Investing in an Automated Teller Machine (ATM) can be a lucrative proposition for many businesses or independent deployer’s (IAD’s). Like any other investment, to make an informed decision one must consider the rate of return on the investment or Return on Investment (ROI). For demonstration purposes, we are going to use the average retail ATM box – the Genmega G2500 or Hyosung Halo 2 – which are both approximately $2300.
Firstly, what is ROI? Return on Investment is a performance measure used to evaluate the efficiency of an investment. It relates the net profit from the investment to its initial cost, with the formula: ROI=(NET PROFIT/ COST OF THE INVESTMENT) x 100. When assessing the ROI of an ATM, the net profit will consist of the revenue from transaction fees minus the operational costs.
Let’s break down the potential revenues and costs associated with a $2,300 ATM. The primary revenue for most ATM owners is the transaction fee charged to cardholders. Depending on the location and demand, fees can range from $1.50 to $5 per transaction. Our nationwide average is $2.20. And our average ATM produces approximately 250 Surcharged Withdrawals. So $2.20 x 250 = $550 in surcharge income on average per month. This translates to $6,600 annually.
Next, consider the operating costs. These can include vault cash, commission payments to the location, maintenance, cash replenishment, communication fees, any associated licensing or regulatory fees and of course your time! On average, these costs come to $3,000 annually.
Given these figures, the annual net profit from the ATM would be $6,600 (revenue) minus $3,000 (operating costs), which is $3,600. Using the ROI formula, the ROI would then be $2,600/$2,400 = 1.50. Multiply that times 100 = 150% ROI. Alternatively, that means that for every dollar invested in the ATM, there’s a return of $1.50 per year.
These numbers are hypothetical and will vary based on many factors. The location of the ATM plays a pivotal role. ATMs situated in high-traffic areas like shopping malls, convenience stores, stores with lotto, cash only businesses tend to generate more transactions. Additionally having a higher surcharge may increase bottom line it also may lower usage, and or increase withdrawal amounts, increasing expenses. An ATM in a remote or low-traffic area might not see as much usage. It’s also essential to keep in mind potential changes in consumer behavior, or seasonal irregularities that might affect ATM usage.
In summary, while a 150% ROI on a $2,300 ATM purchase might sound attractive, it’s vital for potential investors to fully understand what it takes to operate an ATM. With proper due diligence, investing in an ATM can indeed be a profitable venture.
Best Products has over 25 years of experience in providing ATM solutions nationwide. Our customer base varies from a single store operator – who owns and operates their own ATM to large IAD’s who operate thousands. Our goal is to help you be successful- no matter your size. If you are looking to buy an ATM or just in need of an ATM processing partner- turn to the company the experts trust. Turn to Best Products.