ATMs are an important tool for the modern consumer. Especially during the age of COVID-19, ATMs can mean limited human interaction in modern banking. One of the main draws of ATMs is convenience. If your business has an ATM, it can attract consumers because of its proximity to cash-only establishments and other businesses. If your ATM gets people in the door, they're more likely to purchase additional items from your store or restaurant.
Putting an ATM on the premises of your business – such as a gas station, restaurant, salon or in an office building – can also be very profitable. Depending on how visible the machine is, an ATM is likely to be accessed 15 to 30 times a month. For the owner of that machine, those transactions generate revenue from the fees. That revenue can add up to as much as $20,000 and $30,000 per year – no small chunk of change.
Considering adding an ATM to your business? First, you need to decide if you would rather rent or buy the machine. There's no absolute right answer to that question. It depends on various factors tied to your specific business.
Let's explore leasing versus buying an ATM and what you should consider when looking for an ATM for your business.
Leasing vs. buying an ATM
The first consideration is how much capital you have on hand. If you've been saving money for a few quarters and are ready to invest in an improvement to your business, buying an ATM outright may be a great option. It's a one-time purchase; you won't have to pay monthly fees, and you won't be tied to a holding company.
On the other hand, you need to research and find a model that best suits your business, and you'll have to maintain it. If your company doesn't have as much working capital, renting can be a great option. While you'll owe monthly payments, you'll have access to a good machine, maintenance options and profitability. The main concern comes down to math: You need to determine if the monthly cost to maintain the ATM outweighs the revenue it will bring in.
Below are five additional considerations, with more extensive detail, to help you arrive at a clear decision.
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5 issues to weigh when considering whether to buy or lease an ATM
1. Upfront costs
Leasing an ATM can cost less in the short-term versus buying a machine new or used. The upfront cost for leasing can vary depending on models, but may run from $75 to $100 per month.
To buy a new ATM, you can expect to pay anywhere from $1,000 for a basic, used model up to $10,000 for a new one. If you are looking for an ATM that is installed into a wall, such models can cost $5,000 to $10,000 or more.
The newer models are likely to come with valuable enhancements such as a large touchscreen display and accessibility functions for people with disabilities and hearing impairments.
If you plan to keep an ATM on your business's premises indefinitely, buying one upfront may be the better deal in the long run. However, if you're uncertain how long you'll need a machine, or if it will be worthwhile to your business's bottom line over the next year or two, then ATM leasing could work better as a proof of concept.
2. Latest ATM models
Buying or leasing a new ATM model costs more than an older or used one, and you'll spend more to acquire a model with more features than an older, used ATM, or one with fewer functions.
The look of an ATM is important too. An older or used ATM can give customers the impression that it is less secure or that it charges higher fees. An ATM with a small display that is not a touchscreen may come off as less safe and reliable than one with a bigger, full-color touchscreen.
If the ATM retailer you're leasing from offers several models, leasing may give you the flexibility to put in an ATM that best matches your business's premises. Plus, you may be able to upgrade to a better model in the future.
3. Maintenance
You're responsible for the maintenance yourself if you own your ATM, or you'll have to pay someone to fix it if something breaks. The retailer you bought the machine from may offer techs on staff or refer you to a contractor who can repair the ATM for a fee. A previously owned ATM that you buy may incur more maintenance costs.
When you lease, the retailer you're leasing it from should handle the majority of the maintenance. However, scrutinize the maintenance provisions in the contract before signing it.
4. Surcharge revenue
When you own an ATM, you keep a higher commission from the per-transaction fee that's charged to customers who withdraw cash from it. This is often known as surcharge revenue, and it's what makes owning or leasing your own ATM profitable. Plus, you could make additional money on an ATM that you own by running advertisements on its display.
5. Your type of business
The type of business you run should be a factor in your decision of whether to rent or buy an ATM. For example, if it's a bar or restaurant where many of your customers use cash, leasing an ATM could be a smarter choice. It will probably be used more and thus may require regular maintenance to keep it running smoothly.
If the machine will be sitting in the lobby of an office building that has light foot traffic, and the cash it dispenses isn't going to be spent with your business, then buying will be the better investment.
The decision as to whether you should buy or lease an ATM involves assessing how much capital you have on hand, how much traffic you expect to drive into your business with the new ATM, weighing the costs, analyzing the various ATM leasing programs, considering the fees, and making the most informed decision for your business.
Rissa Ann also contributed to the reporting and writing in this article.