Setting up an ATM machine: Is it a relatively simple process? What's the catch?
April 24, 2011 2:29 AM   Subscribe

The site that I'm valeting at right now has plenty of foot traffic. Almost every time I'm at work, I get asked if there's an ATM machine around. I tell them that it's a half-mile away, and they just give up. I thought it would be a great opportunity to put up an ATM machine nearby.

I was thinking of either the lobby of the movie theater, Starbucks, or some other place in the plaza. One of my friends told me that putting it in the movie theater's lobby would be useless, as they would buy their own ATM machine and kick mine out after they see how many people use it.

From what I've seen, indoors-type ATM machines cost about $2-3k. I have $1k saved up so far, so I have the option of either putting monthly payments on the other half, or wait until I have the full amount and buy the ATM machine all at once.

Needless to say, I am new to this idea of setting up an ATM machine at a certain location, since I was under the assumption that there are already plenty of ATM machines in major business areas. I feel fortunate that I found one that doesn't. Perhaps I am being too naive again with my idea of investing in something. Or maybe it will be a good move on my part. What do you folks think?
posted by RaDeuX to Work & Money (14 answers total) 1 user marked this as a favorite
You haven't been at all clear about how you hope to profit from this. So you're a valet of some type, in a plaza somewhere with a movie theater and a Starbucks nearby. That's all we know, and it's not enough to really understand what you're proposing. The fact that you didn't mention maintenance, security, rent or accounting costs gives me the impression that you're not thinking very clearly.
posted by jon1270 at 2:46 AM on April 24, 2011 [2 favorites]

Response by poster: @jon1270

The plaza has their own security. Maintenance depends on which vendor I purchase the ATM from. If not, I can do basic maintenance (comp sci major and previously PC repair). Not sure where you got rent from. That would also depend on whether or not I purchase an indoor/outdoor machine. And what do you mean by accounting costs if almost everything is done electronically? Your vague questions gives me the impression that you're not thinking very clearly.
posted by RaDeuX at 2:56 AM on April 24, 2011 [2 favorites]

Do you have a written agreement to place the machine in the plaza? Sounds like no, if you don't realise that you will need to pay rent to the plaza for the floorspace and potentially, share some of the security costs.

This would surely negate any profit from the machine. Which is probably why none of the other vendors in the plaza have installed a machine either.
posted by wingless_angel at 3:06 AM on April 24, 2011

Have you talked to any of the restaurants or whoever owns the plaza about how much they'd potentially charge you in rent to put an ATM down?
Also, try messing around with some simple revenue estimators like this one, that'll get you revenue numbers to compare with your fixed costs and with the initial capital investment in the machine.
posted by atrazine at 3:21 AM on April 24, 2011

You seem to be working under the assumption that you won't have any/only minor costs other than the initial purchase. I think it would be a good idea to find out all costs involved; I have a hard time believing you won't have to pay for rent, security and maintenance.

And perhaps think about what would happen if you had to move and/or get a job somewhere else.
posted by bjrn at 4:03 AM on April 24, 2011

On addition to rent,security and maintenance I believe you would also need to purchase insurance - liability at a minimum would be required by your landlord.

You also need to have the "float", the cash the machine dispenses (and that you can afford to lose in case of a robbery) also comes from your pocket.

Every business, especially financial ones, needs to do accounting - at the bare minimum for your quarterly taxes You sound like you would benefit from a basic business course.
posted by saucysault at 4:54 AM on April 24, 2011 [2 favorites]

Oh, and as for robbery, those atm's aren't too heavy to cart off unless really securely bolted down. That installation and the permanent damage to the property are another large start-up cost.
posted by saucysault at 4:58 AM on April 24, 2011

I have an ATM in front of one of my businesses. I signed a contract with the person who put it there, after checking to make sure that my lease from the landlord allows for that type of thing. I get a rent check from the atm owner for $500 a month.

He does maintenance on it as it breaks almost weekly, and takes care of any tickets I get from the DEP when they occasionally decide that it's not allowed to be there. Which reminds me-don't forget that you will need a source of electricity for your machine, I supply that from my business to the ATM.

I don't think the outright stealing of the machine should be anything that you should spend too much time focusing on, as long as you have it properly secured to begin with, although my friend did tell me of one of his that was in a more remote area that got ripped out of a wall.
Also, since he is kind of a friend of mine, he was telling me that one of the biggest expenses of the machine was the initial filling it with cash part. It's a lucrative business for him, but he's got about 20 or so machines going. It's a full time job for him between the maintenence/filling of the machines and all of the paperwork involved.

Where exactly are you going to put the machine that people aren't already paying rent or mortgage for the space, in which case they would expect a rent check from you?
Most municipalities wont allow you to put it on public property.
posted by newpotato at 5:36 AM on April 24, 2011

Best answer: I'm not sure of your location since it doesn't say in your profile, but memail me if you live in Canada and I can get you in touch with the right people.

If you are running the machine on your own cost-wise you will need to deal with:
1. Maintenance
2. Supplies
3. Communication lines - phone or ethernet
4. Power (probably included in rent)
5. Rent
6. Insurance
7. Processing Fees
8. Armor car services or floating your own cash
9. Taxes

Most importantly, besides a placement or rental agreement, you will need a processor host to connect the ATM to which will process the transactions and route out of network transactions to the appropriate issuer. Without this, no matter how much money you have in the ATM in the best location you will still have zero transactions.

Revenue comes in the form of surcharge - the up front fee the customer agrees to - typically $1 - $2 per approved transaction depending on location - the more exotic or secluded location will have higher fees - for the customer it is a cost-benefit scenario if they decide to pay the higher fee for the convenience of using your machine.

Behind the scenes there are interchange fees that are sometimes available depending on the network, country of acquiring (where your ATM is) and country of issuance (where the cardholder is from). These fees are the reason that most bank accounts have an out of network cap on the number of free (if any) transactions you can do. These fees are negotiated at the network level (bank group or card group) and will be spelled out in your processor agreement as to how much of the interchange fee is passed onto the ATM owner.

International transactions sometimes have rules that they are not allowed to be surcharged (VISA and Mastercard have negotiated or dictated that if processors want to be able to accept the transaction then there is to be no fee - this restriction is relaxing in some locales), but they have a higher interchange payout to make up for it. Typically in Canada domestic interchange is around $0.70 and international interchange is around $3.00.

Processing gateways tend to give volume benefits to parties with multiple ATMs - (the search term is generally ISO, but regional terms may apply), the more machines and more transactions the higher percentage of revenue they will pass back, and the lower the fees they will charge - another option therefor is to work with a company that does ATM placements and provides all of the services (maintenance, cash loading) and has the processing agreements already in place. They have the infrastructure in place but you will have a lower return, and typically they will deal directly with the property owner or operator for the placement. There are probably companies that are a hybrid in that they will charge you fees for the service, maintenance, cash loading, etc but you own / locate the ATM.
posted by Mahogne at 5:41 AM on April 24, 2011 [5 favorites]

This sounds like a lot of trouble. Were I you I'd consider that, as a valet, having an ATM closer by would probably convert into better tips for you, so maybe you should just take your idea around to the local businesses and suggest they get ATMs themselves.
posted by telegraph at 6:19 AM on April 24, 2011 [1 favorite]

You'd also be directly "competing" with all the merchants in the plaza who offer "cash back" on debit card purchases by customers. And really, because of the scams run by criminals who put independent ATM machines in locations to grab account numbers/passwords, a lot of people won't use a non-bank ATM to get small amounts of cash, if they can get "cash back" from a brick and mortar retailer on their debit card, where they have some level of protection and trust via the merchant's reputation, physical presence, and merchant account agreements.
posted by paulsc at 7:19 AM on April 24, 2011 [1 favorite]

I am not sure why all the negative waves. This is a good idea. Obviously, the viability of it is in the details, but I would follow what Mahogne said above. You could probably do this and sub contract the actual day to day running of it out to a professional firm that services ATMs. It is a good entrepreneurial idea. I have several friends in the vending machine business and the laundromat business and there is a lot of money to be made, one quarter at a time. You sound like a person who is looking for opportunities to make money without being tied to the corporate welfare state. That is good. Even if this doesn't work out, you will learn a lot from the process of trying and failing. Good on you.
posted by JohnnyGunn at 10:02 AM on April 24, 2011 [2 favorites]

I'm more with JohnnyGunn on this. This is essentially small-scale franchising. There are a few (!) caveats, of course, some mentioned above. There are plenty of business basics you want to be sure of before you leap into this.

I would primarily be concerned that your upmarket valet-service restaurant clientele would not, as mentioned above, be interested in using an off-market ATM. These are -- in my experience -- primarily found in high-traffic, lower-end sites like 24/7 convenience stores and cater to the poor. It might pay for itself, but you might not make a lot of money until you have a bunch of them.

I would definitely do my homework and be ready to present your business case to any client before approaching the plaza management or a specific lessee (wear a suit, etc., needless to say). Another caveat is that if the plaza has any banking services on site they may have exclusivity and if there's no ATM too bad. Or the plaza may be looking to land such a tenant. You also need to find out what the tenants' leases permit in this regard.

In other words, this is doable, but you might not be the one to make it happen, at least by yourself. It might fall flat and just be a learning experience. Try to go into it with that in mind.
posted by dhartung at 12:02 PM on April 24, 2011 [2 favorites]

I would especially think about the cash that's stored in the ATM. I have no idea how much is in there, but just imagine how much you'd have to provide (out of your own pocket!) to be sure that it could handle withdrawals of $60 or $100 by many people a day. Then multiply that by the number of days between refilling the machine. Also think about how you would protect the refill money (and yourself) every time you go to the machine to refill it with all that cash.
posted by exphysicist345 at 8:15 PM on April 24, 2011

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