Maximizing ATM Revenues
Before a business owner decides to purchase an ATM, there are factors that should be taken into consideration. First, an owner is usually wondering how they can maximize revenues with the machine and what a good plan is to make that happen.
The establishment where you locate or place your ATM, whether it is a gas station, convenience store, restaurant, or bar; will want to be sure they have the amount of foot traffic needed to generate good use of an ATM. A good rule of thumb to go by is; if the place of business has 150 patrons or more throughout the day, the ATM should generate enough revenue to make the ATM business for that location worthwhile. Another indication of a good establishment, would be if people stop into the business and ask if there is an ATM in the store or if there is one nearby.
There is a formula that ATM companies have put in place for a business owner to speculate revenues from their machine. According to several ATM insiders the formula is a good rule of thumb but since there are many variables, nothing is a guarantee.
The ATM industry formula says that typically 3 – 5% of people that actually see an ATM machine in an establishment will use it. Therefore, if your establishment fits this rule of thumb, and there are an average of 200 customers visiting each day, one would expect about eight of them might use the machine daily.
You could then take those eight people, multiply it by the amount of surcharge, then take that figure and multiply it by the number of days of business in the year. This will give an ATM owner, or perspective owner, an estimate on how much revenue could be generated from the machine in a year’s time. However, most ATM business owners want to calculate monthly revenue and income. There is another industry rule of thumb that states however many adult patrons an establishment has in a given day, that same number plus or minus 10% will use the ATM on a monthly basis. I prefer this rule of thumb and if the establishment accepts credit cards or gives cash back at the point of sale (POS), the lower end of the rule would apply and it might even reduce the number by as much as 20% – 40%.
Let’s say you have an establishment that has 200 adult patrons daily and the business accepts credit cards but not debit cards at the POS. Two hundreds (200) less twenty percent (20%) would be approximately 160 patrons use the ATM monthly.
Keep in mind that if your establishment is not open 7 days per week, or has non-standard hours, or if the ATM is not sufficiently stocked with cash on a regular basis these can all affect the monthly usage. If the ATM processes 160 transactions monthly that would be an average of just over 5 uses daily. If the surcharge was $2.50 (the current average) the gross surcharge revenue from that ATM would be $400 monthly.
The following are factors to take into consideration to maximize ATM revenue:
Advertising the machine – An ATM owner must ask themselves the following questions:
- Is the machine easily accessible? An owner will want to place the machine in an area of the establishment that is easy to get to. A good example is placing the machine near the door where people come and go, near the cash register, or near a very popular aisle of the store, such as the soda aisle. Placing the machine at the back of the store in a secluded corner could make a potential customer miss the ATM or become frustrated and leave.
- Is the machine easy to see? Making the machine appealing to the eye will draw customers to it. Some companies offer ATM wraps, which is a full machine decal that can be customized with the store’s logo or vendor logos (if you want to charge vendors for advertising). Wraps are full color graphics which can be wrapped around the entire machine.
- Is the machine well lit? Using LED signs and lights with bright colors will also catch a customer’s eye. A brightly lit machine will make much more money than an ATM in a dark area of the establishment.
- Do passersby know that the establishment has an ATM? Using visible advertising outside of your building will let customers know there is an ATM inside. You don’t want to place an “ATM Inside” sign in the middle of a clustered window, or somewhere on the building that is too low or too high to see. On gas stations, a good place to advertise the ATM is on the bottom or top of the gas price sign. A lit up sign placed on a door or building is also known to capture a customer’s attention. At any rate, it should be something that is visible to someone driving or walking by.
- Increase surcharge fees – Since revenues are based on the amount of money your customers pay to use the ATM, a business owner will want to be sure they are maximizing the surcharge fee. This means charging the standard fee for the area or for the type of location. Some owners will start the surcharge fee very low to attract new business, which is all well and good; however, an owner should consider gradually increasing the rate to match those that are being charged in the surrounding area. As long as you are not the highest in town, customers will still use your machine. Just keep in mind there is a point of diminishing returns. You want to charge enough where you’re maximizing ATM revenues, but not so much that you are upsetting potential users.
- Offering Coupons – On some ATMs, there is the capability of printing coupons. Not only can this be an attraction to use a machine, but will also motivate the customer to use the coupons on other purchases within the establishment. This can also be a good way to keep customers coming back, especially if the coupons are for best selling items in the store. Gas discount coupons at a gas station work very well (similar to grocery store rewards). Other popular coupons are car wash coupons, BOGO coupons, free drink with purchase coupons, and in nightclubs or bars, free small bags of pretzels with ATM use goes a long way with patrons. This is a good indication to the business owner of how effective the marketing is. Maybe some coupons are used more than others, in which case, an owner can turn his attention towards the higher selling item.
- What’s the best denomination for your location? We’ve seen some ATM’s in certain locations process more transactions when they are dispensing $10 bills instead of $20’s. While this needs to be setup with the ATM processing center, you can request a change of denomination but the ATM will require programming. If your ATM is in a neighborhood that seems like it would benefit from dispensing $10’s, talk to your ATM company about how to change it.
Figuring out what works for a certain type of business can definitely be a period of trial and error; however when the right combination of factors are in place, revenues will increase. ATM owners will find what works best for their establishment, and what works for some, might not work for others. The bottom line is that an ATM can be a revenue generating asset to a business, if it is being utilized the proper way.