≡ Menu

Smart FI Sprint Podcast EP 004: Profit or Pass? Private ATM Machines

in ATMs, Income, Passive Income, Podcast
ATM Machine
Play

Well, this is it folks! The very first podcast regarding income I have had the pleasure of recording. This is the first income idea I’ve started to dive into. I plan on recording more episodes on the topic, so stick around. Now, listen to the podcast, and then read the show notes below. I promise you won’t be sorry!

Smart FI Sprint Podcast EP 004: Profit or Pass? Private ATM Machines

  1. Update
    1. I’ve started back to editing/rewriting my first novel after a long hiatus of working on the SmartFISprint website.
      1. Since everything is starting to go smoothly around here and work the way I want it, I think it is high time to get back to my writing.
    2. The site had the highest number of page views I’ve ever seen with 75 in one day on April 6th. I believe the reason I received so much traffic is because of how much content was published in one day. I posted all three of my reports on the same day, and I published my third podcast episode. I’m hoping to publish at a minimum, three pieces of new content a month going forward.
    3. Now, on to the meat!
  2. Private ATMs
    1. Overview
      1. This is the first ever SmartFISprint podcast episode dealing with a form of income. I’m pretty excited to share and discuss it because I think this one can be completely viable and do-able for many normal people.
      2. The idea (if you didn’t gather from seeing the title or the pic) is private ATM machines!
  • I was actually very surprised by this idea and the information I found in my research. It actually seems like a very good potential source of income.
    1. If you want a more active income style, you could grow it into a business in the tens of atms
    2. Or conversely, if you want a more passive style of income, you could have a few ATMs where you only put in a few hours work per machine every few weeks and net several thousand dollars a year on average.
  1. I’m thinking about looking into this as a passive income stream myself when I have some startup capital.
  1. How They Work
    1. Well, you know how an ATM works at the bank right? Haha, nah. That’s not what I’m talking about, but you get where I’m going with this right?
    2. I’m actually going to discuss how these machines gain you a revenue stream and how you profit off of them. It may sound like a silly idea now, but wait until I dive into it here.
  • It would be surprising in this day and age, but If you don’t know how ATMs in general work, here is a quick breakdown:
    1. You insert a credit or debit card into the ATM. You enter your pin or other necessary information, then you choose how much money you would like to withdraw, and the ATM spits it out.
    2. Well, for non-bank affiliated ATMs, you do the same thing, but you are charged both a surcharge fee, in addition to a processing fee from your bank. The surcharge fee is how people who run private ATMs make their money, which is what I’m going to discuss now.
  1. Revenue is acquired on these machines via surcharge fees.
    1. This is how it works. When someone goes to one of these ATM machines, they insert their debit card or their credit card to get some quick cash. Maybe they’re at the bar, maybe they’re in a hotel, or maybe they’re just hungry for some food from the Walmart bakery. When they stick that card in and withdraw money, they pay a surcharge for this “loan”. This surcharge is how you would make money from the machine.
    2. Basically these people take a loan out from you for what could be considered “interest”. The bank returns your money to you on the next business day along with the surcharge. It’s a pretty nifty way to earn a few bucks!
    3. Well, what else does this entail? You ask. It can’t be as simple as put X in, get X+3 out. Well, you’d be right, it’s not that easy, so I’m going to try and get into the nitty gritty about it.
  2. Location, location, location
    1. Probably the most obvious bit is if you’re going to buy an ATM machine, you’re going to have to figure out where to put it.
    2. From all of the research I’ve done, this is probably the most crucial aspect to making an ATM profitable. If you don’t get customers inserting their cards into the machine, you’re probably not going to make much money.
    3. A good bit of advice would be to gauge the traffic (traffic referring to the number of visitors an area receives a day) an area sees, and the likelihood that someone would withdraw money from the ATM based on said area. Examples would be as follows:
      1. A bar – it’s a place where lots of cash changes hands, people want cash to pay for drinks, lots of people in and out, and (negative ethical implications aside) the more people drink, the looser they tend to be with their wallets. All of this would more than likely add up to a successful ATM placement and revenue stream
      2. A club – basically for the same reasons outlined above.
      3. A grocery store – many people like paying for things with cash, and the fact that many groceries carry fresh food items, vending machines, lotto tickets, and the like, coupled with a likely high amount of foot traffic, could equal out to a good situation for an ATM.
      4. A hotel/inn/motel – Basically, a place where people are staying who are moving around a lot, vacationing, on business, etc. These types of people will most likely also need cash, so getting sixty bucks out of an ATM with a $3.00 surcharge wouldn’t be a big deal.
    4. I’m sure there are other areas that could get a large amount of traffic coupled with those who desire cash, but these are probably the best ones I’ve seen mentioned or the ones I could come up with.
  3. Purchasing the Machine
    1. Since these are private ATMs, you’ll be purchasing them. There is some good news here.
    2. Getting into the ATM business isn’t capital intensive, meaning you don’t have to have a ton of startup money.
    3. ATMs range in price from around $1k all the way up to $10k or more! This is based on the number of features the ATM has, e.g. how much cash can it hold, does it have advertisement space, extra security, etc., etc.
      1. You can even buy used or refurbished machines from ATM suppliers or you can even find them on places like Craigslist.
    4. There are many, many suppliers of ATMs out there, you just need to look around and see what works best for you. Do you want a nicer one with extra security features, a really basic ATM, or one with a place for advertising for extra revenue? It’s up to you to decide!
  • Necessary Costs and Upkeep on the Machine
    1. Unfortunately, like anything in life, you’ll need insurance for the machines in case they are broken, stolen, etc.
    2. From what I’ve been able to find out though, the cash within the machine is not insured.
      1. However, if you’ve ever seen an ATM machine sitting there, those puppies aren’t light, and they are typically inside a building somewhere.
        1. This means to steal it, a criminal would have to break into the business establishment, and either try to cart the thing out on a dolly, a hand truck, or a small team of people to move it.
        2. I suppose they could also smash through the building with their vehicle, tie a rope around it, and then drive off with it.
          1. However, this is obviously a rarity, and, I would hazard a guess, really only happens to big bank ATMs (since they are the ones that usually have tens of thousands of dollars in them).
        3. You have to stock the machine with your own money.
          1. From what I’ve read, people seem to stock them using anywhere from $3k-$5k, but they can hold more if necessary.
        4. You will either have to install the machine yourself, or have someone or a company install it for you (if the company you’re purchasing from doesn’t install them).
          1. Installing the machine involves the following, bolting machines into the ground, getting a connection to the processing company via phone jack, wired internet connection (like DSL), or wireless.
            1. Wireless costs more from processing companies than other methods.
          2. You will also have to pay for electricity and receipt paper.
  • What to Charge
    1. Look at what other ATMs in the area are charging
    2. Look at the standard of living
      1. If you live in the Midwest, you probably won’t be able to charge what an ATM in New York would charge.
    3. Are you going to have a contract with the establishment you put your ATM in?
      1. From my research, it seems when an individual places an ATM in someone’s business, the business usually takes somewhere between a fifth and a third of the surcharge.
    4. Look at all of your other costs. Obviously you want to maximize profit, but you walk a fine line. Charge too much and people won’t want to use your ATM. Don’t charge enough, and you’ll be missing out on higher returns you could have easily gotten.
  1. Example time!
    1. Let’s say you decide to purchase a fairly average yet robust machine for $2500.
    2. Then, let’s say you do the setup yourself, and assume you have all of the necessary tools (drill, etc.). This means setup is free, $0.
    3. Now, let’s say you decide to go with a phone jack for connection to the ATM/processing company. These two could be separate, they could be one in the same. They could also charge you nothing, charge you a per transaction fee, or they could charge you a flat monthly rate. For the sake of argument, let’s say they charge you a flat $10/month rate.
    4. You decide it is imperative you get insurance for the machine, just in case something happens to it. I haven’t been able to nail down a precise number for this, but from what I’ve read, a basic, blanket liability insurance is sufficient. Let’s say it ends up being $5/month.
    5. For other monthly bills, you could have phone line or internet costs, receipt paper, in addition to electricity. I haven’t been able to find good information on ATM power consumption or how connection costs are associated (this could all depend on the contract with the establishment your ATM is located within). For our sake, let’s say it all adds up to $40/month
    6. The contract – if you’re putting the machine in somebody else’s establishment, then they will probably want a cut of your revenue. If I had to guess, nobody is going to let you put a machine they do not own in their business out of the kindness of their heart.
      1. Let’s say this is $1/transaction.
    7. You also need to decide what your surcharge is going to be. Going off of what I typically see around here in Indiana, most ATMs tend to charge $3.00/transaction. So, that is what you will be charging on your awesome, hypothetical ATM machine.
    8. Finally, you somehow land a decent contract and put your shiny new ATM in a bar of average popularity, meaning you have a decent amount of foot traffic, leading to 100 people/month using your machine for a total revenue of $300/month.
    9. Now, let’s put all of those numbers side by side:
      1. One Time Costs
        1. Machine = $2500
        2. Install = $0
  • Total One Time Costs = $2500
  1. Monthly Costs
    1. Processing Fee = $10/month
    2. Insurance = $5/month
  • Monthly Bills = $40/month
  1. Total Monthly Costs = $55/month
  1. Per Transaction Costs
    1. Business’s Cut = $1/transaction
    2. Business’s Cut/month = $100/month
  2. Total Revenue = $300/month
  3. Total Profit (Revenue – Costs) = $145/month
  1. That isn’t bad monthly income for something being almost entirely passive after the initial work is done. Yeah, there may some things like maintenance in there that has to be performed every so often, and you will have to put some time in every month to put more cash into the machine, but that would probably be negligible for one machine. Most likely a few hours at most.
    1. Check out the second Reddit link below. It is probably the best source I have found for information so far (as it is experience from a person who actually owns a relatively large ATM business)
  2. Assuming all of the numbers above hold steady, this would mean your machine would pay for itself in a little over 17 months. Anything after that would be a net profit.
  3. Besides the couple of hours a month you may have to put in to replenish the stock of money in the machine, this would be almost entirely passive income. With only 5 machines, based on these projections, you could make $8700/year for around 10 hours of work a month. That would be the equivalent of $72.50/hour of work.
  4. Or if you want to look at it as the investment in the price of the machine, you would earn 70% of the value of a new machine every year.
  1. Remaining Stuff
    1. I want to note there are many paths you can take in the business.
      1. You can buy the machine and try to go it alone doing everything yourself from choosing your processor to installing your ATM.
      2. You can lease a machine instead of buying it (if you don’t want to, or don’t have, all of the necessary capital to buy one outright), but with most things loan/lease related, I don’t typically recommend this option.
      3. You can partner with an ATM business. They will want a large cut of your revenue, but they will act like a property management company does. They will do everything for the machine. Your only responsibility would be filling it with cash.
      4. There are other ways and combinations of the above as well.
    2. Wrap-up
      1. As you can see, there is some pretty compelling math behind privately held ATM machines. Obviously I’m not an expert in this field, and as with anyone that isn’t an expert, approach everything with a helpful dose of skepticism.
      2. I highly encourage all of you to perform your own research on this topic as well, if you are interested. In the near future I may be making some phone calls to some ATM companies. I’m pretty intrigued by this idea myself, and will continue to dig into material and research the topic.
      3. If you find anything regarding privately held ATMs in your own search, feel free to come back and post it here! I’m always up for discussion. Knowledge only makes us stronger!
      4. At this juncture, I would give this potential source of income a Profit! It seems like a unique and, for the most part, a hassle free way to earn some extra side income.
      5. Do you have experience with private ATMs? Do you own one? Do you own a business where one is located? Do you own an actual ATM business? Feel free to mention in the comments so we can discuss! Thanks for stopping by guys. Continue to learn and research. Let’s reach FI.
    3. Sources
      1. Experience Running an ATM business
        1. https://www.reddit.com/r/Entrepreneur/comments/1asyzo/atm_business_dont_know_where_to_begin/
        2. https://www.reddit.com/r/Entrepreneur/comments/324m48/i_own_an_atm_business_anybody_interested_in_how/
      2. ATM Machine Company Websites
        1. ATM Machine
          1. http://www.atmmachine.com/atm-faq.htm
          2. http://www.atmmachine.com/
        2. ATM Experts
          1. http://www.atmexperts.com/atm_machine_faq.html
          2. http://www.atmexperts.com/atm_processing.html
        3. http://smallbusiness.chron.com/operate-atm-machines-profit-67115.html
        4. http://smallbusiness.chron.com/start-own-cutting-edge-atm-machine-business-12497.html
        5. ATM Profit Calculator
          1. http://www.atmnetwork.net/benefits/profitCalculator.asp

Thanks to all of the sources for the information that provided for this podcast!

Also, a big thanks to Simon Panrucker for providing the music for the intro and outro!




Comments on this entry are closed.