Put More Money in Your Pocket: Making an ATM Profitable

Make More Money

Is your ATM profitable?  There is more than one way to measure ATM profitability. Some ATM Entrepreneurs only look at the surcharge income verse expenses out. However, if you really look at the ATM business, it’s more than that.

Let’s use some easy numbers to wrap our heads around profitability.  I prefer to say, how much can my money make for me?  Do you work for your money or does your money work for you?  That means if you have a few thousand dollars sitting in a bank account (aside from emergency funds which we know is important) how much income are those funds generating.

Historically, interest rates in a savings account, money market account, or a Certificate of Deposit (CD) account can generate 1% – 3% annually. So let’s say you have $5,000 sitting in the bank if you locked that away in a CD that would get you the highest returns. Let’s say you found a bargain at 3% (not likely at the time of this writing) but that would be a whopping $150 per year and you’d probably have to lock up those funds for at least 3 or maybe 5 years.  More common is a 1% CD for a year or a Savings account at less than 1% these days. So for argument sake, we’ll say you’re averaging 1% a year which would be $50 per year on $5000. While the savings account or other bank account funds are insured and the risk of funds is very low, the ATM business is not much riskier if you work it.

There’s no magic bullet. To maximize your income, making the most on your money you do have to find a location and you do have to service the ATM. That’s the way to make the most money from the ATM business. One can expect an average of about 100 ATM transactions per month from an okay location. Poor locations might average 50 or 60 (2 uses per day) and great machines might average 400 or more (12 transactions per day). If you have a mix of locations you’ll see an average of 150 or so across the portfolio.

We’ll use an easy example of 100 transactions at $3.00 and giving the location $1 after the first 50 transactions to ensure you cover your costs. The biggest expense is the ATM itself. We’ll use $2500 for a brand new ATM with taxes and installation and $10 per month for wireless communication services.  Then, you’re going to load $2000 or so in cash but those funds are either in the ATM or in the bank so it’s not really invested cash since you still have immediate access to it in an emergency.  So, the initial investment might be $2500 or $4500 depending on how you look at it.

If you have a location doing 100 transactions at $3 that gives you $300 per month, less the $50 you pay the location for the 50 transactions over 50. That leaves you with $250 less the expense of wireless fees, travel costs to the location (gas, car payment, maintenance, etc), and any costs associated with doing business at that location. Maybe you buy food if it’s a restaurant bar, or get a haircut once a month if it’s a barber (while these are normal things you would probably do, they are considered business expenses) since you want to patronize the stores you do business with.

Let’s say of the $250 in gross income after paying the location you account for $50 per month for other expenses leaving you $200 per month. That same $2500 in the bank would take you 4 years to make the same amount from one ATM a month.  If you average $200 net income each month from one machine you would have essentially paid off your first location in a year.

So, how do you make even more money from your ATM?

Your ATM users might see an ATM as a convenient way to get quick cash; however, some ATM owners are looking to see how they can make an ATM more profitable. Now, if you’re a store owner and an ATM investor and not an IAD (independent ATM deployer) you might look at the ATM as a way to attract more customers to your store.  However, what retailers don’t often realize is that a few simple steps can turn an ATM into an additional money-making vehicle for them making the ATM even more Profitable. If you’re an IAD, these are some of the points you want to talk about with the store owners.

  • Have you ever walked into a store that has an ATM sign in the window but can’t locate the machine once you’re inside? This happens more often then you think. To maximize ATM revenue, make sure customers can easily locate the machine.
  • If you work with convenience stores you know they use every inch of available space to shelve products. This can often make it harder to locate the ATM as they often put it in the back of the store. I’m sure you’ve heard the phrase location, location, location in real estate. Well, it doesn’t only apply to houses.
  • The number one step to maximizing revenue and making more money when operating an ATM business is to make sure the ATM in a visible and easily accessible location. The best place is right inside the front doors of the store or near the front of the store at the highest traffic aisle such as the water and soda aisle.
  • Maximize ATM usage by making sure customers have to pass the machine before they shop. If their main purpose wasn’t to come in and get cash, it might trigger them to do so since the machine is so convenient.
  • In a bar, quick service restaurant, brewery, or any place where customers walk up to a counter to plan an order, placing the ATM machine in an area that gets the most foot traffic before the user gets to the ordering area will be most profitable. Typically, this will be the entrance or along the area where customers may line up or congregate to order. Keep in mind that customers have many uses to have a few extra dollars while ordering and after ordering. At a bar — the need for another drink, playing the jukebox, another game of pool, paying for parking, a valet, or a taxi on the way out.
  • Signage is another simple step to maximize revenue. Advertise that you have an ATM located in the establishment. I can’t tell you how many locations don’t say they have an aTM because they think it will create a target. Trust me, criminals will know they have an ATM anyway. The sign is to increase legitimate use. Anyone that thinks a sign is going to invite the criminal won’t maximize revenue.
  • The location of the sign is also important; it must be visible from the street or to passers-by on the sidewalk. Many storefronts, bar windows, liquor stores, and popular convenience locations can be cluttered with lottery posters, sale posters, or neon lights, so placing the sign where it is clearly visible will improve the ATM usage.

ATM owners make money from the convenience fee that is charged (the surcharge); therefore, the more conveniently located your ATM is, the more people will be driven to the machine. Some locations like barbershops, nail salons, ice cream shops, smoke shops, and even some bars & restaurants do not accept credit cards due to the high cost of taking that payment method. Those locations will generate the most ATM revenues.

An ATM owner making a conscious effort with advertising and placement should maximize profits vs ATM owners not doing those things. Smart ATM operators can get their ROI (make money back) “return on investment” much sooner than sometimes anticipated.

There are also many other ways to make your ATM profitable.  From on-screen advertising to dispensing coupons and discounts on the receipt, to complete ATM branding by wrapping the ATM with a custom skin from one advertiser.

  • Put more money in your pocket with advertising on the ATM screen and coupons.  If you have several locations in an area, cross-promoting the stores can also generate more money.
  • Would the barbershop like to advertise or offer a coupon on the ATM you have located a few blocks away at the bar?
  • Would the bar want to advertise on the ATM at the barbershop?
  • While you can set your own pricing for coupons, welcome screens, and processing screens, generally $25 – $30 per month (a buck a day) you can cross-promote and generate additional revenue.

Obviously the nail salon isn’t going to advertise on your brewery ATM, but they might be interested in advertising on the ATM at a coffee shop or the small boutique or that farmers market where their demographics hang out. When thinking about advertising and coupon opportunities, think about the locations you have as well as potential locations that might be interesting candidates for advertising. If you can get advertising interests prior to meeting with a location owner you can even use some of that info to close the deal (I have a barbershop that would let you advertise on there ATM). This can lower your costs of acquiring the location. You can even use advertising funds to secure a good location by offering the location free advertising on another ATM of yours. Present the real value. Advertising is a great incentive.

One of the simple ways to increase profits is to load the ATM with 10’s instead of 20’s in some locations. This lowers the average withdrawal amount, often increases transactions, and reduces funds needed in the ATM.

Should you need more ideas about how to maximize profits from your ATM or your network of ATMs if you operate multiple ATMs as a business, please give ATMDepot.com a call at 888-959-2269 to speak with one of our associates.

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