ATM Buyer's Guide

ATM pricing

By Sylvia Rosen

Because of competition and falling technology prices, ATM prices have come down by more than half since the ATM boom that began in 1996. Unless you are purchasing your ATM for a gaming environment (those machines range from $30,000 - $50,000), you can expect to purchase a standard model for around $2,000. With common upgrades such as a 10.2 inch color screen, e-lock, and perhaps additional cash cassette, the price creeps up to $2,200-$3,000.

Ongoing costs include power, professional cash loading service if you do not want to do it yourself (about $50 per trip), and replacement receipt paper. Other optional costs may be an extended warranty or service agreement.

A few vendors charge monthly service fees. Make sure to find out what these are before you buy. See what other BuyerZone users have paid for automated teller machines.

Making money from your ATM

Offsetting these expenses is the money you can make with your ATM via surcharges. Determining how much to charge is up to you – surcharges range from one dollar to nine dollars depending on the location with an average surcharge of $2.50. At the average surcharge, if you were to process 300 transactions per month, your ATM would generate $750 per month or $9,000 per year in revenue.

The percentage of that surcharge revenue you take depends on how involved the vendor is in managing your machine. If the ATM provider does nothing but install the machine and process transactions, you can earn up to 100% of the surcharge. If the supplier underwrites the cost of the machine, maintains it, and/or stocks the machine with cash, your percentage drops accordingly.

Earned revenue based on transaction fees from your ATM can accumulate accordingly. A good rule of thumb is that the ATM should be able to pay for itself in a year. Another benefit:on average, ATM users spend 20 to 25 percent more than customers who do not use an ATM, according to research from ATM Marketplace.

Free ATMs

Many ATM vendors offer high-traffic businesses the chance to place ATMs at their locations at no charge. The vendors offer turnkey placements where they install, service and operate the ATM for free. The business simply provides the electrical power, and some floor or counter space, and in return they receive a specified percentage of the surcharge collected. Not all locations qualify for these free ATMs.

The Tremont Capital Group estimates that about 19% of ATMs deployed by non-banks are under this type of agreement. A business would qualify for a free ATM if it easily accessible, has a visible location, and a high volume of foot traffic for 16-18 hours a day.

Keep in mind, however, that nothing is truly free. Some vendors collect up to 50% of the transaction fees every month. You will still need to address problems customers have with the machine, so make sure the ATM supplier’s customer service meets your expectations. Also, if you do the math, you may realize paying for a machine upfront is worth it to gain control over future revenue.

Watch out for aggressive sales techniques. With a dwindling number of viable locations to place a cash machine, ATM suppliers can fight ferociously for your business. While you may think you have negotiated yourself a good deal with a “free” machine, the fine print can say otherwise.

Double check your contract

The details of the contract should specify how much the ATM costs, the term of the agreement, who stocks the ATM with cash, who sets the transaction surcharge, how the transaction revenue is to be divided, service and maintenance agreements, and the conditions for contract termination.

Pay special attention to the terms of the contract to avoid being bound to your provider indefinitely, for example:

• Some suppliers will have you sign a perpetual agreement that prevents you from removing the cash machine from your location; meaning you are stuck with the machine until the supplier decides to remove it.
• Similarly, auto-renewing agreements are common, and you must be aware of the contract renewal dates, so make sure you book these renewal dates into your calendar. Contracts can vary from month-to-month or up to seven or eight years in length, with an average of five years.