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Starting Your ATM Business: ATM Business Contract and Other Documents

Do you need an ATM business contract to start your ATM business? What regulations apply to running your ATM? What do you need to do before you order your ATM machine? We’ve got the answers.

Making the decision to start an ATM business is a big step in and of itself. Completing the required paperwork can be a daunting next task. But don’t let it stop you from making money.

In this article, we cover the first steps in planning your ATM machine purchase. We want you to know what to expect so that you don’t waste any time and you avoid unnecessary stress.

As an independent ATM deployer (IAD), once you’re prepared, you can start making money with your ATM!

What is an ATM Business Contract?

An ATM business contract is a documented agreement between you—the ATM owner—and the proprietor or merchant where the ATM will be placed. This is also referred to as a contract agreement, placement agreement, or site location agreement (SLA).

Rather than retain sole ownership of the machine by renting or owning your own space, you create a partnership with the third party merchant when you use someone else’s business or space to house your ATM machine. 

So, depending on where you plan to place your ATM, you may or may not need one of these contracts or agreements. If you do plan to work with a third party, you will need more than a verbal agreement. 

An ATM business contract or SLA details the ins and outs of the ATM placement and operation. This protects you if you ever have any issues working with the third party.

Common clauses include

  • Where the ATM will be placed
  • Responsibilities of each party 
  • Length of time agreement is effective
  • Revenue split
  • Insurance
  • Maintenance

There are two ways we recommend getting one of these contracts:

First, you can work with a lawyer to draft a contract that lists the protections you need. However, as you can imagine, this is the costly route. Lawyers can cost upwards of about $1000.

Or, you can use a contract template. Again, make sure it lists all of the protections you need. You can find contract templates with an ATMDepot membership.

But, if you won’t be working with a third party, you can skip this altogether. However, choosing your ATM location is the very first step you need to take before ordering your machine. In the next section, we’ll tell you where to start.

ATM Location

Before you order your ATM machine, you need to have a location for it first. This will help you determine whether it will be indoors or outdoors, what size machine your location can support, and whether or not you need an SLA (more on SLAs below).

If you place the ATM in a business or location that you own, you don’t need a placement agreement or SLA. However, you will if you want to work with a third party merchant.

Document Checklist for Starting ATM Business

These are the forms you will need to complete and send to your ATM provider to make sure they have all of the information they need and that you are in compliance. 

You might not complete the equipment order form until everything else is finished, but deciding on equipment is an important step. It requires you to really think about your plan and your needs for your ATM, so we’ll start there.

Equipment Order Form

Once you have your location set, you can order your ATM machine. However, there are two more decisions for you to make before you can submit this form. 

First, you need to decide how much your surcharge will be. The surcharge is the fee associated with conducting a transaction (typically withdrawal transaction) on your ATM. Usually the fee is $2.50, but you want to make sure you keep up with other ATMs nearby. 

For example, a surcharge of $2.50 might not be wise if the ATM across the street only charges $2.00. Alternatively, if the ATM across the street charges $2.50, you might want to charge $2.00 to increase traffic to your machine. 

Second, you need to know what cash denominations your ATM will dispense. The standard is 20s, but you might want 10s if your ATM is located in a low-income neighborhood. This way you accommodate the needs of customers who might have lower account balances.

You will need both surcharge and denomination to complete your equipment order form. You will also need to decide if you will do the installation yourself or if you will have it professionally installed.

Finally, you’ll need to link a bank account. 

ACH

An ACH form documents your account information. You will need to provide account and routing numbers and give permission to have funds electronically transferred to your account.

When you open this account, or if you change an existing account, there are some requirements the bank has to meet to get your account set up for your ATM business.

The USA Patriot Act was passed in 2001 in order to vet bank account owners. This act applies to you as an ATM business owner because you will be under scrutiny for its anti-money laundering provision. 

Additionally, because running an ATM machine means you are conducting money wire transactions for other people, you are not allowed to operate this type of business if you have committed a felony or financial crime.

Section 326 of the USA Patriot Act requires your financial institution to obtain, verify, and record information about you and your business before setting up an account for your business. Therefore, you will need to provide them with your name, address, date of birth, and other identifying information.

The bank will need your driver’s license to identify you, and you’ll need to provide a copy with your ATM purchase documentation.  

Driver’s License

Your ATM processor will need a copy of your driver’s license for many of the same reasons as your bank. You will have to pass a basic background check to be approved for owning and operating an ATM machine. A copy of your driver’s license is the best way to verify your identity.

Voided Business Check

A voided business check verifies the legitimacy of your linked account. Your linked account must be a checking account, not a savings account. And it must be a check—with account and routing numbers—not a deposit slip.

ATM Operator Agreement and Application

Your ATM application is also known as the ATM Operator Agreement. This form tells banking partners who they are working with and makes sure all federal regulations are met.

W-9 Form

Since you will be earning revenue from your ATM machine, you will need to complete a W-9 form to report residuals for tax purposes.

ATM Processing Agreement

The ATM processing agreement lists your rights and obligations as the ATM owner as well as the rights and obligations of the ATM processor. This will be the legal contract between you and the ATM processor that runs your ATM machine program. This contract also ensures your payment as agreed upon.

Other Applicable Documents

These documents depend on your specific needs and situation. Check with your local courthouse to see if you need any special licenses or permits before operating your ATM. And remember, you only need an SLA if your ATM will be in a location that someone else owns.

Business License and Permits

While you can operate your ATM machine as a sole proprietor, LLC, or corporation, you might need to check with your local government about specific requirements. The most common route is to register as a sole proprietor under a “doing business as” business name. Then, you can open your bank account under that.

Some ATM processors will license you the rights to use their name as part of your company name. This might be an option for you as well. It will of course require additional paperwork and a fee for usage rights. However, the nominal fee is often worth the instant credibility and trust you get by associating your business with one that’s more established and well-known.

So you don’t need a specific license to operate an ATM business. When you are ready to purchase your ATM, you will simply complete the ATM Operator Agreement form which serves as the contract between you and the ATM processor. 

Placement Agreement or Site Location Agreement (SLA)

This also refers to the ATM business contract we opened this article with. It’s a good idea to have this to protect you against any potential disputes. The SLA makes your agreement legal and binding before you install the ATM machine. This is a win-win for you and the location owner.

You can work with a lawyer to create a personalized contract or agreement, or you can use one of our templates on ATMDepot.com if you are a member. You can also find scripts here for pitching and selling your idea to business owners you’d like to work with to get them on board!

ATM Insurance

Purchasing ATM insurance is not mandatory, and you can purchase it on your own timeline. It might be a good idea to get insurance once you have your machine set up and filled with cash. There are coverage options for equipment and cash or one or the other.

When searching for insurance companies, look for ones that are associated with the ATM Industry Association (ATMIA). That way they can better guide you toward a policy that meets your specific needs.

Keep in mind also that if your ATM location is owned by someone else, that party might have insurance requirements for you to follow. And you might opt out of insurance altogether if your ATM location is open 24 hours or if it’s under constant security. 

Wireless Agreement

Completing this agreement allows the ATM processor to send you a wireless modem which converts your signal from Internet to cellular. This provides a faster connection speed.

Conclusion

There are a number of steps necessary to get started with your ATM business. However, they are all relatively simple. Use this article as a checklist to prepare and make the process as seamless as possible.

Getting the ATM business contract, or SLA, and setting up your account with your bank are the two steps that will take the most time. That’s only because you have to coordinate with those other parties. Everything else is up to you to fill out and submit. Check out our article on choosing the right ATM equipment here. You can even speak with a representative if you still have questions. ATM Depot has everything you need to start your ATM business today!