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Learn | 8 Mistakes to Avoid When Starting an ATM Business

8 Mistakes to Avoid When Starting an ATM Business

starting an ATM business

In the era of technology, digital payments are becoming increasingly popular among the public. However, it doesn’t matter how many online payment applications come and go, none can compete with the reliability of “hard cash.” And the most convenient way to get your hands on cash is via an ATM.

But did you know that ATM is a great investment opportunity and a source of passive income? Yes, you heard right. However, like every other business, an ATM business also comes with its fair share of challenges. 

Not only banks and financial situations but even you can become an owner of an ATM business. But how to start an ATM business? Fret not, in this blog, we will go over the most common mistakes people make when starting an ATM business and how you can start an ATM business. 

Let’s get started. 

What is an ATM Business?

ATMs also known as Automated Teller Machines have been in use since the late 1960s. The world’s first ATM was unveiled by Barclay’s Bank of London on 27th June 1967. They were specially developed to tackle the issue of withdrawing cash after the usual banking hours. 

The early generation of ATMs were only used to withdraw cash. However, they have evolved and now function as a mini-bank with many functions like cash withdrawal, fund transfers, balance inquiries, and other account inquiries. 

Generally, financial institutions earn money from ATMs by levying a charge per transaction. This is usually $2-$3 per transaction. But did you know that individual people like you and I can also set up ATM machines and run our own ATM business? 

All you have to do is buy ATM machines, get contracts with vendors, and get an agreement with the banks, and you are all set. However, it’s not as simple as it sounds. There are many common mistakes people make when starting an ATM business, which we will discuss later. 

How to Start an ATM Business?

Let’s discuss the step-by-step process to start an ATM business and generate a passive income

Step- 1 Plan Your ATM Business

First and foremost, it is important to come up with a business plan beforehand to avoid any hassle. The planning stage consists of the following steps- 

Cost of Starting an ATM Business

Unlike other brick-and-mortar establishments, you don’t need much capital to start an ATM business. But, there are still some initial equipment costs that are important. The total cost depends on the number of ATM machines you wish to install. 

A new ATM machine costs somewhere around $3000 to $10,000, depending on the model and features. On the other hand, you will also require a phone line, an internet line, and a computer to monitor the machines. Based on all these expenses, make sure to calculate the overall budget of the venture before starting. 

Cost of Operating an ATM Business

Apart from initial business costs, running and operating an ATM business also requires some regular expenses. For instance, a single ATM machine requires at least $2000 cash per week. Additionally, the merchants or vendors where you will place your ATM will also charge a weekly or monthly fee. An ATM machine also requires receipt paper to be filled regularly. 

Lastly, the bank also requires you to pay a surcharge fee for becoming their ATM operator. 

Location of ATM Machines

Lastly, the location of ATM machines is one of the most crucial aspects of starting an ATM business. The location will decide how many people will visit your ATM daily and how much money you will make. 

The larger the foot traffic, the more money you will earn as transaction fees. The most common high-volume locations for an ATM machine are restaurants, bars, strip clubs, shopping malls, convenience stores, gas stations, etc.

After you have created a solid business plan and figured out the basics of your ATM business, the next step is to register as a legal business. Primarily, there are four types of business structures to choose from- sole proprietorship, partnership, limited liability company(LLC), and corporation. 

Most small businesses register as an LLC as it has minimal state LLC fees and a straightforward procedure without much hassle. 

Step- 3 Register for Taxation

Every business is liable to pay federal and state taxes. Therefore, it is a good idea to register for taxation, unless you want to run an illegal business. 

If you are starting a business in the USA, you will have to register your business with the IRS. This will provide you with an Employer Identification Number(EIN). This number is crucial for opening a business bank account and hiring employees. 


If you are a sole proprietor, you do not need an EIN and you can simply use your Social Security Number(SSN). Depending on which business structure you have chosen, you will have different options on how your business will be taxed. 

Step- 4 Open a Business Bank Account

It is important to have a business bank account to separate your personal and professional assets. Moreover, it also makes tax accounting way easier and has much cheaper lines of credit. 

Opening a business bank account is as simple as it gets. You must have all the documents that you have acquired by completing the previous steps. Just walk into any bank and ask for a business bank account. Complete the necessary paperwork and your account should be operational in a few hours. 

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Step- 5 Get the Required Licenses

To run and operate an ATM business, you are required to get a license. As the owner of an ATM business, it is your responsibility that the business complies with all the necessary regulations and guidelines. 

Depending on the location of your ATM, the licenses and permits may differ. For instance, you might need a liquor license if the ATM is inside an establishment that sells alcohol. 

Moreover, also make sure to get insurance for your business as it can protect you in case of an incident or unexpected loss. 

Step- 6 Set up Accounting for Your Business

Not setting up accounting is one of the most basic mistakes people make when starting a small business. It is important to have an efficient accounting system that keeps track of all expenses and income. 

This will help you track the financial performance of your business and be more efficient in the long run. Moreover, it will be a huge help when you are filing for taxes. 

Step- 7 Launch Your ATM Business

Now that you have taken care of the most important things, it is time to launch your ATM business. Ensure that the quality of the equipment like ATM machines, phone lines, and internet lines is the best since these can hamper the working of your ATMs. 

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Mistakes to Avoid When Starting an ATM Business. 

Now that you have learned how to start an ATM business, let’s understand the common mistakes people make so you can steer clear of them and maintain maximum efficiency. 

Overestimate Cash Flow

There are many online sources that will tell you that you can earn $500, even $1000 per month with an ATM business. However, it can’t be further from the truth. As a new ATM business owner, you should be a little conservative in the estimated earnings. 

Not everyone can make that much money in the beginning. If you are unsure about the cash flow, make some calls and talk to some merchants to get an estimated figure. An ATM business that generates $150-$300 per month is a very good start, especially if you are just starting out. 

Purchasing Old Equipment

One of the most common mistakes new business owners make is buying old equipment to save a little money. Keep in mind that the ATM machines and other equipment should be in top-notch condition to function properly. A simple mishap can be detrimental to your business. 

Moreover, old equipment may be prone to breakdown and require repairs every now and then. In this case, you are better off shelling out a little extra money and buying fresh new equipment with warranty and ATM insurance. 

Understanding How Much Cash an ATM Machine Needs

If your ATM is located in a high-volume traffic area, you will need to maintain an adequate amount of cash in your cash machines. Generally, a single ATM machine requires at least $2000 cash per week. 

Poor Locations

The location of an ATM machine is a crucial element that can significantly impact your earnings. If you install standalone ATMs at places with minimal traffic, you will most likely end up incurring losses. 

It is important to conduct research and find the best place for your ATM business. Also, make sure the locations of your ATMs are not very far from each other and are within your ATM route. 

Working Without Signing Agreements

It is important to have a written signed agreement with your merchants. Without the backup of a legally enforced ATM processing agreement, you can not protect the interests of your business and might end up losing money in the long run. 

Not Maintaining Records

One of the main reasons for the loss in small businesses is failure to maintain records of your accounts, business transactions, and clients. It is important to maintain a record of your transactions and accounts as it will help you track the performance of your business and will come in handy when filing taxes. 

Setting Low Margins

The outlets or stores where you will place your ATM machines will charge a commission. It is important to negotiate and don’t give too much from your margins as it can hamper your earnings significantly. Make sure to negotiate with the concerned parties and agree on a number that is beneficial to all involved parties. 

Not Partnering With Banks

There are some banks that support an ATM business and some that don’t. It is important to contact a local bank and ensure that they can support the needs of your business. Make sure to enter into an ATM Operator Agreement with your bank before starting an ATM business

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Final Words

Becoming an ATM business owner requires you to have an understanding of small businesses. It is an unconventional method of running a business, but if you do it right, you can make a decent passive income without having to work every day. 

If you follow the steps mentioned above and avoid the mistakes in this list, you can effectively run your business on autopilot mode. And the best part is, you don’t need any degree or qualifications to start an ATM business. 

Frequently Asked Questions(FAQs)

Q. How profitable is owning an ATM business?

Ans. Owning an ATM business can be profitable is you avoid the common mistakes that most business owners make. In the initial phase, make sure to not overestimate your earnings. If you are making $150-$300 per month with your business, it’s good. In the long run, if your ATM is located in a high-traffic area, you can probably earn tens of thousands of dollars. 

Q. What are the risks associated with an ATM business? 

Ans. An ATM business has high upfront costs like purchasing ATM machines, installation fee, stocking cash, and buying other equipment. On top of that, there are other responsibilities like maintenance, cash management, and compliance with regulations. There is also the added risk of theft and vandalism.

Q. What are the best locations to install ATMs?

Ans. Gas stations and convenience stores are among the most popular locations where you can install ATMs. These locations see a large amount of traffic daily and will be optimal for an ATM machine.