The term ATM dates back to 1967, but the first cash-dispenser was installed in 1966 in Japan. Today, ATM machine have changed since then, and people are making money off of them. Whether you’re looking for a more passive income option or need extra cash, there are mistakes you want to avoid. Read this guide to discover the various mistakes you’ll want to avoid today.
1. Overestimating Cash Flow
When you buy an atm machine, you don’t want to overestimate the cash flow. Avoid online estimates since they’re much more than you’ll realistically make.
Talk to merchants and those who have an ATM machine for sale. Realistically, you’ll probably be making a few hundred dollars per month. You’ll need to think about maintenance costs and paying off the machine as well.
2. Underestimating Capital Requirements
You’ll need cash to place into the machine. Have at least $2,000 per week to place into it. You’ll want to have at least $20,000 available for multiple machines.
Before you begin, contact your bank to ensure that they can support your business. Some banks won’t support it. Contact ATM machine sellers if you struggle to get in touch with a bank.
3. Having Low Margins
Speak with the merchants about commissions and fees. Be careful to limit how much you give of your margin. Set them correctly from the start, and you’re more likely to succeed.
Banks will often have a per-use or flat-rate calculation. Flat-rate calculations tend to make more sense. Paying minimums is common.
Ensure that you can still make a profit after these fees. The ATM machine cost on its own will dip into your profits.
4. Not Being Knowledgeable About Security Threats
ATM machines tend to experience thieves and hackers. Consider liability insurance to protect your business.
Empty bank accounts could occur if someone steals a customer’s information. You’ll also want to keep the machine up-to-date, don’t wait until it breaks.
5. Not Picking Out the Right ATM Machine
Avoid paying a large sum of money for a brand new ATM if you don’t know how they’ll do in the area. Ensure it’s 3DES compliant.
This is an encryption process in the firmware and keypad that protects consumers’ PINs. Without this, their PIN could be stolen when the ATM is using its processor.
While it’s a requirement now, some older machines might not have it. Avoid machines on classified websites that seem inexpensive.
They might also be expensive to upgrade. Avoid unauthorized vendors.
ATM machine costs could be between $2,000-$3,000. Through-the-wall units are about $4,000-$8,000.
ATM buying Tips
Check the age and condition of the machine. The cash dispenser should be firm even if it looks worn. Plug the ATM in to ensure it works.
If something doesn’t function, don’t buy it. Many ATMs could have broken printers, keyboards, etc.
Unless you’re buying it for parts. Understand the price before you buy the item.
6. Not Considering Replacement Costs
Many ATMs will come with a 1-2 year warranty on repairs and parts. Even if you have limited knowledge, they tend to be easy to fix.
The parts that could need repairs include the:
- Screen
- Cassette
- Dispenser
- Safe
- Lock
- Mainboard
- Printer
- Keypad
- Modem board
- Card reader
- Wireless
- Power Supply
Your expenses will add up, including fuel, receipt paper, and the cost of capital. The cost of capital includes access to a loan. If you use a wireless router, you’ll need to pay an additional $10-$20/month.
There might be vaulting costs as well. Vehicle maintenance can vary. Business expenses such as checks, postage, cell phones, website maintenance, and other items will be part of it.
7. Not Researching the Location
Research each area before you buy the ATM. Some popular locations include concert halls, convenience stores, etc.
You’ll want a location with plenty of foot traffic. Bars and hotels are also popular.
Look for cash-only locations. Most convenience stores will already have an ATM.
Avoid large chains and go with a smaller operation. Look for hotels that have at least 250+ rooms. Research non-corporate hotels in the area.
Other good locations are offices, diners, bowling alleys, and small amusement parks. Go with hair salons that have heavy foot traffic.
8. Not Knowing What’s Needed
Every ATM requires a wireless device, internet, or phone line. This is what handles transactions.
Ensure that the ATM will fit into the location that you’re considering. You’ll need a power source for it.
Find out what security system each location has available. Theft is less common for machines that are bolted to the floor.
Have agreements or contracts with the merchants. See if they’ll do a trial period and then hand them a check.
Attempt to get a deal with at least a few years. If you have an auto-renew contract in place, you don’t have to worry about doing it over. Ensure that the paperwork says you’re the provider.
9. Not Looking Into Visa, Mastercard, and Europay
Understand the makes and models of each option. You’ll also want to know how much it’ll cost to upgrade them. Due to these, it’s best to consider a brand new ATM.
Understanding the Different ATM Machine Mistakes
After exploring this guide, you should have a better idea of avoiding mistakes when buying an ATM machine. Speak with vendors and merchants to decide your best option. Research a location first before you agree to that area.
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