withdrawals, deposits, fund transfers, balance, and other account inquiries.

The financial institution that has placed the ATM earns money by levying fees on the use of the ATM. The transaction fees usually range between $2 and $3 per transaction. But not only financial institutions, individual people or businesses can also set up ATM machines and run their own successful ATM businesses. You can buy some ATM machines, get contracts signed with merchants and vendors where you’ll be placing your ATMs, get an agreement with the banks, and you’re on your way to starting to become a business owner. But the process is not so simple, and there are a lot of steps involved in it which we will discuss later.

How Much Money Can An ATM Owner Make

There are numerous factors that have to be taken into consideration before understanding how much money ATM owners can make through an ATM business. These factors can include geographical location, fees charged, business plan, etc. But some of the successful ATM business owners are reported to make upwards of $500 per month as a passive income.

Now that we know what an ATM business is and how much money you can through an ATM business. Let us learn how to start an ATM business in a few simple steps.

Step 1: Plan Your ATM Business

No matter what business you are going to start, it is always advised to come up with a business plan beforehand. The same is true if you are looking to enter the ATM industry. The planning stage broadly consists of the following steps:

Cost of Opening an ATM Business

Unlike other brick-and-mortar businesses, this business does not require much capital or office space, to begin with. Yet, there are some initial equipment costs associated with when you start an ATM business. The cost primarily depends upon the number of ATM machines you wish to deploy as a part of your venture. A new ATM machine can cost anywhere between $3000 to $10000 depending upon the kind of machine. On top of that, it would require a phone line, an internet line, a computer to monitor the machines, tools for routine maintenance, and most importantly a business insurance policy. Hence, depending on your budget, number of machines, available facilities, and other ATM equipment you can calculate the total startup costs.

Operating Costs of an ATM Business

Apart from the costs associated with opening a business, there are some day-to-day business expenses that also need to be taken into account. A single ATM machine requires around $2000 cash per week, so that has to be considered. Moreover, the businesses and merchants where you will place your ATM machines will charge fees for placing your ATM machines. A lot of banks also ask you to pay a surcharge fee for allowing you to become their ATM operator. An ATM machine would also require receipt paper to be refilled regularly. Hence, these come under the operating costs of an ATM company and should be taken into account.

Location of ATM Machines

Once you’ve taken into account the opening costs and business expenses, the most important aspect of an ATM business has to be considered. This is the location of the ATM machines because a very high volume location would decide the number of users for your ATM machine. The ATM locations can vary from region to region and some of the most common and popular places are restaurants, bars, strip clubs, shopping malls, convenience stores, gas stations, etc. Larger the foot traffic at your ATM locations, the more money you will stand to earn as transaction fees. Hence, the ATM location should be chosen strategically and wisely. The places of business where you will place your machines will also charge you commission or rent. Therefore, the perfect ATM location is one which has a large foot traffic made up of your target traffic and the commission or rent to be paid is minimal.

Name Of Your ATM Business

Picking out the right name for your business entity is one of the toughest challenges in the business plan for small business owners. Choosing the right name is one of the keys to running some of the most successful small businesses. A name should be such that it is easy to remember your potential customers. Hence, it is advisable to choose a business name and not a personal name if you operate as a sole proprietor. Once you’ve narrowed down on a name, the next step is to register the name. A few things to consider before naming your business are as follows:

  • Business records of your State.
  • Trademark records at Federal and State levels.
  • Social media accounts have similar names.
  • Domain availability for your business website.

Step 2: Register As a Legal Business Entity

Once you’ve formulated your business model, factored in the ongoing expenses, found the perfect location with your target market, and came up with a business name. The next step to start an ATM business is to register it as a legal business entity. There are four primary types of business structure to choose from namely, sole proprietorship, partnership, limited liability company(LLC), and corporation. Registering as a legal business would help separate personal from professional as you would not be held personally liable in case your business is being sued. Most of the small businesses choose to register themselves as a limited liability company as it has very minimal State LLC fees and a very straightforward procedure.

Step 3: Registering For Taxation

Any business has to register itself for taxation as they are liable to pay various federal and state taxes. If you are based in the USA, then you will have to register your ATM program with the IRS. Upon registering with the IRS, you will be provided with an Employer Identification Number(EIN). This number is necessary for opening a business bank account, and also for hiring employees and their taxes. In case you are planning on being the sole proprietor, then you do not need to get an EIN number and can simply use your Social Security Number(SSN) to register. Also, depending on what business structure you’ve chosen, you will have multiple different options on how your business will be taxed.

Step 4: Opening a Business Bank Account

Having a bank account for your business that is separate from your personal account is very important. This is because, not only will it help you protect your personal assets in times of crisis, but also help you apply for business loans, etc. Not only that, it makes accounting for tax liabilities easier, has access to much easier and cheaper lines of credit, etc. In order to bank a business bank account is very simple and you only need to provide all the documentation that you. have collected in the steps above. Merely walk into any bank of your choice and the account should be operational in a few hours.

Step 5: Get A Business Credit Card

Business expenses should be kept separate from your personal expenses. Hence, getting a business credit card is really important. You can apply for a business credit card either through your linked bank account or through a credit card company. The credit card costs are minimal and using it judiciously will help you establish your company’s credit score. This credit score will come in handy if you want to raise money to expand your business in the future.

Step 6: Get the Required Licenses

You are required to get a permit in order to start an ATM business. As an ATM owner, it is your responsibility that your business is in compliance with all the necessary regulations and licensing norms. Depending upon your location, the license and permits would differ and failure to get any one of those might result in hefty fines or shutting down of your business as well. Some of the licenses that you can look into are a liquor license if the ATM is inside a place selling alcoholic beverages, a permit from the Department of Transportation if the ATM is to be installed on highways, environmental permits, etc.

Step 7: Get Business Insurance

Getting business insurance is almost as important as getting licenses and permits. Good insurance can protect your business in case of any untoward incident or loss. There are a lot of business insurance policies available in the market for you to choose from. But in case you are not sure which insurance suits your ATM business, then opt for General Liability Insurance. It is one of the most commonly opted-for insurances by small businesses and covers accidents or injuries that happen at a property and also covers damages caused by products, etc. Connecting with an insurance agent would also be a good way to figure out what insurance suits your business better.

Step 8: Set Up Accounting for your ATM Business

Accounting is one of the most neglected aspects of running a small business when one is just starting out. But having a robust accounting system that keeps track of all the expenses and sources of income is how most businesses can become more efficient and understand the financial performance of the business. Moreover, keeping track of money from the beginning will help out in a huge way when it comes to filing taxes. 

Step 9: Market Your Business

Now that you have successfully completed all the steps mentioned above, the next step is to market and promote your ATM business and brand. A strong brand name with recognizability and recognition in the community will help establish trust. The trust factor becomes much more important for an ATM business. This is because people are skeptical of making transactions through vendors or outlets that they do not trust. A live and active website, social media accounts, logo, etc., as mentioned above will go a long way in making your target audience familiar with your brand.

In an ATM business, you won’t be interacting with the clients that much. Rather the majority of your interactions and dealing would be with the merchants and business owners where all your machines are housed. Building trust, communication, and a strong working relationship with them will help you in getting favorable terms and continue the partnership for a long time. Hence, the connections you form in the industry could be the deciding factor when it comes to making money.

Step 10: Launch your Own ATM Business

The final step if you have followed all the steps mentioned above is to launch your ATM business. Make sure that the quality of the phone line and the internet line being used is the best. Any issue with these will hamper the working of your ATMs in a major way.

Thus in a few easy and simple steps, you have managed to learn how to start an ATM business. You don’t need to have a business degree in order to make money as an ATM business owner. Most successful ATM operators follow a blueprint similar to the one given above. And much more than that, they avoid the common mistakes made by new ATM operators, some of which are given below.

Top Mistakes to Avoid When Starting an ATM Business

Some of the mistakes that you should avoid making in order to make your ATM business successful are as follows:

Purchasing Old ATM Equipment

It is a very common mistake that people looking to become new ATM owners make. Even though buying used equipment might seem like a cheap and good option. But the ATM machines have to be up to date and in a good condition. Old equipment might also require repairs and more intense upkeeping. Hence, it is better to buy new equipment and get an extended warranty and ATM insurance. Make sure that the machines you buy are EVM(Europay, Visa, MasterCard) Compliant as they will prevent any fraud through your machines. Most of the ATMs manufactured after 2018 are EVM compliant. 

Overestimate Income

The thought of earning anywhere around $500 dollars per month as passive income sounds very lucrative. But new ATM owners should be conservative in their estimated earnings. Not everyone will be able to make that much money from the beginning and will have to manage their expenses properly. An ATM business that makes around $150-$250 per month is a good place to start if you are just starting out. This would help you in expanding your business so that you can start making your desired income. 

Underestimate How Much Cash an ATM Machine Requires

If you place the ATMs at places with consistent foot traffic, you will need to maintain sufficient vault cash in your machines. The amount can go as high as $2000 per week. Hence, depending on the number of machines, you will have to maintain and refill cash to that amount. 

Not Partnering Up With Banks

There are some banks that support an ATM business and some don’t. Hence, it is very important that you get into an ATM Operator Agreement with your bank before venturing into the business.

Setting Too-Low Margins

The outlets and places where you will be placing your ATMs will charge you a commission or surcharge fee. Make sure to not give away too much from your margins as it would highly impact your earnings. Hence, merely placing your ATMs won’t be profitable, rather, you’ll have to figure out and negotiate a margin that proves beneficial to all parties involved. 

Working With Signing Agreements

As is the case with almost any business venture, signing ATM Processing Agreement with your merchants is a necessity. Without the backup of a legally enforceable contract, you can’t protect your business and might end up losing value and money in the long run. 

Poor Locations

The key to running a profitable ATM business is the location of an ATM. If you install free-standing ATMs in places that have. little to no foot traffic, then you will end up making losses. Hence, do your due diligence and pick the best spots that you can find to install the machines. Also, in order to bring down the operating cost for your business, make sure that the locations of all your ATMs are not very far away from each other and are within your ATM route.

Charging Very High Fees

As an independent ATM deployer, the fees you charge per ATM transaction are for your to choose from. You will have to fight the urge to charge exorbitant fees and charge anywhere between the industrial standards of $2-$3. You should work on the volume of transactions and not try to extract as many fees as you can from only a handful of transactions. If the users find you are charging a very high ATM fee, then they might not return to use your ATM and it will only be reduced to being used in times of utmost emergencies. 

Not Doing Proper Maintenance Of the Machines

It might sound like a non-issue when it comes to establishing a successful ATM business, but it plays a very important part. The ATMs have to be in perfect working condition and also have sufficient receipt paper in them. Any day that is lost due to the ATMs not working, is a loss of profits for you. Hence, regular upkeep of the machines is of paramount importance. 

Not Keeping Proper Records

An often overlooked reason behind a lot of failed businesses is their failure to keep proper business records, accounts, and client information. As a business, it is important that you maintain a thorough record of your transactions and accounts, as it would come in handy when filing taxes. 

Final Thoughts

Becoming an ATM business owner is a bit unconventional method of running a profitable business. But if done correctly, using the methods mentioned above, the chances are that you’d be able to make a decent income passively without having to work every day. If established with precision and avoiding the most common mistakes that a lot of businesses that fail make, you can have a business that runs on autopilot basically. The best part about starting an ATM business is the fact that you do not need a business degree to become an entrepreneur. All the tools you require are available to you in this article and the success depends on various factors mentioned above. You can start the business as a sole proprietor and expand your team as your business grows with time. 

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