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Alternative Investing Series: ATM Investing – A Beginner’s Guide

Alternative Investing Series: ATM Investing – A Beginner’s Guide

An ATM provides unparalleled convenience to consumers. We can conduct our businesses without ever stepping into a bank hall.


We love it. We live in an age of instant gratification. You want something; you get it.

ATM cash withdrawal

We want things now, now & now!

And all those things – well, most of them anyway cost money. This is what we tackle today: Cash.

Am specifically talking about ATM’s – Automated Teller Machines. Those monsters you feed a card, and they spit out cash.

You probably used one today. Or you passed by one. There are everywhere. Because we like cash, and we love accessing cash whenever we want it. Day or night.

Cash is still king.

ATM investing provides the cash to consumers.

The reality is, not all ATMs are bank owned.

Yes, they mint money for the banks, but not all of are held by the banks. Some ATM’s are owned and operated by individual companies and investors.

They are there to provide a service. And where money is to be made (especially dealing with cash), individuals will find a way of profiting from it. Because, well, it’s cash.

A Brief History of ATM’s


The first ATM probably sprung up around 1966. By then it was called a “Computer Loan Machine.” It supplied three-month loans to individuals at 5% p.a. The initial patent was granted to one Adrian Ashfield in 1962. He’d come up with the smart idea of a card combining the key and user’s identity.

As with all ideas, it never did come from one person. In the US a Luther George Simjian has been credited with developing a similar idea. This was called the Bankograph.

An experimental “Bankograph” was installed in New York City in 1961 by the City Bank of New York. It was removed a few months sooner because the idea didn’t catch up.

You can say it’s the bane of all smart ideas. We as humans – however much we love convenience – we are apt to distrust new technologies.

If you doubt me, think back on the mobile phone, or the internet, or social media.

The first widely accepted “cash machine” was put up by Barclays Bank in North London. That was on 27th June 1967.

From there additional patents were granted that made the venerable “cash-machine” more usable and acceptable to the general population. Some of those included the PIN stored on a card, a card that dispensed cash, etc

Different iterations but all building up to what we now call today the Automated Teller Machine.

If you must know, the first proper ATM installation was in Australia! The machine only dispensed $25 at a time. Yes, just twenty-five bucks!

According to Wikipedia, the first modern ATM came into use in 1972 in the UK.

From there, the ATM “virus” spread fast. Here was a machine that could dispense cash at all hours of the day without any human intervention.

Convenience and instant gratification combined!

How an ATM Works

An ATM is a “mini-vault.” It stores cash in various denominations and dispenses it to you and me when we want it using an ATM card or a mobile phone.

Here is a quick primer on that whole operation from an old Youtube Video.

You can check out this how the ATM works article here.

ATM Investing – Banks vs. Cash

As mentioned earlier, not all Automated Teller Machines are owned by banks. Individual investors can invest in ATM’s and benefit from the profits.

ATM investing spawn profits to banks and investors.

ATMs generate a good chunk of cash for the banks; not as much credit cards or loans do, but they do produce some money. They also provide convenience to customers and eliminate the need for banks to invest in expensive branches.

Bank branches while good do have their shortcomings. You need a building, employees, security and in most cases, they can’t operate at night.

The ATM, however, can operate anywhere, anytime with minimal supervision. Day or night! And provide the much-needed convenience to the consumer.

Cash plus instant gratification equals profit.


Typically, an ATM charges you a small amount of money for transactions. This is the referred to as the surcharge. It can range anywhere from $1 to $5 depending on the transaction. The small charge covers the ATM’s operational costs and the costs of securing it.

The surcharge is a revenue stream for both the banks and some individual investors. It’s not the only revenue stream.

ATM Investing – Modern ATMs

ATM Investing - Modern ATMS

Think of the modern Automated Teller Machine like real estate.

Typically ATM’s are located in convenient places. Shopping malls, street corners, restaurants, high traffic malls, airports, etc. The more the human traffic, the more likely you are to find an ATM.

It all goes back to convenience!

And as with any real estate, the secret is location, location, location.

Modern ATM’s are a far cry from those of yore. They are smarter and have more significant screens in most cases which increases the real estate. The extra “real estate” is used for advertising, coupon promotion, branding, etc.

This is the second way that banks and savvy ATM investors make their money.

Think of all those times you visit the corner ATM because you need some quick cash to buy something. Or to check your balance or perform any other transaction that you’d conduct at the bank, e.g., deposit cash.

You aren’t the only one. People need cash and with that crazy amount of “people traffic,” there is money to be made.

In essence, a correctly placed, managed and operated, Automated Teller Machine is a piece of prime real estate.

The Savvy ATM Investor

The surcharge on ATM transactions gets split between the investor, the real estate owner and the management team that maintains and replenishes the cash in the machines.

Those charges also cover the costs of insurance.

The thing is, people do still try to steal from this mini-vaults. It’s easier insuring them than hiring security to guard them 24/7.

“The ATM could be considered to be more important to banks and consumers than ever before.”
Michael Lee (CEO ATM Industry Association)

Modern ATM’s offer more services for the consumer than ever before. Most are also future proof for interoperability with phones. Increased services translate to more income to the ATM investors.

An ATM, in essence, provides a necessary service and hence has a high return on investment. The ROI is also predictable and backed by real estate because it’s about the physical location.

Modern ATM’s with their interconnectedness and increased “visual real estate” offer the savvy ATM investor different ways of making money from this the machines. From advertising to proximity marketing through WiFi, Bluetooth and App based promotion with geofencing which generates mobile advertising sales.

So to recap.

  • Not all ATMs are bank operated.
  • An ATM is a piece of real estate
  • ATM investors make money from the surcharge on transactions as well as advertising on the ATM’s video displays, physical locations, etc.

Threats to the ATM

threats to ATMs - ATM investing

Where there is cash, you can bet there are people working day and night to figure out how to profit whether legally or illegally.

Modern ATM’s face a myriad of threats. From thieves trying to scam money from them to sophisticated computer viruses and malware that make the ATM’s open up their vaults and give money to the wrong people.

There have been cases where thieves even just uproot the ATM and walk away with it. It’s rare nowadays, but anything is possible where cash and human psychology clash.

While not an immediate threat, mobile technology also poses a risk to ATM’s. Instead of people walking to the corner ATM for cash they can get it from their mobile phones. Customers can use their mobile wallets to pay for goods and services.

However, as discussed in the history of ATM’s, it usually takes a bit of time before new technology catches up. As an example, mobile banking has grown from 7% of bank consumers in 2010 to over 41% in 2017 from a Raddon Research.

Newer technologies like the blockchain also do pose a looming threat to cash. But when it’s all said and done, people still need cash to perform transactions.

Final Thoughts

As with any investment, it’s best to dive deep down to figure out the risks and rewards for you. Think of ATM’s like real estate. You wouldn’t buy a house without doing basic research on its location and looking at other market signals.

People though are creatures of habit. We need cash, we love convenience, and we enjoy instant gratification. An ATM satisfies a lot of those needs while creating revenue streams for investors. You can sit back and watch the cash flow from the Automated Teller Machine.

Dig deeper and learn the facts of the ATM investment space. It could be just the investment for you.

About The Author

Simon Elstad

Simon is a freelance writer, content marketer & digital entrepreneur. He writes on business, tech, marketing, etc. He works closely with entrepreneurs helping them build thriving businesses. Can be found at: SimonElstad.Com or Contact and connect on Twitter & LinkedIn

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