Eli5: How do ATM’s work at small businesses?

Question

Whenever I see local businesses have an ATM, whether it’s the liquor store or the nail salon, I ask myself how they have an ATM. I thought they would put their own money into it, but then how would they profit? Do they get the money from somewhere else (government)? How do they put more money in it, and how are they monitored to make sure the business isn’t stealing from the ATM?

In: 10

Answer 1

TL;DR: They would make money because there’s an additional fee for using an ATM; the person who supplied the money for the ATM gets reimbursed for the removed money and gets a cut of the additional fee.

~~ATMs are owned and supplied by the bank.~~ S~~everal banks have ATM networks and share them with others for an additional fee.~~ ~~I would expect that small businesses are paid some amount for the ATM to be there, or it’s just expected that allowing your customers access to cash on premises is better than making them leave.~~

~~The business would not be putting their own money into the machines.~~

Correction: There’s actually a middleman industry of buying and placing ATMs. Supposedly if you can get into it, it’s a source of passive income; you buy the machine, find a venue and an ATM processor, then split the fees between all three. It’s the owner who’s usually responsible for supplying the money, so it could be the business itself if it owns the ATM. You would want to do this because it would maximize your cut as well as letting your customers get cash instead of going somewhere else to do so and maybe not coming back.

So the owner would be putting the money in; if the owner is the venue, taking money from it would be stealing from themselves. They would still make money because if a customer took $60 out, the ATM processor would repay them that $60 and a portion of the additional fee that was charged the customer. If the owner is not the venue, then it’s the owner’s money, and the owner is given that $60 and the fee is split between the owner and the venue. Generally ATMs are hard to bust and have video, GPS and other guards to prevent theft; if the venue isn’t the owner, they wouldn’t have a key to it.