Like most of you, I absolutely hate to pay ATM fees. It’s usually never a problem for me, since I get paid rent (from renting out my basement) in cash I hardly ever crack out my debit card. I’m a little bit old school like that. When I need money, I go to the bank to get it. My bank does a nice job hiring cute tellers, so that helps.
While out of town training for my new job, I ran into a girl who has a somewhat interesting job. She works for a guy who buys ATM machines and puts them in convenience stores and other public places. She shows up at the stores whenever the machines need more cash or repair. The profit made on the fee is split between the company and the owner of the convenience store. Every store has its own individual split depending on what is negotiated.
There are countless companies who are willing to sell or lease a store owner an ATM machine. And typically, the store owner can sign up for a plan which includes maintenance of the machine. Anyone who has ever had to call tech support of a large company can attest to how painful of an experience it is. Lets face it, a lot of convenience store owners don’t speak great English. They don’t want to call into tech support. They want to run their store.
The key to the model is offering local support. If the owner of the store has someone local they can call who will come and repair the unit without an intervention from head office. You want to make the support/repair as painless as possible.
The ATMs I’ve seen charge between $1.50 and $3.00 per transaction to the card holder. This obviously excludes bank ATMs. If someone was in the bottom end of that range (say $2.00) and split that fee 50/50 with the store owner, they’d still make $1.00 per transaction. Insurance would be a good idea, and there would be a cost for processing each transaction. I’m just pulling numbers out of the air, but lets say net profit would be 80 cents per transaction.
A quick Google search gives me the price of around a thousand bucks for a used starter machine. At 80 cents per transaction, you’d need 1250 transactions to pay for the cost of the machine. A little over 100 transactions per month would pay for the machine in a year. This is pretty easily achievable, that’s only 25 per week. Break it down further, and that’s less than 4 transactions per day.
It never ceases to amaze me how willing people are to pay ATM fees. In the grocery store I used to work at, we’d put $8000 a week into that machine. Assuming an average of $50 a transaction and the costs mentioned above, the machine paid for itself in a little over 3 months. Obviously a grocery store is a very high traffic location, so perhaps it isn’t the most ideal example. Yet people were willing to pay ATM fees even though avoiding them would be as easy as asking for extra cash at the till.
While there are ATM machines seemingly everywhere these days, I think if someone were to start this up as a small sideline business they could make a couple hundred bucks a month with not a whole lot of work. It takes capital to get going, in both buying the machines and supplying the cash to put in them. It’s something I may do more research into.