How to Get In The ATM Business – Pitching to New ATM Clients

Author Justin Gilmore
Gas stations are a reliable place to find an ATM.

There is plenty to consider when creating a profitable ATM business. From payment processing to organizing cash liquidity, ATM ownership does include some preparation before providing stable and consistent returns. There are many elements to consider when learning how to get in the ATM business, but in the end, you can certainly see a return on investment.

In particular, the relationship with your ATM clients has a significant impact on your kiosk’s earnings. Location is everything, so the business deals you make with the retailers and business owners for high foot-traffic real estate is crucial to the success of your ATM route.

If you have found the ideal location for placing a machine, read on to learn how you can create a high-quality ATM proposal. One well-devised sales pitch can entice physical store owners into a profitable business relationship. If you own real estate, use the following steps as vetting criteria for good ATM owners.

A Million Ways to Make a Deal Starts with Prep Work

The most efficient way to structure a win-win deal for you and your business clients starts with prep work. Due diligence not only shows the reliability of your proposed income source but also keeps all financial affairs in order. In a business with intensive compliance requirements and a need for good security, an in-depth proposition makes all the difference.

Use the following steps to best outline the terms of your ATM deal clearly and concisely:

Step 1. Set your flat-rate fee and fee split

As an ATM owner, you make money from surcharge fees applied to customers. For each transaction, you take either a flat rate, a percentage fee, a combination of both.

Surcharge fees vary based on several factors, such as geography, foot traffic volume, consumer clientele, business type, etc. And while some ATMs can command a higher surcharge fee, it is best to select a price point that matches market rates.

For example, Citizens Trust Bank in Georgia charges $2 per transaction, First Republic Bank in California is free for regional users, while Bank of America charges $2.50. Meanwhile, the average ATM surcharge for operators currently rests at $3.08. Selecting fees way higher than average will result in less customer usage which will hurt revenues.

Once you set a satisfactory surcharge fee rate, present a cut of that fee to the business owner in your proposal. The split fee is the “value add,” or the possibility of passive income that might interest someone in your ATM opportunity.

Attempt to create a fee structure that is lucrative for both parties. Whether that includes negotiations on total fees or a mixture of both transaction percentages and set customer charges, a good middle ground can leave you both happy. To most store owners, such a deal is quite attractive, as the ATM itself brings in more customers who spend more in addition to passive income.

Step 2:  Get your paperwork in order

Organize all supporting paperwork within your proposal. You need several different document types as an ATM owner, and having that paperwork on hand while making a pitch makes it far easier to entice new business clients.

For example, both you and your potential business partner will need to fill out Automated Clearing House (ACH) service agreements. For security reasons, all businesses must obtain authorization to exchange cash deposits and surcharge fees. Having detailed explanations about who is responsible for the cash float liquidity or how each party receives their share of funds also makes for a better partnership.

Another critical document to prepare for is an ATM Location Agreement (check out our Location Agreement template for an example). It is a simple way to lay out all the nuances associated with the proposed ATM placement deal, including maintenance schedules, how to proceed with repairs, insurance requirements, security, installation information, and any other potential legal definitions.

The more paperwork you provide, the more confident your business partner will be in your ATM opportunity. Be sure to collect and present Source of Funds documents, copies of personal identification, compliance forms, and processing agreements within your pitch.

Step 3: Pitching to a client

With the details in order, the next step is proposal delivery.

Your potential clients might not know how to get in the ATM business so make sure they understand the following benefits that an ATM placement can provide:

At first glance, a store owner might not know or understand just how profitable an ATM partnership is. Most businesses rely on customer engagement. An ATM increases total traffic, total cash spent, and total sales conversions, all with a reduction in customer exits (a customer who leaves a store to draw cash is less likely to return and make a purchase). Your pitch must outline how a partnership with you is a lucrative opportunity.

Lastly, don’t forget the importance of branding. A logo, a professional email, and a website are must-haves. Not only does good branding provide identity authenticity, but good marketing material can help drive more potential clients to your business. Demonstrate your authority and credibility to teach potential customers how to get in the ATM business and succeed.

Step 4: Structuring your deal

Even if conditions are perfect, a deal takes time to negotiate. For example, both you and your potential business client need to discuss how the fees split, create projections of revenue numbers, and prepare for overhead costs.

While negotiating, be sure to run the numbers yourself to ensure that your ATM placement will earn you stable returns. Request to view any merchant’s total foot traffic and expected transaction volume to help determine profits with the following formula:

  • [Surcharge fee] x [potential monthly transactions] – [fee split] x 12 months = Potential annual return

Once you can add up the annual rate of return, don’t forget to account for any additional expenses that could lower your earnings, such as kiosk purchases, payment processing fees, and installation costs. In general, a sound ATM investment would result in a 100% return on investment within a year or less.

Often, a good business deal requires a series of adjustments before it becomes mutually beneficial. For example, if the transaction volume of a particular location is less than ideal, that doesn’t mean the opportunity is dead in the water. Instead, see if you can set up a tiered system that rewards higher fees to the store owner if they reach certain transaction thresholds. In many cases, you can settle on a deal across several different scenarios.

There may be some initial effort to get your ATM business up and running, but it remains a profitable investment. And with an excellent pitch to an ideal business client, you can achieve a positive return in a short amount of time. For proof, check out Dan’s Story about how he got started with his own ATM business.

Want to learn more about how to get in the ATM business? For additional insights into structuring and pitching ATM contracts and building partnerships with business owners and other ATM operators, enroll in our Online ATM Business Course