Want to start earning a passive income? People still need cash and learning how to start an ATM business (ATM means automatic teller machine) can be a great way to make a passive income. Take it from someone who is already an ATM owner.
From starting a side business in 2017, Paul Alex grew to $15 million in annual revenue with his company ATM Together. Now, he helps people automate their own ATM businesses. He makes it easy to:
- Buy ATMs at wholesale cost
- Get a free payment processor
- Find the best rates on internet
- Locate a bank that serves ATM businesses
- Place your first ATM
- Access vaulters and technicians
How to start an ATM business
Starting an ATM business requires a simple seven-step process:
- Perform market research
- Create an ATM business plan
- Prepare for ATM business operations
- Find an ATM location
- Buy an ATM (and other equipment)
- Install and operate the ATM
- Grow the ATM business
Find out how to start an ATM business by following the steps below.
Perform market research
Starting an ATM business will require understanding the ATM industry. We’ve got you covered with the information you need to become an independent ATM deployer. We’ll answer ATM industry questions like:
- How much to start an ATM business?
- How much can an ATM make?
- How much time do you need to spend on an ATM business?
- How profitable is an ATM business?
How much does it cost to start an ATM business?
Starting an ATM business isn’t expensive. Paul told us:
He broke the costs down to:
• ATM Cost: $2,100
• Limited Liability Company: Under $1,000
• Business license: Under $1,000
• Internet modem: $150
• Internet service: $7 per month
• Tools: $300-$500
• Gas: 65.5 cents per mile using IRS Mileage Rate
• ATM liability insurance: Under $1,000
How much money can you make owning an ATM machine?
Your ATM investment earns approximately $9 to $15 per day according to Paul. That converts to $3,285 to $5,475 annually or $456.25 monthly at $2 per transaction.
Paul also told us:
That means to make the $15 million annual revenue he earns, you would need approximately 4,600 ATM machines. Don’t worry, you can start off with one ATM and build from there.
Check out the rest of the interview with Paul.
How much time does investing in ATMs require?
Running an ATM business will take different amounts of time depending on the strategies you use. If you manage all your ATMs yourself, it will take your drive time plus up to 15 minutes to fill each machine.
But Paul told us you can hire employees or pay other companies to do it for you. That makes owning ATM machines completely passive income.
How much money is in an ATM?
The average ATM may hold up to $200K, but you might not want that much cash in your ATM at any time. Many machines keep less than $10K in the machine at any time.
Depending on the manufacturer and the bills in the machine, you will have between one and four dispensing cassettes that hold 1,000 to 4,000 bills each. That means in rare scenarios, an ATM could hold up to $1.6M.
Create an ATM business plan
Next, you’ll want to create an ATM business plan to document how your ATM company will operate. A successful ATM business plan will include the following sections:
- Executive Summary: Briefly cover the main points in your business plan in a single page.
- Company Overview: Explain what makes your ATM business different.
- Industry Analysis: Show your knowledge of the ATM industry both locally and nationwide. This will help you choose suppliers for your ATM operational plan.
- Customer Analysis: Describe your target customer and how you’ll reach them.
- Competitive Analysis: Explain how you’ll differentiate yourself. For instance, Paul helps people find their first location and provides all the vendors to get started.
- Marketing Plan: Detail how you will approach product, price, placement, and promotion in your ATM business.
- Operations Plan: Explain how you’ll provide customer support, refill machines, and find new ATM locations.
- Management Team: Provide the long-term goals for your organization, the roles you’ll need to fill, and the experience of anyone who is already on the team.
- Financial Plan: Document your expected revenue and expenses. Then create three- to 10-year estimates of your annual earnings. Provide any prior year net income statements, cash flow statements, and balance sheets.
- Appendix: Document every website you used to research ATM businesses in your appendix.
Check out our article on writing a business plan for more information.
Prepare for ATM business operations
There are certain things that every ATM operator will need to do run a successful ATM business. You’ll need to:
- Select an ATM business name.
- Choose your ATM business legal structure.
- Get business licenses.
- Open a business bank account.
- Get business insurance.
Keep reading for more resources about starting an ATM business.
Select an ATM business name
You’ll want to consider the name for your ATM business carefully because it will represent your brand for the lifetime of the company.
Some tips for choosing a memorable name for an ATM business include:
- Choose a business name that is low-cost and easy to pronounce, like ATM Together.
- Check name availability as a website, social media accounts, and on the USPTO.
- Think about how branding and marketing will fit with your ATM machine business name.
Paul told us:
Check out our article about naming a small business for more information on choosing a name.
Choose the legal structure for your ATM business
Next, you’ll need a legal business structure for your ATM business. You’ll go to the Secretary of State and register the business name in each state where you’ll provide ATM machines.
Paul told us:
Want to know more about how the business model impacts ATM providers? Consider the following.
- Limited Liability Company (LLC): This business model protects ATM operators from personal liability for business liabilities and debts. You can have single or multi-member LLCs with pass-through taxation, and also turn it into an S-Corporation. You’ll have to pay self-employment taxes.
- S-Corporation (S-Corp): An S-Corp provides liability protection and pass-through income like an LLC, but has limits on the number of shareholders. You’ll also file with the IRS to be considered an S-Corp. If you work within the company, you’ll need to pay yourself a salary, too.
- C-Corporation (C-Corp): This business entity is entirely separated from its owners and must have a separate tax ID number. Should your ATM business grow large enough to go public you can have unlimited shareholders. C-Corps are taxed on both personal income and business income, which causes double taxation.
- Sole Proprietorship: While a sole proprietorship is inexpensive and may not require any registration, you do not want to use a sole proprietor structure for your ATM business because it leaves the business owner personally liable for all debts and commitments of the ATM company. Compare LLCs and sole proprietors.
- Partnerships: There are different types of partnerships, but these are primarily used when you start an ATM business with more than one business owner. You’ll need a legal agreement in place for partnerships to resolve conflicts.
While most businesses use these five structures to start an ATM business, there are plenty of other models for your business venture.
Next, we’ll discuss business licenses.
Get business licenses
You’ll need an ATM business permit to comply with local requirements and zoning codes. Check with your city for the inspection requirements because each state and municipality has its own requirements. You may also need:
- Class C Liquor License: Get this when businesses sell alcohol in the same location as your ATM machine. Consult a lawyer to see if your state requires this.
- Sign Permit: Your state’s Department of Transportation (DOT) may require a sign permit for ATM signage on pedestrian malls, highways, and parking areas.
You will also need bank accounts for an ATM machine to accept credit or debit card transactions.
What banks accept ATM business accounts?
You’ll need a business bank account for your ATM machine to deposit the funds that people transfer from their bank account. Unfortunately, many ATM machine businesses have trouble finding a bank to work with.
That’s because an ATM machine requires lots of cash, which means that the bank has to do more work. The ATM business bank account will also normally have low balances, which makes it harder to earn money on the interest.
ATM Together helps you find banks that are ATM business-friendly, or you can check out the list of banks suggested by ATM Depot.
Using other banking products, like a small business loan, business credit card, and money market account may help convince banks to be more friendly to your ATM business.
Get business insurance
You’ll want small business insurance to operate an ATM business. Some of the risks you’ll want to consider include lawsuits and theft of machines or cash. Most of these will be covered in a Business Owners Plan (BOP).
Other common small business insurance policies your ATM business may want include:
- General liability insurance: This covers damage to property as a result of your products or services, plus accidents and injuries that happen on your property or while interacting with your machines. It will normally be included in the BOP.
- Workers’ compensation insurance: This policy is required for small businesses that have employees. It protects against on-the-job injuries by paying medical bills and lost wages.
Find an ATM location
You’ll need to find locations to place your ATMs. Some popular places for ATM locations include:
- Convenience stores: Gas stations and convenience store customers will often want to withdraw cash.
- Retail stores: Some retail stores only accept cash payments. Plus some people just like having cash on them and prefer to make cash withdrawals at the same time as they shop.
- Hotels: People traveling will often need cash for tipping. Providing an ATM in hotels and other hospitality locations can be highly profitable.
- Casinos: Most casinos are all-cash businesses. Just make sure you’re dealing with legally operated casinos, or your ATM equipment (and money) may be confiscated during a police raid.
- Cash-only businesses: Some business ventures only accept cash and will need an ATM in the location. Some businesses that only accept cash include adult entertainment venues and dispensaries. Again, make sure these businesses are operating legally, or you could get in trouble for money laundering.
- Newly opened small businesses: You can reach out to new small business owners who have a retail space and offer to place an ATM in their location.
Buy an ATM (and other equipment)
You’ll need to buy ATM machines and other equipment to start an ATM business. Every ATM business will need:
- At least one ATM machine: You’ll need at least one ATM machine for each location.
- Computer: You’ll need a computer to manage your business, keep track of revenue and business expenses, plus work on marketing activities.
- Internet line: Every ATM needs access to the internet. According to Paul, you can get internet access for $5.99/month through Verizon or AT&T.
- Phone line: You’ll need a way for customers to reach you, plus older ATM machines use phone lines for the internet connection.
- Square reader: You’ll want a Square reader to process business credit card and debit card transactions if you sell ATM machines to gas stations, convenience stores, and other small businesses that operate them.
- Debit card processing account: An ATM processor authorizes and processes the transfer of funds. Plus they create a log of every time money changes hands so you can easily view a report of your ATM transactions. Working with a company that already has this set up will make starting an ATM business easier.
- Currency notes: You’ll need money in ATMs to provide to potential customers. Depending on the location, ATM machine, and programming, you’ll need at least $10K in $20 bills for each machine, but casino ATMs will need a $100 slot, $20 slot, $5 slot, and $1 slot. If each slot has 2,000 bills in it, that means you’d need $247K to fill the machine, plus a way to pay out coins.
- Security camera: You’ll want to have security cameras to protect your investments. There are optional security cameras for an ATM machine, plus you may want one in your business or home office and vehicle.
- Safe: You’ll want a discreet safe in your vehicle and home because you’ll be transporting large amounts of money at times. If you pay a company to manage the collection, you can skip this.
- Tools for routine maintenance: Varies by machine, but should probably have drill, screwdrivers, levels, and other tools.
- Alarm system: Anywhere you’ll store cash, make sure to have an alarm system.
- Handgun: A friend of mine who owns an ATM business recommends carrying a gun when you are loading and unloading cash from machines. If you hire a vaulter, you won’t need this.
- Body cam: You only need this item if you are carrying a gun. This is a personal suggestion because it will help you defend yourself if you have to use protection.
Install and operate the ATM
You’ll need to install all your machines in their new locations. Plus you’ll have to operate them by restocking money routinely. We’ll look at each of these next.
How to install ATM machines
To install an ATM machine, you’ll need to:
- Take the box off the machine.
- Grab the box with the receipt paper and keys.
- Unlock the machine.
- Take out any styrofoam liners or any other shipping materials.
- Place the receipt paper in the receipt holder.
- Reset the default code.
- Program the ATM.
- Connect Ethernet or WiFi.
- Fill the cassettes with money.
- Bolt the machine to the wall.
- Test the ATM machine.
Buying an ATM will require some learning during the cash machine setup. Paul suggested:
How to manage an ATM location
One of the things you’ll need to consider about how to start an ATM machine business is how you will refill the machines. You have three main options:
- Fill them yourself.
- Hire vaulters.
- Hire employees.
Let’s look at each of these to understand how to get ATM machines refilled.
Maintain ATM yourself
When you first start an ATM business, you’ll want to keep startup costs low. The easiest way to do that is to do all the work yourself. That means you’ll need to learn how to work on ATM machines and how to refill ATM machines.
Paul told us:
If you track each machine individually, you should be able to tell when it is getting low and go refill it. Then refill any of the ones that are on the way to it. Next time reverse the order.
Paul told us:
But which option is better: hiring a vaulter or hiring employees?
Vaulting services are companies that manage the refilling of your ATM for you. First National ATM provides a great overview of how to start an ATM business with no money using a vaulter.
They use the following ATM price example:
Monthly Service Fees per ATM
• Cash lending fee: Prime rate + 4 points
• Cash management fee: 3 cents per transaction
• Cash Insurance: $25 insurance on vault cash
• Armored courier: $80 per trip
They subtract those costs from the monthly revenue, which they assume will be $3 per transaction and 500 transactions per month. Effectively, their example means you are paying approximately 17% of revenue to operate the machines. That sounds way better than doing it yourself or managing employees if you want passive income.
But what does it take to hire employees?
Hire employees for an ATM business
If you want to be more active in providing ATM services, you can hire employees. This business strategy would work if you are particularly good at multiple aspects of the ATM business.
For instance, ATM Together helps people get their first ATM machine location, automate the business income, and find ATM technicians.
In general, the operating costs will be higher if you hire employees because you’ll have to implement time tracking, payroll systems, and other types of ongoing expenses.
When you hire employees, you’ll need to:
- Prepare to hire people.
- Create a job description.
- Screen applicants.
- Conduct interviews.
- Provide a job offer.
- Onboard employees.
- Improve your employee retention.
We go into more detail on hiring in other blogs. Whether you DIY, contract a vaulter, or hire, there’s still a lot to do to become a successful business. Read on for a play-by-play for growing your ATM business.
Grow the ATM business
In addition to the initial equipment costs, finding a financial institution to work with, and placing and supporting your first machine, you’ll want to grow the ATM business because you’ll probably want to build more income than the couple hundred dollars you make on the first machine.
You’ll want to:
- Create an ATM business website
- Reinvest in the business
- Add toppers
- Reduce costs
- Market your ATM business
- Pay taxes
Create an ATM business website
At a minimum you’ll want to create an ATM website with the following pages:
- Home page
- Services page
- ATM business FAQs page
- Contact page
These pages will help your target market understand what you do, how you do it, and how much you charge as an independent sales organization. Learn more about website building.
Reinvest in the business
As you make money, you’ll want to find more ATMs for sale so you can buy them and make more surcharges from the transaction fees. You might also want to make an ATM purchase to sell to people who want to manage their own ATM.
ATM Together makes it really easy to make a profit when you buy ATM machines at wholesale and then provide the ATM machine for sale. You can charge a one-time fee or monthly fees if you provide support to your customers.
An ATM topper is a screen that attaches to the top of an ATM to diversify your income stream. With an ATM your primary revenue is from surcharge revenue, but an ATM topper lets you earn revenue from ad views.
You can use the ads to promote your own products and companies, products and services in the store, or even outside businesses that the target market might like.
Paul told us:
Check out how the Smartcast ATM Topper works.
Credit card processing fees are a portion of your ongoing expenses. If you’re doing all this yourself, you could pay as much as 2.9% + 10 cents per transaction fee.
Meanwhile, other processors claim they can provide free payment processing. I assume the credit card costs are baked into the prices of other services they offer. See the picture below to see places where ATM Together might make profits that cover the processing network.
Reducing the fees can impact how much cash you have to buy more ATM machines. There may be other ways to save money, like outsourcing the maintenance of your machines or providing cash to vaulters to earn a percentage of their returns.
|Number of transactions||2.9% fee assuming $100 per transaction||10-cent fee||Total savings by switching|
The change makes it so every 10,000 transactions, you can afford another three machines.
Market your ATM business
There are numerous ways to market your ATM business including:
- Optimize your website for search engine optimization (SEO)
- Reach out to new small businesses and offer to place a machine
- Offer incentives for making cash purchases at stores
- Offer a loyalty program or monthly subscription to frequent users of your ATMs
- Partner with online banks to provide cash services through your ATMs.
Make sure to pay your taxes
Nothing hurts the income of a small business like getting hit with a hefty tax bill for failing to pay your taxes. You especially don’t want to fall behind, given the IRS is charging $450 for failure to file, plus you’ll owe the full tax amount and 4% to 9% interest for failure to pay.
ATM business FAQs
What does ATM stand for?
ATM means automated teller machine. An automated teller machine may dispense cash, manage money transfers, accept checks, buy and sell Bitcoin, and facilitate other financial transactions that make accessing funds more convenient for customers.
Next, we answer “How much does an ATM cost?”
How much is an ATM machine?
ATMs cost between $1,900 and $29,000 depending on the style of ATM, functionality, and security. Some common pricing for ATM machines include:
• New ATMs: $2,700 to $17,000 with an average cost of $6,250
• Used and refurbished ATMs: $1,900+ (or around 80% of the cost of a new machine)
• New wall-mounted ATMs: $6,800 to $12,500
• High-end ATMs: $29,000+
You’ll also have operational costs like cash replacement, data connection, electricity, and receipt paper.
Do I need office space for an ATM business?
Yes, but you can use a home office and the costs will help pay for your mortgage or rent.
How to buy an ATM machine business
When you’re looking for ATM machines for sale, one option is to buy ATM businesses. You’ll want to:
- Research the market and understand the industry.
- Raise money to purchase the ATM business.
- Find reputable ATM machine suppliers and compare prices.
- Consider location options and potential profitability.
- Research the business to establish whether they have a very high volume location or if they are using a cheap ATM.
- Obtain necessary licenses and permits.
- Negotiate a purchase agreement. See step 5 in our blog about buying a business.
- Sign the contract.
- Set up a reliable cash management system.
- Market your business to potential clients.
- Provide excellent customer service and maintain the machines regularly.
Start your own ATM business
Starting an ATM business can be a highly profitable venture. It’s similar to starting a vending machine business that provides money to customers. Check out our extensive resources on vending to see how you can apply them as you learn how to start ATM business operations.
Have you seen unique ATM strategies? Share them in the comments.