How to Start an ATM Business with No Money

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If we said we could tell you how to start an ATM business with no money, would you believe us? It’s no secret that an ATM business has low startup costs compared to other business models. That’s one reason why it’s the ultimate side hustle.

Of course, starting an ATM business will require some startup money. But what if you could find other ways to come up with the money? What if you could start an ATM business today without thousands of dollars already saved up? Here, we’ll share some tips that can allow you to get creative with funding your business. Then, you’ll be left with absolutely no excuses keeping you from getting started.

How to Purchase Equipment

The biggest startup cost will be the ATM machine or equipment itself. You can expect this to cost around $2,000-$3,000 for just one machine. That is considerably low compared to what it costs to start a brick and mortar or other business. But not everybody has that kind of money available. So, if you want to know how to start an ATM business with no money, you have a few options.

Use a Credit Card

If you have a credit card or can open one, you can purchase an ATM machine on credit. The cost of a machine is usually within the range of credit limits. Plus, you can find a good deal where you are offered little or no interest for a certain period of time. This allows you to start generating revenue before interest accrues. This can speed up your return on investment (ROI). You even have the chance to pay off the balance with your ATM revenue before the interest kicks in!

Lease

Another option is ATM leasing, but it is much less common these days. The price of ATM equipment is not as high as it used to be. So, it often makes more sense to purchase a machine on credit than to lease. Unless you’re considering purchasing several ATM machines, it might be more profitable to borrow instead of lease due to the rates on bank financing.

If you have great credit and only want to lease the actual ATM equipment, you can get a lease for as low as $55/mo. Benefits of leasing include a fixed payment, tax deduction, and recuperation of your monthly payment by your business revenue. 

However, an out-right purchase has an ROI of between 3 and 18 months depending on the situation. The national average of all our ATM operators have an ROI of 8.5 months based on a $2 surcharge. Thereby, you avoid the necessity of a long-term ATM machine lease.

Apply for a Loan

You might not have friends and family willing and able to lend you some money to start your ATM business. But you may be able to get a line of credit (LOC) from your bank or other commercial lender. Since $5,000 is a very small loan (microloan), you could consider increasing the line to help cover other expenses if you choose to go this route. 

It’s a bit of a hassle to get a loan. So it might not be worth it to get a loan for less than $25,000 when you could purchase the equipment with a credit card. But some banks will open an LOC for $5,000-$15,000 if you have a good track record with them and decent credit. 

To apply for an LOC, simply visit your bank or other institution where you have money in an account. Interest on a regular loan starts immediately. But on an LOC it only starts once you take the cash, and you only pay interest on the outstanding balance. So prepare yourself before you start using it. Keep in mind, too, that most traditional business start-up loans will require a decent credit score.

Qualify for a Financing Program

Third party business funding is a great way to get cash if you have locations waiting for ATMs and simply need to find the money to purchase the equipment. You can see if you qualify to get financing to start your ATM business. There is no charge to check, and no inquiry will go on your credit report.

All you do is fill out the quick pre-qualification application. Then, a financing representative will give you a call to collect the rest of your information. A soft inquiry will follow. Lastly, the financing rep will let you know what you’ve been approved for in your area based on your credit.

You will know within minutes whether or not you have been approved. If you proceed with the loan, the third party loan provider will work on your behalf to secure multiple revolving credit cards (up to ten) with varying amounts of credit. The total available line of credit could be between $25,000 and $100,000 based on your creditworthiness. So this is really only an option if you are looking to purchase multiple machines. 

The third party will work to secure all of your credit cards to include up to 18 months of no interest. You complete the online form. They qualify you for free and do all of the work to secure your loans without inquiries on your credit report. There is no upfront fee; you don’t pay anything out of pocket. 

However, upon approval and when you receive your first revolving line of credit, a flat fee of $2,997 charges to the first credit card you receive. This way, you’re not out of pocket and have up to 18 months to pay the fee and any other charges you incur on the cards received.

How to Provide Vault Cash

Another ATM business expense is the vault cash. This is the money you will load into the machine for your customers to withdraw. Now, at the end of the day this money is yours, but it will be tied up in your business. And you need it immediately. So how can you easily get $2,000 cash to stock your ATM machine?

Other People’s Money

One option is what we like to call other people’s money, or OPM. Technically, OPM is a slang term used in finance to refer to financial leverage in the form of borrowed capital that is used to increase the potential returns as well as the risks of an investment. However, in the case of an ATM business, it simply means you can fund your venture with help from family, friends, or a business partner in return for an agreed upon share of your business revenue.

Financing

If you decide to finance your business, you might be able to cover your cash needs from this same source. However, keep in mind that normally the credit cards aren’t used for obtaining vault cash. But, if you speak with the loan provider, you may be able to pay an additional small fee to pull cash off the cards.

Location Funding

This is probably the most common option for cash vaulting when an ATM operator is short on funds. You can make this service part of the agreement with the location owner. When you negotiate the placement of your ATM machine in someone else’s business, you will need to discuss the need for the location to provide the vault cash as part of the agreement. 

Obviously, this is only an option if the location owner agrees to this arrangement. In this scenario, you will need to be willing to offer a larger share of your surcharge revenue. This will compensate the location owner for the extra work and responsibility. You will also end up reliant upon him or her for the seamless operation of your business. 

For example, if something happens where the location owner fails to restock the machine, you are out of business until you have cash to offer customers. If you are able to handle the vaulting yourself, on the other hand, you have more control over your business and assume less risk of down time.

What Can Wait

Finally, when planning how to start an ATM business with no money, you want to make sure you stick to the bare necessities to start. Purchase just enough to get going. Then, as you begin to generate revenue with your machine, you can budget for other add-ons and services to enhance your business as you go. 

You will have a lot of options to choose from when it comes to purchasing equipment. You will have to consider screen size, lighting, cassettes, locks, cameras, etc. But many of these upgrades can be added later; they aren’t completely necessary to get started.

Be strategic as you weigh “need to have” against “nice to have”. Bells and whistles can always be added. But you also want to make your ROI as soon as possible. You can only do that with a competitive machine. So if you need help making these decisions, talk to someone with experience in the industry or a trusted ATM vendor. 

How to Start an ATM Business with No Money

The cost to start an ATM business is so low that you technically now know how to start an ATM business with no money. Keep your initial budget limited to equipment that is need to have versus nice to have. Borrow from friends and family when you can, or enter into a business partnership. Seek financing when it makes sense for your business model. Work with a reputable financier who will offer you a fair deal based on the revenue you anticipate and the rate at which you will reasonably be able to make your ROI.

If you still have questions about how to start an ATM business with no money, don’t hesitate to contact us today! You can also check out our comprehensive list of FAQs about how to get into the ATM business. These answers provide more information about what you can expect when getting started.

13 FAQs About How to Get Into the ATM Business

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If you want to know how to get into the ATM business, there are a lot of factors to consider. First, you might want to be sure that getting into the ATM business is something you really want to do. Therefore, you will want to be able to weigh the rewards against the costs before you get invested.

Then, once you are sure you want to start an ATM business, you will likely have a lot of questions about what to expect and how to handle certain situations. We’ve found that many new independent ATM deployers (IADs) have some of the same curiosities and concerns when it comes to getting started. 

Our hope is that by answering these frequently asked questions all in one place, IADs will understand how to get into the ATM business and become confident about getting started. 

What Is an ATM Business?

Before understanding the ins and outs of how to get into the ATM business, you should know what “ATM business” means. Did you know that not all ATM machines are owned and operated by financial institutions? That means that there are other companies and individuals who purchase ATM machine equipment, place it in locations where there is a lot of foot traffic and demand, and make money from each transaction. 

Individuals who purchase, place, and operate ATM machines are known as independent ATM deployers, or IADs. However, there are a lot of other ways to get involved and make money in the ATM industry. There are ATM vendors who sell ATM equipment to businesses who want to operate their own machines. There are vaulters who work with ATM operators to handle the cash stocking. And there are site locators who match businesses and operators so that both parties benefit from the placement.

Regardless of your role, the following FAQs and answers can help you better understand how to get into the ATM business and start making money. 

1. How much does it cost to start an ATM business?

Of course, the question that is on the forefront of everyone’s mind is financial investment versus reward. One reason an ATM business is the ultimate side hustle is because it has a low overhead compared to many other businesses. The biggest cost is the ATM machine itself. This can be about $2,000-$3,000. The next cost is the cash you use to stock the machine if you will vault your machine yourself. This is still your money at the end of the day, but it will be tied up in your business as an investment.

There are other costs that vary from operator to operator. For example, you might pay for installation and programming, equipment upgrades and add-ons, and/or advertising. These are all optional.

So while it’s hard to provide an exact number, you can expect to start an ATM business with just a few thousand dollars. The vault cash is the only expense you need in full up front. You can handle installation yourself if you are comfortable, purchase ATM equipment on credit and pay over time, and you can add custom graphics, cameras, and other features over time and as needed once you start making money.

2. What are the ongoing costs of operating an ATM?

Now, those are the costs to consider when it comes to getting up and running. Ongoing costs will include internet service, insurance, maintenance, and travel.

Purchasing your own wireless device to provide your ATM machine with an internet connection separate from the location’s ISP is essential to maintaining consistent service. If anything happens to the location’s internet and your machine loses connection, you will lose more business than it would have cost to provide your own connection. 

Insurance is optional, but the location may require you to obtain at least general liability insurance as a condition of your placement agreement. General liability insurance typically covers bodily injury, property damage, medical payments, and legal defense. 

Maintenance costs will include cleaning supplies, receipt paper, and any technician calls. These costs can be unpredictable, so it’s a good idea to set aside some money or budget for these things.

Finally, you might want to consider the travel to and from your machine. This is why it is important to try to place your machine close to where you live or work or already go regularly. The farther out of the way your machine is, the more you will spend on travel costs.

3. How do I make money from an ATM?

There are a lot of different ways to make money from an ATM. As an ATM site locator who negotiates with location owners on behalf of ATM owners, you can request a flat rate or negotiate for a share of the surcharge. As an ATM vendor, you can mark up the price of ATM equipment to earn an upfront commission and/or keep a share of the surcharge for servicing the machine.

But most commonly, individuals will purchase and operate their own machines, generating revenue from surcharge fees imposed on transactions. Surcharge fees can range anywhere from $1-$10 depending on the location. Setting the right surcharge fee depends on the location. How much demand is there for cash in the area? How much competition is there? What is the average withdrawal amount? 

When setting a fair surcharge fee, you want it to be high enough to make your return on investment as soon as possible but not too high that customers opt for service elsewhere. Typically, the best surcharge fee is the one that brings in the most users. But you will monitor your data when you start and make adjustments as necessary.

4. What is the typical profit margin for an ATM business?

As an IAD, you can expect to make an annualized return of 35%-70% or more. With just one machine, you can make a few hundred dollars a month. One machine can generate some extra passive income to help supplement your regular salary or fund a savings account or large purchase. But if you want to rely on your ATM business for your salary and make thousands of dollars, plan to scale your business.

To calculate your ATM business profit, multiply your surcharge by the number of transactions you expect to see in a day or month. Then subtract any business costs, and that will be your profit for any given month or year. There are some formulas and calculators you can use to help set the right surcharge fee and estimate your revenue.

Remember that you can always adjust your surcharge fee or even move your machine to a more successful location if you don’t see the numbers you want. And of course, the more machines you operate, the more revenue you will generate.

5. How do I choose a location for my ATM?

Choosing a location for your ATM requires you to consider a number of factors. First, you either need to find a business that wants to offer ATM service to its customers or a gap in the market. Areas that experience high foot traffic and also provide opportunities to spend cash are the best locations for ATM machines.

Remember that you make money from each transaction made on your machine. So you want to see as many transactions as possible. This should really influence where you place your ATM. Will a lot of people pass by your machine? Will those people need cash? Are there clear benefits of an on-site ATM machine for the location owner? 

It is best to start looking near where you live, work, or already travel to frequently. The more you have to travel to and from your machine, the less profit you will make because more of your revenue will be spent on travel costs. 

We’ve created a list of the best ATM locations and how many transactions each typically sees. But each IAD’s situation is unique, so the right location will really depend on the need in your area.

6. Do I need any special license or permits?

You do not need a specific license to operate an ATM business, but you will need some sort of business name to complete the agreement with the ATM processor as your ATM vendor and to open a business bank account. There are a few options.

You can establish a limited liability company (LLC) to separate your personal assets from your business liabilities. This can be a good idea depending on the scale of your operations, your risk tolerance, and your specific business goals. 

The simplest and most common route among new IADs is to create a sole proprietorship and operate under a fictitious business name, or a DBA—doing business as. There are also partnerships and corporations that can be created depending on your business model and goals.

7. What kind of insurance do I need?

You don’t necessarily need any kind of insurance. However, the owner of your location might require that you at least purchase a general liability policy. General liability insurance covers bodily injury, property damage, medical payments, and legal defense. You can expect to spend about $400-$700 a year for $1 million in general liability coverage.

ATM insurance is an inexpensive way to protect yourself against expensive accidents. Since your ATM machine is not owned by a bank, you are not subject to FDIC protection. While you can get ATM business-specific insurance, you don’t have to. A general liability policy might be enough, depending on your needs.

8. How do I choose an ATM provider?

There are a few qualities to look for in an ATM provider or processing company. First, it’s a good idea to look for a company that also sells ATM machines. This way, you can get equipment and service all in one place. And you know the machines you get from your ATM processor can process using their service.

You might also want to look for flexibility in payment options. Automated payments make your income even more passive and your paydays quicker. You might also want the option to split payments between multiple people or accounts. 

Of course, you want to work with a company that offers free processing. The least amount of hidden and unclear fees, the better. Make sure your ATM provider is transparent about any fees and processes.

Maybe most importantly, choose an ATM provider that offers reliable support. Especially when you are just learning how to get into the ATM business, you want to be confident that you will succeed. The best ATM providers will view your success as their success, offer resources, and be available when you need them.

9. How do I manage cash for my ATMs?

There are a few ways to handle cash vaulting. The most profitable way is to do it yourself. You will need a bank account with a balance that you will withdraw regularly for the sole purpose of stocking your machine. You might need $2,000 or so depending on how busy your machine is and how often you will stock it. Withdrawal amounts from your machine get redeposited to that account by your ATM provider. 

Another option is to have the location owner or other location employee handle the vaulting. This is sometimes a good option for IADs who don’t have enough cash available to tie up in the machine; businesses usually do. However, this extra task might cost you more in a revenue share, meaning you might have to pay a portion of the surcharge revenue to the location owner for taking care of this work.

And of course there are independent vaulters and vaulting companies. Your ATM provider might also offer this service. This is the most expensive option, but it alleviates the burden for you.

10. What kind of maintenance do ATMs require?

Fortunately, ATM maintenance is very simple. Just make sure it is clean, attractive, and functional. Keep it stocked with cash and receipt paper, address any errors immediately, and wipe the machine down regularly. If any decals start to peel, replace them. If someone vandalizes it, clean and repair it. 

Most maintenance you can easily conduct yourself. For more complex problems, simply contact your ATM provider or other ATM technician for help. Consult the manual for your machine when necessary, and check YouTube for how-to videos to save yourself time and money working with someone else. 

Know your machine well by monitoring the activity. That way you can identify errors and anomalies more quickly. The faster you resolve an issue, the less time you spend out of business, and the more money you make.

11. How do I handle security concerns?

There are a number of ways criminals can tamper with an ATM machine to try to access cash or customer account details. However, the simplest barriers can easily deter this activity. The most important thing you can do is be vigilant.

It is a good idea to keep your machine under surveillance. Whether it is always in eyeshot of a location employee or in the line of security cameras, advertising this kind of monitoring can deter criminals as well as reassure customers of their safety. 

Make sure the machine is bolted firmly and evenly to the ground to prevent the machine being moved. Test your machine’s security by trying to nudge or shift it. If it doesn’t give, you are good to go! The more time it will take someone to get access to the machine, the less likely they are to pursue it.

Therefore, you want to try to barricade the machine as well. Keep a straight path to it open, of course, but blocking the sides with furniture or displays can make getting to the machine more difficult. 

And again, know your machine well. You don’t want someone to install a pinhole camera or fake front to your machine that would compromise customer account data. Regularly inspect your machine to ensure that it hasn’t been tampered with. 

12. How do I attract business to my ATM?

There are a lot of free and inexpensive ways to bring more traffic to your ATM machine. A little bit of promotion can go a long way; you need to let people know your ATM exists! 

You can purchase an ATM sign and coordinate with the location owner about displaying it, but if you want to save some money at the start, just consider strategic placement. Put your machine close to a payment counter or somewhere else where all or most customers will pass by and see it.

You can also coordinate with the location owner to offer coupons printed on receipts and even advertise deals and discounts for cash payments. Cash payments save businesses on credit card processing fees, so discounts for cash payments is a win-win-win scenario that can encourage more ATM transactions. 

And take advantage of your ATM screen. Create custom graphics that appeal to users and also brand yourself at the same time. You can do this yourself or hire out for it, but some ATM providers will add custom screens as a perk!

13. What is the best ATM equipment?

You have a lot of options when it comes to choosing ATM equipment. To keep it simple, the leading brands are Hyosung and Genmega. But this doesn’t mean you have to purchase one of these brands. What you do want to look for is reliability and ease of use. 

Be wary of used machines. They might come with complicated issues, be noncompliant, or simply no longer work with ATM networks. Purchase new or certified refurbished. This ensures that the machine will function properly. Newer machines also tend to be more user-friendly because any issues with older models are typically improved with newer ones.

You also have a lot of options when it comes to features. The screens, cassettes, locks, etc. will vary from model to model. So shop around and make a list of features that are “nice to have” and features that are “need to have”. This will help you narrow down your options based on your budget. 

How to Get Into the ATM Business

There is a lot of information for you to consider when starting an ATM business. However, we hope that this list of frequently asked questions helps to simplify some of that information and put you at ease knowing what to expect at every stage of the process. 

Working with a knowledgeable, supportive ATM provider can make or break your business. ATMDepot.com specializes in helping people go from zero to ATM business owner. If you want to get into the ATM business as soon as possible, request an ATM Start-up Kit or check out the ATM Business Road Map risk-free to get a detailed guide for starting an ATM business from the ground up. 

An ATM business is the ultimate side hustle. It is simple, inexpensive, and rewarding. With decades of experience and a wealth of resources available to you, we can show you how to get into the ATM business today!

The Truth About Owning ATMs as a Business “Gurus” Aren’t Telling You

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Owning ATMs as a business can be a reality for anyone. With the right information, resources, and support, you could be making semi-passive income with ATM machines if that’s something you are interested in. But just because anyone can do it doesn’t mean that everyone should.

ATM business gurus often provide valuable insights and strategies. But they can sometimes overlook or downplay certain harsh realities of the ATM business world. There are some truths they might not emphasize but that you should be aware of before getting started. Making sure you properly manage your expectations and know exactly what’s ahead is your first step to success owning ATMs as a business.

There Is No Guaranteed Formula

You will often see ATM business gurus touting the wealth and success they’ve experienced owning ATMs as a business. They want you to know exactly what worked for them so that you can follow in their footsteps. 

But what this strategy fails to consider is the fact that each person has different business goals, obstacles, strengths, and weaknesses. What works for one person might not work for the next. And what each person wants out of an ATM business will vary as well. 

There are many ways to make money in the ATM industry. And there are many ways to run an ATM business. No two business models look exactly the same. So to be successful, don’t force yourself into someone else’s formula if it isn’t working for you, regardless of the promises.

Failures Are To Be Expected

Everyone makes mistakes. Successful entrepreneurs often have multiple failures behind them. The path to success is rarely linear and is often paved with setbacks. Fortunately, by following the guidance of gurus and ATM industry experts, you can avoid a lot of major failures and setbacks by learning from the mistakes of others. 

But if you are new to owning ATMs as a business, you will have to learn from your own mistakes as you go. Simply adjust and move forward with your new knowledge. There is really no mistake you can make that can’t be remedied. And the closer you adhere to ATM industry best practices, the fewer and smaller your mistakes will be.

One of the biggest misconceptions many gurus will promote is that owning ATMs as a business will be easy. Compared to other businesses, an ATM business is quite simple. But at the end of the day, it will still require effort to get up and running smoothly. If you can’t power through the challenges, you can’t expect success.

Do Not Expect to Get Rich Quick

Really, don’t expect to get rich at all. Owning ATMs as a business is a great, low-stakes way to generate some extra semi-passive income and maybe even replace your 9-5. But don’t expect to become a millionaire….

Don’t pressure yourself to grow quickly. Prioritize sustainability over rapid growth. Rapid growth is frequently glorified, but sustainable, steady growth is often more beneficial and less risky in the long run. Take your time, study your metrics, and adjust accordingly. If you focus on the business as a whole rather than simply generating more and more revenue, your service will be better and your business will succeed in turn.

Beware of Market Saturation and Competition

Entering a saturated market or facing intense competition can make it exceedingly difficult to gain traction. Not all cities have the same need for ATM service. So success owning ATMs as a business might be dependent on where you are located and the opportunities available. 

However, just because a location has an ATM in place already does not mean that it’s off the table. If the equipment is old, run-down, or frequently out-of-order, that could be an opportunity for you to offer a shiny new ATM. If a business owns its own ATM machine but is tired of maintaining it, that could be an opportunity. Or maybe you find a business that is unhappy with their current service and is eager to work with someone new.

High traffic, high demand locations, like casinos and clubs, are difficult to break into. This is where networking comes in handy. If you already know someone who is a decision-maker at a profitable location, then your chances of operating an ATM machine there improve.

Whatever the situation, it is your job to identify a gap in the market. If you see opportunities for ATM placement in your area, you can be successful owning ATMs as a business.

Be Open to Continuous Learning and Adaptation

Owning ATMs as a business will require a certain degree of flexibility. The business environment is constantly changing. Continuous learning, adaptability, and willingness to pivot are crucial for long-term success. 

Don’t expect to learn everything. Because as soon as you do, something will change. And if you don’t keep up with the changes and dedicate yourself to learning and improving, your business will suffer.

Learning the business is not something you do once. It is an ongoing part of being a business owner and entrepreneur. Don’t neglect this work in your business.

Influencers vs. Gurus vs. Mentors vs. Experts

ATM industry gurus are not all wrong or bad. However, be warned that if it’s too good to be true, it probably is. Beware of influencers, gurus, and mentors online who are just after clout, views, and likes without really explaining how ATM business works. If you really want to know how a successful ATM business works from start to finish, take it from an expert whose success is tied to yours. 

How to Get Started Owning ATMs as a Business

Now, owning ATMs as a business is the ultimate side hustle because of its comparative simplicity, low overhead, and semi-passive revenue. But, like any business, it will come with its fair share of challenges. To be successful, you have to know your strengths and weaknesses and be able to move on from mistakes.

If you want to learn the ins and outs of owning ATMs as a business from someone who’s been in the industry for over thirty years, check out the ATM Business Road Map. What sets this training system apart from others is that it is risk-free and you don’t have to complete it before getting started!

You can use the ATM Business Road Map modules as reference material as you progress through your business journey. You have lifetime access to all training materials, so you can refer back to them any time you have a question about a particular situation.

If you are unhappy with the course or discover that owning ATMs as a business is not for you, just email us within 30 days of purchase or before you start Module 4.2 for a full refund.

Additionally, you can purchase equipment and receive processing from ATMDepot.com—everything all in one place. With this kind of information and support from experts dedicated to your success, you can confidently take the next step in owning ATMs as a business.

Get started today!

Still have questions? Contact us here.

Everything Independent ATM Operators and Deployers Need to Know about Interchange Fees

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Interchange fees are kind of an ATM industry mystery for most independent ATM operators. Some first hear about it from Facebook groups or other online sources. However, it is important to know what they are, where they come from, and where they go. 

ATM interchange fees, also known as interbank or network fees, are complex transactional fees. They are part of the financial exchange that occurs when a debit or credit card is used at an ATM machine. These fees compensate the ATM owner for providing users with access to their bank account. 

But, who actually benefits from interchange fees? Here is everything independent ATM deployers (IADs) need to know:

Where Do Interchange Fees Come From?

First, there are a couple of important terms you need to be familiar with: acquiring bank and issuing bank. 

The acquiring bank is the bank where the ATM transaction is conducted. The acquiring bank, also known as the acquiring institution or acquirer, is the bank or financial institution that establishes and maintains the merchant accounts for businesses that accept card payments. In the context of ATM transactions, the acquiring bank is the bank that owns the ATM or has a partnership with the ATM owner to process transactions.

The issuing bank is the bank that issued the card used in the transaction. The interchange fee, therefore, covers the costs associated with conducting the transaction, like network fees, processing, and maintenance.

As an IAD, you do not have access to ATM networks. You cannot simply purchase an ATM machine, connect it to power, and start dispensing money and collecting surcharge fee revenue. This is because you still need some way for your ATM to offer a line of communication between the acquiring bank and the issuing bank. That is why you must work with an ATM processing company or ISO.

Independent Sales Organizations (ISOs) are third-party agents who contract with banks and merchants to provide services such as card processing and network connectivity. This is how your ATM verifies that a user has the available balance necessary to facilitate a particular withdrawal.

In short, interchange fees are charged by the card-issuing bank and paid to the network the issuing bank belongs to as a fee for routing and processing the transaction. Some of the fees are shared with the ATM processing company as compensation. 

How Does It Work?

When a cardholder uses their debit or credit card at an ATM to withdraw cash or perform a transaction, it involves multiple parties:

Communicating with the Network 

First, the ATM communicates with the processing company, which routes the transaction to the designated network based on the cardholder’s bank (the issuing bank) to verify the transaction and obtain authorization. 

The issuing bank authorizes the transaction, which tells the network that the ATM user has the funds in their account to cover the amount requested. If approved, the ATM dispenses the funds. Once daily, the ATM settles all the transactions. This means the funds are transferred (settled) from the cardholder’s account to the ATM owner’s account the next business day.

Settlement

The cardholder’s bank pays the ATM network an interchange fee as part of the settlement process. This fee compensates the ATM providers (the processor, the networks, and any other party involved in the transaction) for providing access to their ATM network and infrastructure. The interchange fee is also debited from the ATM user’s account unless their bank waives some of them. (Many internet banks and accounts with high balances offer this benefit). 

Networks and ATM processors typically deduct interchange fees and other associated costs if you’re an ISO, sub-ISO, or an IAD on a flat buy rate. The remaining funds are transferred to the ATM owner’s bank account (e.g. a retailer, an ISO, sub-ISO, or an IAD). The interchange fee represents a portion of the revenue earned by the ATM owner for facilitating the transaction.

Who Charges and Who Pays

Card networks such as Cirrus, NYCE, Plus, Pulse, and STAR facilitate these transactions and set the rules and fee structures governing interchange fees. The interchange fee is ultimately paid by the cardholder, and the card networks play a significant role in regulating and standardizing these fees across their networks.

This is why it is typically cheaper for cardholders to use in-network ATMs. Their banks already have access to their account information and do not need to pay to route transactions through a third party. As an IAD, however, your ATM machine will always be out-of-network for its users. 

Basically, the user pays the fee their bank is charged by the network and the ATM processing company to enable them to perform the withdrawal or any other transaction on an out-of-network ATM.

What Are the Networks Involved?

Cirrus, NYCE, Plus, Pulse, and STAR are ATM and payment networks that facilitate the electronic movement of money and information. Each has its own fee structure and method for managing transactions:

Cirrus is a global ATM network owned by MasterCard that allows cash withdrawals and other banking services. Cirrus charges interchange fees, including network fees, which are distributed based on the agreements MasterCard has with its member banks.

New York Currency Exchange (NYCE) is an electronic funds transfer (EFT) network in the United States that facilitates ATM transactions and point-of-sale (POS) debit card payments. It is owned by Fidelity National Information Services (FIS), a global provider of financial services technology. NYCE is a prominent player in the electronic payments industry, particularly in the realm of ATM transactions because of the convenience of its extensive network and connectivity. 

Plus is a global ATM network operated by Visa. It functions similarly to Cirrus, facilitating ATM transactions worldwide with fees structured around interchange and network operation costs.

PULSE, an interbank EFT network, is owned by Discover Financial Services and is one of the U.S.’s leading debit/ATM networks. PULSE is a leader in debit payments, global cash access, and account transfers.

The STAR network is the largest interbank network in the United States. STAR provides services like debit card processing and ATM functionality. STAR was acquired by First Data Corporation in 2003. Today, the network is owned and operated by STAR Networks, a subsidiary company of First Data.

Everything IADs Need to Know About Interchange Fees

ATM Processing

ATM processors are large companies that typically prefer working with a few large organizations rather than new ATM operators or IADs. IADs need more help and support which requires a lot of time, attention, and service. And, they just don’t process enough transactions on their own to justify the effort. 

So, processors will work with local or national ISOs or sub-ISOs who have economies of scale. Economies of scale means that the more IADs they work with, the more transactions they process. Since they send substantial business to the processors (like CDS, Core, DNS, PAI, and Switch), they can offer IADs similar deals to those of processors. 

Many ISOs offer free processing as part of this deal. But what this really means is that the IAD gets the full surcharge revenue rather than the ISO taking a share to cover the cost of their service and support. Instead, they rely on interchange fees for their compensation. However, with MasterCard’s recent interchange fee changes, we expect continued erosion of the interchange, and eventually IADs will not get free processing.

ATM Operator Roles

Interchange from the ATM operator’s perspective varies depending upon whether they’re an ISO, a processor, a sub-ISO, or an IAD. The way it works is that the cardholder who uses the ATM typically pays or is charged by their bank for an out-of-network ATM transaction. This is how their bank pays the network interchange fee they are charged as a card issuer.

If you’ve ever used a debit card at an ATM not owned by your bank, you were probably charged a fee from your bank as well as the surcharge fee imposed by that particular machine. So, in addition to the surcharge, some cardholders will end up paying that out-of-network fee to use your machine. Of course, this varies from bank to bank. Some banks might even waive a certain number of these charges a month. In this case, they absorb the interchange fees as a cost of doing business.

So, the issuing bank pays the network (Cirrus, NYCE, Plus, PULSE, STAR, etc.) the interchange fee for the transaction. The networks share some of that interchange with the processing provider (CDS, Core, FIS, Switch, etc.). The processing provider decides how much they charge for each transaction. This decision is based on processing volume and whether or not it includes bank sponsorship or any other fees. Then, the processing provider forwards the interchange balance to the ATM vendor. This is typically the ISO.

When Can ATM Operators Get a Share of the Interchange Fees?

When starting an ATM business, it is important to work with a reputable ATM processing company that is transparent about its fee structure and distribution. As an IAD with only one or two machines, your ISO will likely keep all of the interchange as compensation for onboarding, managing, support and ensuring funds settlement for your ATM business.

However, if you grow your business and start processing thousands of transactions monthly, you could negotiate with your ISO to either participate in a share of the interchange and generate additional revenue or go on a flat buy rate. This opportunity will come with increased volume and experience. The total number of transactions should outweigh the costs associated with managing your account. 

Extra Revenue Opportunity

ISOs often have several larger sub-ISOs and sometimes work with IADs directly that have larger volumes and know the business. Keep in mind that it’s rare for a new IAD or new ATM operator to work directly with a processor and get any interchange. 

Processors and ISOs typically have a rate schedule that determines how much they charge for transaction processing and other services. This is typically based on transaction processing volume and other needed services. They deduct that amount from each transaction and pass the rest of the interchange to the sub-ISO. This is how everyone down the line makes money.  

If you are just starting, need a lot of help and support, and have no or few transactions, you probably won’t receive any interchange.  

Interchange fees are paid to processors for all transactions, including cash withdrawals, balance inquiries, and transfers. When you, as an IAD, receive 100% of your surcharge and don’t incur any costs, you need to understand that the interchange you don’t receive compensates all the infrastructure that supports you. This is how you are able to receive “free processing.”

However, the more transactions you process and the fewer services you need, the better your rate. 

Once an IAD processes several thousand transactions (3,000-5,000 or more), there is sometimes an opportunity to get pass-through pricing, also known as flat-rate, buy-rate, or net-rate pricing. In this situation, the entire surcharge and all the interchange is passed on to you, the IAD. But, then, you are charged one flat driving fee (e.g. ATM processing charges) for every transaction, including cash withdrawals, denials, inquiries, balance transfers, admin functions, etc. 

Before accepting buy-rate pricing, a thorough cost analysis should be completed. You should also ensure full disclosure and thorough knowledge of every charge.

What’s on the Horizon

Networks have started deducting some of the interchange and dramatically reducing the amount they share for surcharge transactions. This is an attempt to help offset banks that complain about losing money due to the proliferation of free-standing ATMs and all of the independent operators. 

Financial institutions spend a lot of money on their ATM networks. But, their transaction volumes have been decreasing, which is therefore increasing their costs. The networks are increasing their profits by sharing less of the interchange and sometimes also helping the issuing banks by reducing the interchange fee. This in turn affects the ATM processors’, ISOs’, and sub-ISOs’ income streams.

It’s possible that, as interchange decreases, more processing companies, ISOs, and sub-ISOs will start charging a flat rate for transaction processing. As the interchange fees decrease, the funds for compensating the infrastructure will come from somewhere else. 

New IADs might start getting charged a small fee per transaction based on the cardholder’s network if other networks reduce interchange, as MasterCard recently has. MasterCard now charges $0.28 of the interchange on surcharged transactions. They’ve also reduced balance inquiry and transfer interchange to $0.15, which in some cases could be more than the cost of a flat-rate pass-through buy-rate for low-volume IADs. 

Breakdown of Fee Distribution

In short, this is the breakdown of how fees are distributed in an ATM transaction:

Interchange Fee (aka Network Fee)

The interchange fee is typically paid by the card issuing bank (usually charged to cardholder) to the networks. 

Network Fee (aka Interchange Fee)

The network fee is paid to the network (Cirrus, NYCE, Plus, Pulse, STAR) for using their infrastructure.

ISO Fee

Some ISOs charge a flat-rate or buy-rate fee plus additional fees if they are paying out 100% of the surcharge plus all of the interchange. This is especially true if they manage services related to the transaction like network connectivity or machine maintenance. There are many ways ISOs might bundle fees.

ATM Surcharge Fee

The surcharge fee is also known as a convenience fee or operator fee. It is a direct fee charged to the cardholder by the ATM owner—a bank or non-bank ATM operator. This fee is separate from the interchange fee and is retained entirely by the ATM operator.

Who Gets What?

Issuing banks receive the interchange fee minus any network and ISO fees. 

Acquiring banks pay the interchange fee and charge the cardholder any applicable ATM operator fee.

The ISO receives a portion of the interchange fee for services provided. This could include transaction processing, network services, and machine maintenance.

Networks receive network fees embedded within the interchange fee for facilitating the transaction and maintaining the network infrastructure.

The ATM operator, or IAD, collects the ATM surcharge fee directly from cardholders. He or she may also share in some or all of the interchange based on their agreement with the ISO.

Conclusion

Overall, interchange fees are a fundamental aspect of card-based transactions. They enable the smooth functioning of the payment ecosystem while providing revenue streams for various stakeholders. It’s complex. But this fee structure ensures that each entity involved in facilitating ATM transactions is compensated for its role in the process.

If you need ATM processing and honest answers to your ATM business questions, ATMDepot is the right company. There are no commissioned sales offices or sales agents. We offer the most competitive pricing on ATM machines and ATM processing. There are no monthly fees or minimums and no hidden fees or long-term contracts.

We connect our ATM machines directly to our full service network gateway. Our ATM processing provider gives your ATM machine full access to all the ATM networks. This provides you with the most reliable ATM processing available. With the lowest percentage of declined transactions in the industry, you get more approved and profitable ATM transactions.

An ATM business can improve your quality of life. Make your money work for you instead of you working for your money. Get started today!

7 Myths About Running an ATM Business in the US

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Running an ATM business is the ultimate side hustle. It offers faster ROIs, lower start-up costs, and fewer barriers than most other side gigs or passive income streams. But there are some common myths and misconceptions about running an ATM business. You might even be surprised to find out that not all ATMs are owned by banks!

What does it entail? What are the possibilities? Once you have an idea of what you can realistically expect from running an ATM business, then you can confidently make the decision to get started yourself! Don’t let the wrong impressions keep you from making a little extra money.

1. Get Rich Quick

There are ATM business gurus who will try to appeal to you with their successful business models that generate thousands of dollars a month. They did it, and so can you. 

While it is absolutely possible to generate a $50,000-$60,000 income with an ATM business, it takes hard work and dedication to get to that point. Many independent ATM deployers (IADs) start with just one ATM machine to generate some extra spending money. It isn’t until you build an entire route of ATM machines that you will start seeing thousand-dollar paydays.

So, whether you want to get started with one machine and earn a few hundred bucks each month or scale up to 12-24 machines and make five to ten grand a month to support yourself, make sure you maintain realistic expectations. You might not get rich, but with a little time and effort, you can definitely make money running an ATM business.

2. Passive Income vs. Semi-Passive Income

You might hear revenue generated from running an ATM business referred to as “passive income”. Passive income typically means that you do some work one time, and that work continues to generate revenue without any further effort. For that reason, it is more accurate to say that an ATM business generates “semi-passive” income.

Running an ATM business generates passive income in the sense that you make money while you do other things: work another job, play golf, sleep…. You make money from your ATM machine(s) without being tied to a location for hours a day. However, it is really only semi-passive because you do have to maintain your business; you don’t just put in the work one time and then forget about it.

You have to make sure your machine is always stocked with cash. You have to address any error codes, repairs, or software updates. And you should probably be regularly monitoring your ATM activity to ensure everything is always running smoothly. But remember, you can monitor activity remotely. That’s the beauty of running an ATM business!

3. You Need Business Experience or Technical Skills

Another common myth that keeps many people from getting into the ATM business is the notion that they need some sort of business experience, technical skills, or industry knowledge. And that simply isn’t the case.

These are all things that you can gain on-the-job. As an ATM business owner, you will be in business for yourself—an entrepreneur. You are the boss; you call the shots. So in that respect, yes, you do need some business acumen. But many IADs get their entrepreneurial start with their first ATM machine; no prior education or training necessary.

But what about technically operating an ATM machine? Well, if you’ve ever used one yourself, you pretty much already know how it works and what the components are. ATM machines are not complex, and each new model is designed to be more user-friendly than the previous; rapid technological advancements and a competitive market make this possible.

Then there are plenty of resources available to you. From technicians to user manuals to Facebook groups to YouTube videos, there is no shortage of information out there. Especially if you work with a reputable ATM processing company dedicated to your success, they’ll walk you through each step you need to get started.

Running an ATM business is not easy. But it is simple. It is simple enough that anyone can do it with the right resources.

4. Easy to Find Profitable Locations

Running an ATM business is not easy. It will require a little leg work. For example, you have to find a location from which to operate your ATM machine. This could be as simple as finding an old, run-down, frequently out-of-order machine and offering to replace it. Or, you might know someone already who owns a retail store and wants to offer ATM service to their customers. Or, you might just have to ask around to find an interested location.

But negotiating a placement agreement isn’t all you need to make money. You want a location that will generate a lot of business for you. So the best locations are going to be high traffic areas with high cash needs. And those aren’t always so easy to find.

Don’t be discouraged. Another benefit of running an ATM business is that if one location isn’t doing well, you can always move it or just place another one somewhere else! An ATM business offers you that flexibility.

5. Easy to Get a Bank Account

Many new ATM entrepreneurs underestimate the patience and finesse required to open an ATM business bank account. Unfortunately, it isn’t as easy as opening an average business bank account. Regularly providing an IAD with large volumes of cash presents banks with a degree of risk and extra effort.

So for a bank to open an ATM business bank account, they have to be sure it will make them money and be worth their time. Be prepared to purchase a number of products (open a line of credit, fund multiple accounts, etc.) to prove that you are a worthwhile customer. And of course, be respectful, patient, and grateful. Some banks don’t open ATM business bank accounts at all. Others might simply refuse you. Just move on and keep looking!

6. You Have to Have an LLC

This often worries a lot of new ATM entrepreneurs because they don’t want to mess with the fees associated with forming and maintaining an LLC. But the good news is that you don’t have to, and most IADs don’t. The most common way to establish your ATM business entity is as a sole proprietor with a fictitious “doing business as” (DBA) business name.

However, if you do plan to scale your business to include a route of multiple machines, an LLC might be a good idea because of the limited liability protection it offers. But if you are just starting out with one or two machines, a sole proprietorship will suffice, and you can always purchase general liability insurance if you want that peace of mind.

7. Cash Is Obsolete

Maybe the biggest myth about running an ATM business in the United States is that cash is becoming obsolete. This keeps a lot of people from investing in an ATM business because they worry about the security and longevity of it.

But while cash is currently competing with a number of digital payment methods, we will not become a cashless society any time soon. There is still too much tradition tied up in cash and there are too many benefits associated with cash payments. 

Cash allows people to budget, avoid debt, conduct business without a paper trail, and manage without a bank account. And, more and more businesses are pushing for cash payments and becoming cash only in an effort to alleviate credit card processing fees. 

So as long as there is a need for cash, there will be a need for ATM machines. And as long as there is a need for ATM machines, there are business opportunities for you.

Conclusion

Now that you know the truth about running an ATM business, hopefully you feel better prepared. There are many reasons why an ATM business is the ultimate side hustle. You can be your own boss, earn semi-passive income, and rest assured that your ATM service will always be needed!

Still not convinced that anyone can start an ATM business? Check out the ATM Business Road Map completely risk free! Take a look at the first three modules, and if it’s not for you, just email us within 30 days of purchase for a full refund.

If you are ready to start your semi-passive ultimate side hustle running an ATM business, get your ATM startup kit today!