An ATM is a profitable business venture. With earnings that average $3.08 per transaction, you can break even and gain a complete return on investment within 12-18 months. A well-placed ATM kiosk represents a viable passive income source for investors, store owners, and entrepreneurs.
But ATM ownership also involves some upfront work. From achieving compliance to setting up payment processing and maintenance schedules, there are existing overhead costs and preparation tasks you must tackle before you can generate revenue.
In an earlier blog, we outlined a few necessary steps regarding deal structures, paperwork, and setting a fee split with any business partners. This blog will focus on another crucial aspect of owning an ATM: cash vault management.
Read on to learn more about cash vault services, why you need to plan out your cash schedules, and the easiest ways to optimize your ATM cash processing operations.
What Is Vault Cash?
Vault cash is stored money used as a safety reserve for business operations. Since every ATM accepts and transfers large quantities of money, owners need to keep liquid reserves on-premise to handle the kiosks’ day-to-day supply.
Customers engage in many cash-based services through your ATM (withdrawals, money transfers, and bill payments) – without enough cash on hand, you might not be able to fulfill a customer request.
While partial ATMs do exist, most machines have attached vaults where you can store your cash float. In technical terms, “cash loading” refers to the act of filling your ATM Vault, while the money stored in the vault for safekeeping is considered “vault cash.”
Proper vault cash management is key to the success of your ATM. Numerous customer transactions deplete your supply, and without a safe and efficient way to source, deliver, and refill your vault, you could run into service disruptions or take on undue security risk, both of which hurt your profits.
Vault Cash Management and Customer Transactions
Let’s walk through typical customer transactions so you can better understand the necessity of vault cash.
- A customer will verify their details and use your ATM to withdraw cash. The machine then completes the request through a processor, a central ATM host that communicates with the customer’s bank and starts the electronic fund transfer (EFT). Once the host receives the money from the client’s bank, it approves the cash request at the kiosk, and the customer walks away with cash in hand.
- As the ATM owner, your vault cash supply decreased, so you will receive from the ATM host the electronic transfer amount taken from the customer. The funds will be transferred via ACH to your chequing account (plus any convenience fees) with a next-day turnaround. From there, it is your responsibility to refill the cash vault from your bank account and “settle” the transaction.
An ideal setup would involve two checking accounts: one for operating capital and vault cash and one for your surcharge fees. Surcharge fees are direct earnings, so it is best not to mix profits with your cash float. Plus, you might need to split fees between business partners or other accounts – it is best not to confuse withdrawals from your cash vault account with surcharge profits and business expenses.
How Much Vault Cash Does an ATM Need?
You need enough vault cash to manage the average demand of your ATM. Without enough supply, you can hurt your revenues and increase expenses.
For example, a reputation of extended service outages will deter customers and potentially lose their lifetime sales value. Multiple small trips to replenish the vault add to operational expenses that can hurt your return on investment and break-even timeline. They also extend your security risk, especially if you don’t have protected cash transfers.
Maintaining a proper cash vault balance is known as cash replenishment planning, and you need to set a schedule if you hope to scale your ATM route. Different ATMs require cash loads on different timetables dependent on transaction volume, average consumer withdrawal amounts, and machine access (i.e., store hours). Without proper planning, your efficiency could decrease as complexity grows.
To find the ideal cash load for a particular ATM and its planned delivery schedule, track about three to six months of customer transactions. Humans are creatures of habit, and you can use that data to understand the average amount of transactions and the average cash value that flows through your ATM.
Once you have an average daily withdrawal amount, times that number by nine, giving you a sum for nine days worth of cash. A nine days surplus is an ideal fit for a weekly refill schedule. There is enough money to handle possible withdrawal spikes without creating additional undue or unnecessary expenses.
Can You Outsource Your Cash Management?
Due to the setup time, liquidity requirements, and costs for delivery, many ATM business owners opt to use a vault cash management service. A third-party service offers you several advantages:
- Frees up your finances: Many cash services will use their own money to maintain the cash vault. That means you no longer worry about settling your vault or chequing account, and it also frees up a significant sum of money that you could divert to business growth.
- Seamless service: A vault cash service will maintain the ideal replenishment schedule, ensuring that you always have cash on hand and can fulfill every customer request at your ATM.
- Lowers operation costs: Save on bank fees, delivery fees, and other expenses by outsourcing your cash management. Any costs incurred become your service partner’s responsibility, making your ATM an efficient, hands-off venture.
- Increased security: With a service, you no longer risk your own money and limit any potential losses associated with security issues. You don’t have to pick up large sums of money and can avoid employee training by hiring a cash vault service.
For many ATM owners, outsourcing is a preferred method for managing their vault cash.
Partner With Us
At AtmMachines.com, LLC, we offer various service partnerships — including cash vault management. As your outsourced cash vaulter, we handle all responsibilities related to cash loading. We do the heavy lifting! Take advantage of our dependable supply of liquid cash, ensuring same-day withdrawals for deposited vault cash, optimized load amounts and schedules, and coordinated armored couriers with reputable transport services.
With us as your partner, you can take advantage of our industry relationships and business services. For example, If your ATM does not produce enough transactions to justify an armored vehicle, or if your ATM is in remote locations, we work with local, reputable ATM services to facilitate your needs.
A dependable vault cash supply is the linchpin of any thriving ATM program. That is why we offer you comprehensive and hassle-free solutions for cash access, vault supply, and armored carrier management.
Alternatively, contact us today to request a consultation.