ATM and Cigarette Machines

[T BIRD]

Does anyone know of a trusted web site on the web that sells cigarette machines?  A friend of mine is interested.

And......with ATMs, how does the cash thing work?  Its hooked up with a bank that the owner of the ATM works with?  I am confused with how this works.

[MrEen]

Johnny,

An acquaintance of mine sold cigs a while back in an old snack machine. All the spirals were either 10 or 12 deep on every row, and worked perfect for this. I'd bet you could find an old snack machine to do this cheaper than what you'd pay for a "real" cigarette machine. Just something to think about.

I don't know anything about ATMs, so I can't help there.

Scott

[caserri]

John,

Maybe member BluePlate could answer some ATM questions here. He has ATM's and I believe he is quite successful with them.

I will send him an invite to this thread.

[BluePlate]

The cash can be loaded 3 ways.  

#1 You load the cash, in this case you should expect to make almost all of the surcharge.

#2 The retailer loads the cash in this case the merchant makes most of the surcharge.

#3 You hire a cash vaulting company.  An Armored car will fill the ATM, expect to pay  65 cents per transaction and $150 per each load.

Here are a few common ATM senerios:

You buy the ATM (about $2000) and you load the ATM

In this case you look for a location to place the ATM.   This is not too hard.  The hard thing is to find a high volume location.  A common commision schedule might be where you would pay the retailer the following:  0 to 100 transactions they get paid nothing, 100 to 200 they get paid .25 cents per transaction, anything over 200 they get paid .50 cents per transaction. Remember there is 50 cents on the backend called "Interchange" per transaction.

Real Life Example:

ATM placed at a liquor store, surcharge is set at $2.00, I own it, I load it, does about 150 transactions a month.

150 x $2.00 = $300

150 x $.50 (interchange) = $75

Total income = $375

Phone line costs = $33

Commision paid to store owner = $12.50

Transaction cost (.25 per transaction) = $37.50

ATM insurance =$25

$375 (income) - $108 (expenses) = $267

You sell it and store owner loads it

In this case you buy the ATM for about $2000 and try to sell it for about $2500.  The store owner loads it and keeps 100% of the surcharge.  You work off the interchange money only.

Real Life example:

C-Store, store owns the ATM, store loads the ATM does about 350 transactions a month. Store pay all expenses. You make 25 cents per transaction.  It is very common to have the store sign a 5 year contract with you.  In this example you make $87.50/month.  These are great accounts, very very hands off.  You can make a few extra bucks fixing the ATM or selling paper or selling a neon sign or a banner.

Hybrid Example

In this case you can get creative.  Say the store owner doesn't want to buy an ATM, but will load the cash.  You can split the surchage 50/50.  So you pony up the $2000 and make $1 a transaction.  Once again a hands off example.

Leasing

Sometimes store owns just do not want to make the investment in the ATM.  You can team up with a leasing company and lease the ATM to the store owner.  The Lease is tax deductible to the store owner.  Say you lease a $2000 ATM to the store owner.  Say you set the lease payments at $79/month on a 60 month lease.  You in a sense sold the ATM for $4740.  You can expect to clear over $2000 in profit.  The store owner gets to make 100% of the surcharge.

Selling Points

Here are a few sales points for an ATM sales person:

- Load cash in the ATM, store owner makes less trips to the bank

- 80% of cash taken out of the ATM is spent in the store.

- Reduce Credit Card processing fees

- Increase "cash only"  sales in the business, mostly lottery sales

- Outdoor signs increases foot traffic.

If you have any questions let me know, I enjoy talking ATMs!!

[caserri]

You've got my "respect" on that one BP. Great info!

[BluePlate]

Thanks Steve!

[Profits]

That was a fascinatingly good read.  I wish all posts were that good. 

[lurtsman]

I tossed a respect on there to for you BP. Excellent post.

[BluePlate]

Thanks

[mike.h.rosen]

Blue Plate, what are some of the keys you look for in determining where to locate an ATM? Also, this question is to anyone; what would you say is an appropriate amount of ATM or other similiar vending opportunities necessary to start with in order to make a decent income?

[BluePlate]

When looking for a location for an ATM, I look for a few things.  1. Traffic 2. Places that sell "SIN" items like Lottery, cigarettes, ect 3. Places where there is no ATMs for at least a mile.

Traffic - In general 5% of people who see an ATM will use it.

SIN Items - Often stores do not allow you to put these on credit cards or it is easier not too.  For example, Lottery Tickets - store will not allow them on credit/debit cards.  BARS - Often bar owners want cash for cover charges and if you are going drink for drink it is a pain to keep using a credit card. 

ATMs where there are none - I have seem it over and over.  The morning routine.  Person stops at a c-store in the morning, buys a stale danish a cup of coffee and pulls $20 out of the ATM.  The change from that ATM stop buys lunch from the lunch wagon that comes to the worksite (they don't take credit cards).

As far as number of locations, it is all relative.  I have a friend in the ATM business.  He runs 26 ATMs in the eastern Queens, NY/Long Island area.  We have never talked specific numbers.  He loads all his ATMs. I am assuming he is making over 120K a year.  NOW that may sound good. But people who live in that area can tell you how expensive it is.  One wrong turn can cost you $10 in tolls. A house costs double the national average. What do you consider a decent income?

[nam]

Blue,

I always found the best ATM locations were bad areas.  The average withdrawn was much much lower and these people often use the machine 2-3 times in a day.  Instead of taking out $60 at once and paying only one fee they come back and get $20 three times and pay three seperate fees.  Crack heads are great customers as well as customers for the prostitutes - they seem to prefer cash as well.  Look for an area with crack heads and working women and you'll do well.  lol

I usually found the more expensive neighborhoods to not do as well.  These people will pull $100 or more from your machine and are smarter than using it over and over to keep paying the fees.  They also are more likely to use their own bank ATM where they don't pay any fee.  It takes alot more money to keep a machine in an affluent area supplied with cash.  So they take more of your cash and you get less transaction fees from your money.  Give me the bad areas any day - just a lot more dangerous to fill with cash.

nam

[whistle]

Nam.....is there any Good money to be made with ATM and/or Cigarette machines?  how much a month do you think?  can you buy theses machines cheap?  ive been looking at the ATM machines lately.....anyone else running a ATM Business out there?

Whistle

[nam]

Whistle,

I have no experience with cigarette machines.  The ATM business has it's good and bad points like everything else.  Except with the ATM's if you're loading your own cash that point might be the point of a gun.  I was never robbed but was always careful and very much afraid of it happening.  You can have the location load their own money for a much larger share of the fee but often they don't want to do it themselves either.  You can also have a professional vault company load the machines but that's just too expensive unless you have really high volume locations.  So often those high volume locations already have a bank ATM if they are doing 600 or more transactions a month.  This leaves the smaller locations for the independent person to go after.  Most of those will already have a machine too.  The contracts are typically 5 years so even when you find a potential account it may not legally be able to switch without being sued.  The ATM business has a lot of people just like we have in the vending business.  Looking to take advantage of unknowing people by inflating the number of transactions to expect and talking them into leasing machines based on numbers that just don't usually happen.  Then the owner of the business is stuck with an ATM for the next 5 years and instead of making money it may end up costing him money.  The insurance for the location will go up quite a bit once the insurance company finds out there is a cash dispensing ATM in their business.  Some may not be able to get insurance - period.  If you own the ATM you can tell him you are responsible for the loss of the machine and money inside but he is more concerned with the loss of the front of his store when someone drives through it with a truck to get the ATM.

The best way to do the business is buy your own machines and fill them with your own cash.  This is were you can make the majority of the money and often only pay the location as little as 25 cents per transaction.  The majority of the smaller accounts will do in my experience 100 to 200 transactions a month with a few that might hit 4 or 5 hundred but they are far and few between.  Those locations are almost always already setup and to get them you'll have to pay a lot more than 25 cents.  Everyone wants those accounts and the locations will be offered as high as a full dollar off that transaction fee.  Competitive just like all other vending, especially on large accounts.

Buying used ATM machines can also be a big problem if you aren't familar with the machines.  Some are not Triple DES compliant and may cost more to have them upgraded than it's worth.  Some older machines may have kits that you can do yourself and cost less than $400 but other machines require major changes and can cost more than the machine is worth used.  You also need to be very careful on getting setup with a processor to run your transactions though.  Often they will also want to lock you into a long term contract that you can't get out of either even if their service is lousy.  There is no fee to process a transaction on a cash dispensing ATM.  A credit card transaction requires a lot of different fees depending on what type of card and transaction you are running.  An ATM transaction is just the reverse.  It's called reverse interchange - they pay you for running the transaction.  So if your trans fee is say $2.00 you should receive from your processor money on the back end so you're really being paid $2.25 or $2.30 even though your locations and customers all think you are only working with the base $2 fee.  Not true!  I'm not sure how much the processor is being paid for running the transactions.  I've heard between 35 and 50 cents per transaction but they need to make money as well they're not going to pay you all that.  Most in my experience want to start you out at 25 to 30 cents and think you're volume has to get pretty high to ever get about that.

Installing an ATM is nothing like installing one of our normal vending machines.  You'll need phone lines and power - wireless is available but gonna be more issues! The machines them selves need to be anchored into the floor of the location so you have to talk the owners into allowing you to drill into their tile floor or whatever is there.  You'll need a high quality hammer drill and lots of special drill bits as the tile and concrete will eat up your bits like candy.  Then you need to become a sign man as you'll need to buy electric ATM signs and hang them in the front windown if you want much business.  Then you need to post signs outside as the more signs the more business. 

I'm not trying to say there isn't any money in the ATM business or paint a dark cloud over it either.  It just often isn't what you think it will be.  The business is full of liars and crooked sales people that take advantage of the locations not knowing the business just like business opps in vending.  The owners will really appreciate having an honest person to deal with but again often they can't get out of their contracts for 5 yrs.  I'm personally very happy to be out of the business and feel my chances of being shot have greatly decreased!  lol  So far I don't feel anyone is out there waiting for me to empty my quarters from a machine or steal my gumballs.

nam

[Mr_H]

I never figured an ATM as a vending business. Excellent posts with tons of information. I was wondering how much cash gets loaded into the machine? Have you ever had a machine run out of money?

[whistle]

Blue Plate.....im looking into ATM Machines.....very seriously....im curious how to buy them?....from whom?  and how the system works?  any advice?  how did you start and are you still involved in them?

thanks

Whistle

[nam]

Mr. H,

The plan is to never have a machine run out of money but yes it happens.  The amount of money in the machine depends on whats needed at the location.  One of the nice features of an ATM is since they are connected to a phone line it is possible to keep really good track online everything that is happening with your machine.  You can check online to see each machine and how many transaction have been run, how much cash is left and what day it is projected to run out of cash based on the average transaction amount.  Those projects are very good but it can still be way off sometimes.  You can have several customers withdrawn much larger amounts than your average and you can just end up for what ever reason running a lot more transactions than normal.  Anyway, the money can be put right back in your account in one or two business days depending on the processor - it isn't always the next day.  Holidays and weekends can really make it difficult as you need to load your machines for these periods and sometimes the money may not have come back into your bank account yet.  If you have more machines than money you have to really try to run the least amount of money you can in your machines and fill them more often.  This allows you to have more machines out on the street but means you have to run your route more often to keep putting the money back in the machines as fast as it hits your account.  If you have a small convience store running 150 transactions a month at an average of $60 per transaction your going to need to keep probably $10,000 in that one machine to service it only once a month.  If your paying a company to load the cash $70 to $100 per location to load cash in your machines you don't want them coming twice a week or even once a week.  If you are loading the cash yourself you can keep a lot less cash in the machine by loading twice a week yourself.  Eats up a lot of your time but means your not paying to have a vault company load the cash and you can keep much less in the machine.  If its running 40 transactions a week at an average of $60 you can put like $3,000 in and service it once a week or put in like $1,500 and fill it twice a week.  Most smaller location ATM machines being service by an independent person will probably have $1,000 to $5,000 in them depending on how long since they were last filled.  You can do the math though by simply increasing the numbers for a location doing 400 to 600 transactions a month.  The scary part comes in when you are running 25 to 40 machines in a day and trying to carry enough cash to fill that many machines.  The ideal thing is to not carry all that cash and let an armored car with guards do that but you can't afford to pay them.  The banks and larger ATM companies have enough money to fill the machines with enough cash for a month at a time.  Most of the independent people running ATM's can't do that.  Way to much cash to fill all their machines with enough cash to make it a once a month thing.  It's really hard to keep them filled for a week.  lol  Another thing is the risk of having that much cash in the machines if someone decides to steal your machine.  Better to have 2 grand stolen than 20 grand.  Oh, insurance would be the simple answer but it's too expensive too! 

The other answers are to let the locations fill their own machines but many won't do it and the only way you can get the deal is to fill the macine yourself.  If the location does fill their own machine then they are going to get the lions share of the money.  You can lease them the machine and have them put in their own money and you just make a little off the processing and whatever you make off the lease.  Leasing can be very profitable if you can sleep at night.  This is really just doing sales on commission and not really in the ATM business but more in the story telling business.  Sorta like selling Vendstars and telling the potential buyer how much money they can make off their machines.  Mostly BS and leaving a lot of business owners stuck with a lease they end up wanting out of and not making any money and in many cases losing money each month.  But the ATM salesman probably made big bucks leasing that ATM machine to them.

Sorry for the long post and hopefully if you're not interested in ATM's you quit reading long ago.  lol

nam

[spdydre]

I wanted to bump this up.  Has anyone else had any experiences with ATMS or cigarette machines?

[agrantha]

Spdydre

I don't know if much more can be said. Personally, I would rather pay someone to load the machine and put $20,000 in cash in it.  However, I don’t know what insurance cost is for these machines.  I am not loading an ATM machine myself.  I get nervous taking $30 in quarters out of a combo drink machine…so ATM’s are out of the question. 

[eddiebauervending]

Hey johnny t one of my vendors bought this wall mount for a place he had a video game machine.

I'll ask him how he likes it and let you know.

http://www.hanna-vending.com/cigarettes.htm

[Bocephus]

I originally wanted to do cigarette machines, but you really need to know a bar owner to make money off of those. If anyone is vending cigarettes and having success I would be interested in hearing how you are doing it.

I would load my own ATMs (I am always armed) but do not have a spare 2-10 thousand dollars lying around to load them with.