Automated teller machines (ATM) first appeared in the late 1960s and immediately changed the landscape of cash management.
The inconspicuous little holes in the wall provide us with such a simple yet valuable service, saving us all so much time every year.
We are all used to using them and thankfully avoiding the long lines at banks, but have ever considered investing in them?
On average, ATM machines are used 6 to 10 times a day, generating a gross profit between $15 and $25. And this is just one machine.
It is possible to own multiple, potentially hundreds, which quickly makes you realise that in the right hands, ATM machines can be gold mines.
So let’s not waste any more time, and get into the details of whether ATM machines are a good investment.
Why invest in ATM machines?
The main reason for investing in an ATM machine is no different than any other investment opportunity. It provides a chance of earning a source of consistent and relatively passive income.
However, the Covid 19 pandemic had a huge impact on how we handle our cash, and how often we use it.
This means it is more of a question of should you still invest in ATM machines, and not something else.
And before the pandemic National Cash Statistics studies showed that in the USA:
- Per month the average ATM is used around 300 times.
- 40% of ATM users are regulars, visiting their local machines between 8 to 10 times a month.
- 60% of 25 to 34 year olds, and 51% of 35 – 49 year olds withdraw $40.00 between 8 to 10 times every month.
But since the pandemic, ATM use dropped by 37%.
How to invest in ATM machines
There are three main ways to get involved with ATM machine investing. We will now discuss these in more detail as well as their pros and cons.
To get into ATM machine investing, you can:
- Buy an existing ATM route
- Start your own ATM route
- Buy into an ATM franchise
Buying an existing ATM machine route
Once an ATM machine is up and running, servicing customers and generating you money, it becomes known as a route.
The success of a route depends on how many ATM machines it has, and each of their locations. Long routes consisting of machines placed in busy areas are the best. Not only are there several machines to make money from, they will also be visited by the most number of people.
Short routes in quiet areas will be least successful. Fewer machines means less points of customer contact, and fewer people means less visits.
The benefits of buying an existing route are appealing. As an established business, all the groundwork is already in place. You do not have to worry about finding locations, striking deals with location owners, or developing a customer base.
However, A successful route takes a lot of time, effort, and money to establish. And any owner looking to sell theirs on will not want to let it go for cheap.
The most expensive routes on the market, which consist of at least 150 locations pull in roughly $350,000 a year. They will set you back close to $1,000,000.
Smaller profiting routes with less than 10 machines, which generate a combined total of around $40,000, sell for roughly $15,000.
And so although this is the most convenient way of investing in an ATM machine, it is the most costly way to get started, and requires a lot of upfront cash.
Buy into a franchise
The second way to get going is to buy into an ATM franchise. Joining a franchise means that you operate under the name of an already established ATM business, but still own your machines.
It is a handy entry into the world of ATM investing as the franchise will:
- Help you find locations
- Deal with the legal side of things
- Teach you maintenance techniques
- Advise on the best machines to buy
- Provide continual support and guidance throughout your time with them
On the flipside, the cost is again high. It is nowhere near as expensive as buying a highly successful existing route, but it will take a hefty chunk of cash. Not only will you need to buy your machines, but franchises charge fees or their services. All in, expect to pay at least a total of $39,000.
Start your own business
Starting your own ATM machine ui9sness is your final option.
The benefits of doing this are that you will own all your machines, and make as much profit as possible for each. There will be no profit lost through commissions to franchise owners, and you can start with a small amount of money. On average, a brand new free-standing ATM machine goes for between $2000 to $3000.
Now let’s consider the cons. Although starting your own gig seems the cheapest option, it will cost you the most work. You are responsible for everything. This means that you need to source machines, pick locations, agree on location deals, as well as maintenance.
Buying machines and learning how to service them is the easy part. It is securing good locations and commission rates which will be the real challenge. Finding a prime location will take patience, and you will likely face competition. Along with this, competition can give property owners the chance to barter higher commission. And this will eat into your profits.
Of these, you also need to understand ATM laws. This means ensuring that locations are law compliant, and correctly registering your business for tax purposes.
Pros of investing in ATM machines
Now that we know the good and bad when it comes to the different ways of investing, let’s look at the general pros and cons.
Aside from making money through cash-withdrawal commission, ATM machines are also prime real estate for advertising. An eye-catching physical ad can be placed on the outside of the machine, and digital ones on-screen.
Businesses within the financial sector are keen to advertise their services and products through ATMs. It allows them to engage their target audience whilst money is already on their mind.
As an ATM machine investor, this is perfect for you. You can negotiate a deal with these sorts of companies, and make a greater return on your investment.
Another pro is that ATM routes are a scalable investment. based on average earnings, in less than a year your first ATM machine could make you enough money to buy a second. This is an exciting thought for the entrepreneur who wants to put their earnings back to work to generate more profit.
Cons of investing in ATM machines
The major can of investing in ATM machines is that you have to split your profits. If you own the machines then it is not so bad as you will only pay commission to the landlord of your location.
However, if your machines belong to a franchise, or the services which they offer belong to a separate organisation, then you will also pay independent service operator fees( ISO)
ISO fees will take another slice of your money. And if your ATM machine is not in a prime location, this could be a big problem. The idea here is to treat your ATM like stocks. Keep your fees as low as possible so that your profits stay healthy over the long run.
The second con comes with scaling. The more your route grows, the higher your cost will become. It is recommended to put aside around $250 a year per machine to keep it in good working order. This can be over 10 days of profits from a higher earning machine.
Related to maintenance costs comes damage repair. ATM machines are not invincible, and sometimes they get vandalised by people, or tampered with by credit card detail thieves. This is always a possibility and something to factor into expenses, as a machine out of action is money lost.
Are ATM machines a good investment?
Market researchers predict a 6.8% year on year increase in the global ATM machine market until 2027. And with cryptocurrencies also picking up speed, crypto investors will need ways to convert their digital currency to a usable format.
So despite the 37% decline in ATM use, along with the rise in digital payment platforms means that cash will not likely be king forever, it does still have a future.
Along with the predicted market trends, there are also the social impacts to consider. Many people do not like the idea of a cashless society. They feel that it gives the government too much control over their finances. So although paying digitally is much more convenient, cash brings more freedom.
A final consideration is that digital payments are not 100% convenient. WHat happens when your phone dies, and you are out of cash?
This means that for at least the coming years ATM machines are still a good investment.