by Ben Dwyer As a small business owner, you have systems set up to accept credit cards quickly and securely. But what about offering access to cash, right in your store or restaurant?
In today’s increasingly cashless world, it might seem counterintuitive to install an ATM at your business. However, there are compelling reasons to consider it. Whether you’ve been thinking about adding an ATM or never gave it a second thought, here’s what you need to know about the pros, cons, and costs of ATM ownership or leasing.
Pros of an On-Site ATM
There are two main benefits of having an ATM on premises.
A “Backup” for Your Card Machines
Like it or not, there will probably be times when your credit card machine or POS system goes down. In those cases, you may be able to take advantage of “store and forward” modes that let you accept cards offline. But if your system doesn’t offer that or your machine isn’t working at all, then what?
An in-house ATM gives you one last option to keep that sale, offering customers a way to pay even if you can’t take their card. For their hassle, you can even offer a small cash discount.
ATM Fee Revenue
The second benefit has nothing to do with backing up credit card machines. Instead, it’s about adding a little extra revenue. When customers withdraw money from your ATM, they’re charged a fee. As the ATM owner, you keep all or part of that fee. Depending on the company you work with and any applicable rules in your area, you can set that fee yourself. Many businesses price it at $2-3. For businesses with lots of regular traffic (or in locations that an ATM might bring in more customers) it can help add passive income. According to a study by Cardtronics, almost 40% of customers using an ATM visited the location they wouldn’t have otherwise, just because of the on-site ATM. For some business types, such as gas stations, bars, convenience stores, and pharmacies, the ATM that lures in potential customers reliably turns into sales.
However, if you’re not looking to make money from the ATM, some companies offer placement programs, where they install and maintain the machine at no cost to you, but they keep all or most of the fee revenue. That can be a good option if you want the benefits of an ATM (such as having a cash backup) without shelling out for it.
Cons of an On-Site ATM
Of course, adding an ATM isn’t without its drawbacks, and it’s important to be realistic about what you’re getting into.
Not Enough Use to Justify Cost
Your customers are likely using credit and debit cards more than ever. That means an ATM might not get enough use to justify the expenses of maintaining it. Some ATM companies have service plans, which your usage will need to offset to be worthwhile.
Possibilities of Fraud
Freestanding ATMs are a common target for credit card skimmers, as the machines are often unattended and not closely monitored. Card skimmers (and “shimmers” for newer EMV card theft) are small devices that are inserted into or over card readers on credit card machines, gas pumps, and ATMs to steal customer’s card information without their knowledge. The card info is used to clone the card or make unauthorized online purchases.
One way to cut down on the likelihood of skimmers or shimmers being installed on your ATM is to keep it in a visible, well-lit area, such as near the registers. Be sure to regularly inspect it to ensure it hasn’t been tampered with.
Costs
While it’s true you can set fees to help recoup costs or earn passive income, ATMs still aren’t cheap to install. If you’re purchasing one outright, an average standalone ATM will cost you in the range of $3,000-$5,000. (But can go higher for new models with more features.) If you instead choose to lease, you can expect ongoing monthly costs typically around $100. You’ll also need to either handle “cash loading” (keeping the ATM stocked with cash) yourself, or pay a company to do it for you.
Hidden fees
In addition to the known costs of installing an ATM, keep an eye out for possible “hidden” fees that can increase your overall cost. Those include monthly maintenance fees, network fees paid to the ATM company, and cash replenishment fees.
ATM Companies
If you decide to install an ATM at your location, you’ll first need to decide if you’re going to purchase it outright, lease it, or use an ATM placement program to allow the ATM company to install an ATM at your site. The company you work with will be different depending on those factors. You can also check with your credit card processor. Some processors offer ATM programs or have partnerships with companies that do.
In any event, you’ll want to make sure that you’re aware of contract terms and cancellation requirements. The last thing you want is to get stuck in an expensive, non-cancellable lease or contract for an ATM that is not bringing enough value to your business.
Should I install an ATM?
The truth is that there’s no one answer. You’ll need to evaluate your specific needs, the pros and cons, and costs. But as a rough rule of thumb, installing an ATM may be a good idea if your business:
- Has regular foot traffic
- Occasionally experiences credit card machine outages or problems
- Serves customers that prefer to use cash
- Is in an area with few other ATMs
That said, if you’re in a location with relatively little foot traffic or mostly card-preferring customers, it may not be worth the hassle.
ATMs can still serve a purpose for the right business. Whether as a source of extra revenue or a backup when your card terminal goes down, it can be a good addition to your payment acceptance options.
Just be sure to read the fine print, understand the full costs, and choose a reputable company.
