The inside of an ATM.

ATMs perform some pretty sophisticated functions — encrypted confirmation of account balances and access privileges, followed by handing out cash. But at heart they’re fairly simple machines: a computer, a card reader, a safe, and a cash dispenser. The complexity lies mostly in the software and physical security.

If you’ve ever wanted to see what lies inside an ATMs armored case, this “How Stuff Works” video takes you there. The machine they show is a big “through the wall” bank ATM. But non-bank ATMs work similarly — they’re just smaller, hold less cash, and typically open from the front rather than the back.

After watching the video, flip through the other pages in the article. Page 3 describes how ATMs contact the processing network. Page 4 walks you through the parts of the ATM interface.

What most people don’t think about is, “how does the machine make sure it dispenses the right amount of money?” The answer is severalfold: programming that tells the ATM what denominations are in which dispensers, a sensitive bill-mover that makes sure only one bill is dispensed at a time, and an electronic eye that counts the bills as they are dispensed.

Finally, how does the ATM owner get reimbursed for the cash you take out of their machine? Through electronic fund transfers between your bank and theirs.

As you can see, there’s a lot that goes on behind the scenes just so you can have access to cash whenever you need it.

The November/December issue of Bar Business magazine examined the value that ATMs bring to bars. They talked to bar owners, industry observers … and us.

Kyle Radzyminski, co-owner of three Manhattan bars including Billy Hurricane’s, Thunder Jackson’s and Point Break, said that his bars have ATMs because, “You make a couple of bucks, but it’s mainly about keeping people within the confines of the place. It does work.”

Customers are more likely to spend more money if their cash flow never runs out. Instead of ending the night when they spend that last $20, they can opt to stay at the bar and drink more after taking some money out of the ATM.

Additionally, many bars and restaurants have been trending towards the elimination of credit cards as an accepted payment form on-premise. With the economy still slow, some bars prefer to not pay the credit company fees associated with each transaction, and instead force patrons to pay cash. And the risk/benefit ratio—not paying fees vs. possibly losing patrons who prefer credit—would seem to be weighted in favor of cash-only transactions if you have an ATM on-premise.

We show up a little further down in the article, where Kurt Duhn and Steve Ray discuss both specific machines and the general economics of ATMs in bars as well as things many people don’t consider — like their marketing potential.

Every major ATM runs on a Windows operating system, so they now can do much more than simply dispense cash. “Any current model ATM provides room for marketing on the screen,” said Kurt Duhn, General Manager of ATM Network. “With Windows custom graphics system, a bar owner can have coupons or promotions printed on the back of receipts and have other promotions running across the screen.”

Look below most ATM screens and you’ll find more marketing space. Many now offer the option of placing a custom design on the outside of the machine, providing the chance to remind customers which bar they’re currently enjoying, all while taking out more money to buy the next round of shots. And since ATMs often are not naturally sleek machines, adding a design can make the hardware fit more seamlessly into a bar’s decor.

That last point can be important, since the article cites a bar owner who doesn’t have an ATM because he doesn’t like how they look. Covering the ATM in custom graphics easily addresses that.

Anyway, have a look. You can read the article online in our article archive, or download the pdf to get the full magazine experience.

The amendment is not dead — Harkin could try to bring it up again, either with this bill or with a different bill later on in the session. But at this point it seems unlikely to be part of the current bill.

Meanwhile, here are a few more people speaking up to oppose the amendment.

From a letter in the Des Moines (IA) Register:

I have to tell you, Sen. Tom Harkin, how disappointed I am with your proposed 50 cents maximum per ATM withdrawal fees. I’m a small-business owner in the ATM business, not a bank, but a hard-working, tax-paying U.S. and Iowa citizen.

It is an absolutely ridiculous statement that ATM withdrawals cost us a mere 36 cents, Senator Harkin. I have quite a few ATMs and drive more than 1,800 miles per week. I have the cost of gas, a vehicle, the cost of the ATMs, the interest for the cash in the ATMs, etc. I pay my locations between 50 cents and $1.50 per withdrawal as I lease the space in the locations.

Is Congress going to stop the person who charges $2.29 for a cup of coffee versus the store that charges 99 cents? Is Congress going to put a cap on Nike shoes when a merchant charges more than $200 for a pair of shoes that cost him $65, but the demand is there, so he can charge what he wants?

The biggest difference is my ATMs have a screen that asks the customer if they agree to the charges. If not, they hit cancel.

— Jeff “Ole” Olson, Guttenberg

And the Cato Institute resurrects a paper from 1998, the last time a senator (in that case, Republican Al D’Amato of New York) proposed capping surcharges:

Consumers have the ability to obtain money from their bank accounts without paying a surcharge. ATM surcharges allow banks and other ATM operators to deploy machines in more convenient locations than might otherwise be possible. Customers who are unwilling to pay a surcharge incur the cost of inconvenience, while those who value the convenience more than the cost of the fee have the option of paying for it. Senator D’Amato, Rep. Bernie Sanders (I-Vt.)–Congress’s self-proclaimed socialist–and numerous consumer groups have formed an unlikely coalition to put an end to ATM surcharges. If successful, that campaign would limit the options of consumers, since there would be no means to support the more convenient ATM machines. Prohibiting ATM surcharges would only harm consumers by slowing the expansion of ATMs and reducing the number of ATMs currently deployed without making anyone better off.

The 1998 effort failed, which is why you find privately-owned ATMs all over the place, complementing the bank-owned ATM networks. It looks like the latest effort will fail, too — which is good for consumers and good for business.

U.S. consumers are withdrawing more money from ATMs, likely the result of the economic recession, industry insiders say. In September 2008, when the recession was official, consumers started relying more heavily on cash and debit, and less on credit.

Gary Faulkner, the executive vice president and chief marketing officer of Morphis Cash Forecasting Software of Dallas, says it was around that time that U.S. ATM withdrawals started going up. He said many of his ATM customers started complaining that the Morphis forecasting tool was not meeting targets, and ATMs were often low on cash because of increased withdrawal amounts. Faulkner says ATMs that had been effectively managed by Morphis’ system for years were suddenly running out of cash.

“Starting in September 2008, customers were complaining that the forecasting was not right,” he said. “Nearly universally, our customers saw an increase in transactions and an increase in cash withdrawals per transaction.”

Faulkner says the volume of transactions increased as well. In fact, Faulkner estimates that the overall cash withdrawals from each transaction increased from roughly $65 to $75 a transaction to about $100 a transaction.

We’ve written before about the practice of using cash accounting to manage tight budgets — withdrawing a certain amount of money for holiday shopping or a weekly budget, and when the cash is gone, stop spending. We’ve also noted why a recession can be good for ATM usage.

Now the numbers are in. ATMs really *are* recession proof.

Tax time can be a headache for many small business owners. It’s not just that business tax rules can be confusing and arbitrary. Spring is the time when you have to go through a year’s worth of saved receipts and paperwork, trying to find a specific number or form, and hoping you didn’t accidentally throw out or misfile an important piece of paper.

At ATM Network, we understand this very well. Every year at this time we get a lot of calls from our customers. Usually it’s because their accountant needs to know how much money they made on their ATMs last year, and they didn’t save all the monthly statements we sent them with their checks.

It’s an even bigger headache for people who own a lot of ATMs. Someone with 80 machines has to keep track of — and add up — nearly 1,000 different monthly statements. The headache can be enormous.

Then there are the checks themselves. Paper checks can get lost, stolen or damaged. They take days to arrive. And machine owners have to take them to the bank, physically endorse them and deposit them.

At the end of 2009, ATM Network took a big step toward making things easier for customers by switching from paper checks to electronic payments. Customer profits are deposited directly in their bank account — automatically, without risk, and usually 10 days or so earlier than with paper checks.

Now ATM Network has taken the next step with Webstatements, its online statement archive.

Instead of receiving and storing a paper statement, customers can login to their Webstatements account to view their machine’s financial results.

They can see total activity for all of their machines, or view each machine individually. They can sort results by month and year. And if they do want paper copies, they can print out individual statements for all of their machines with a single click of the mouse.

The online statements contain all the information that used to be on ATM Network’s paper statements: profit information, daily activity, network activity, and more. So it’s easy to see at a glance how a machine is being used and how profitable it is.

Webstatements works in conjunction with ATM Portal, an online reporting service that tracks up-to-the-minute activity and keeps track of daily operating items like how much cash remains in each machine. ATM Portal provides daily reporting; Webstatements provides monthly summaries, as well as customer-specific financial information unavailable through ATM Portal.

It’s just one more way that ATM Network provides its partners with top-of-the-line service and accountability.

Nautilus Hyosung has developed software that will let ATMs sell Quick Pick lottery tickets.

Nautilus Hyosung America Inc. has partnered with Linq 3 to enable the purchase of quick pick lottery tickets on Nautilus Hyosung’s CE ATM models. Nautilus has been developing the software application for the CE models and will demonstrate the quick pick functionality during next week’s ATM Industry Association conference in Miami.

Linq3 developed the secure links to state lottery commissions that makes the whole thing work.

The software will work on any Hyosung machine running Windows CE. That includes the 1800CE and 5000CE.

All new CE models will ship with the software, and already-installed machines can get a software update to run it.

But taking some time to think about how and where to use your ATM will help you get the most out of it.

A recent report on ATM site-planning offers an idea of what’s involved. It focuses on banks, but many of the concepts also apply to retail locations. For example:

Placement. Is the machine visible and accessible? Can people use the machine without getting in the way of other customers? Is there enough space to accomodate a small line of people waiting to withdraw cash?

Security. This involves two aspects: security for customers, and security for the machine itself. If the ATM is inside the store, is it visible to the desk clerk or security cameras? Is the area around the ATM open and well-lighted? If the ATM is outside, is it bolted down or in a locked enclosure? If the ATM is hidden from view, it puts customers at risk and increases the possibility of attempted theft.

Advertising. Do signs clearly and prominently advertise the existence of the ATM? Do interior signs clearly direct customers to the machine? If customers don’t know you have an ATM, they won’t stop in to use it. If the ATM is hard to find, fewer people will use it. Proper location and signage work together to maximize ATM usage.

Regulations. Standalone ATMs usually don’t require permits — just hook them up inside your store and you’re ready to go. But anything that involves construction (like through-the-wall ATMs) or external structures (like ATMs placed outside in kiosks or other enclosures) is probably subject to zoning and construction laws. Check with your city’s building inspectors to find out what is needed and allowed.

Power and communications. Every ATM needs two things: a power supply, and some way to communicate with transaction processing networks. Keep that in mind when picking a location. Consider the ease/cost of running power and either a phone line or Internet connection to the desired location. If that’s a problem, or if you just want more flexibility, consider a wireless option. You still need the power supply, but by using cellular phone networks for communication you save on the cost of running a communication line, and you can place the machine anywhere you can run a power cord.

The article goes on to discuss the implications of changing consumer behavior: notably, the total comfort that people under 30 have with doing all their financial business through ATMs and kiosks. ATM owners that are ready to serve that population will benefit the most in the coming years.

Nicole Sturgill, of TowerGroup, noted that self-service financial transactions have expanded to include both the traditionally underbanked as well as consumers who may have lost access to credit or bank services through recent hardships. The growth of prepaid debit for payroll and money transfer has fueled the resurgence of cash.

“At both ends of the spectrum we are seeing the transaction volumes at the ATM going up fairly quickly,” Sturgill said.

Another factor driving the advancement of ATM functions just may be a generational shift. Consumers under the age of 30 or so have grown up using self-service machines in restaurants, airports, grocery stores and many other venues. With direct deposit of paychecks, online banking and debit cards, many young consumers may never set foot in a traditional bank branch.

And that means opportunity for non-bank ATM owners.

So take a few moments to think about how an ATM fits into your business model. Then find a location that minimizes installation costs while maximizing usage, and watch your ATM become a pillar of your business.

One problem with through-the-wall ATMs is that they have to be attached to a wall. With interior installations, that’s not usually a problem: the front of the ATM is in the public part of the store, while the rear is in the back room.

But if the store wants the machine to be accessible from outside, it needs to find a place on its exterior wall that is both accessible and observable. That can mean giving up prime sidewalk or parking-lot space in front of the store so that customers can walk or drive up to the ATM.

Enter the ATM enclosure.

Enclosures let you direct ATM traffic to the far corner of your parking lot, turning an underused area into a profit center. The machine is available 24 hours a day, meaning you’re making money on it even when you’re home asleep. And the enclosure can be painted or wrapped with any graphics you want, providing a highly visible advertising and marketing opportunity.

Enclosures have other advantages, too:

From a consumer’s point of view, the look and feel of an ATM installation can inspire confidence. ATM users want to interact with units that are attractive and appear to be safe.

From the operator’s perspective, security and maintenance expenses play a major role in the return on investment. Installations that provide maximum protection from the weather, vandalism and theft reduce operating costs and generate more revenue.

Enclosures are very secure. They’re usually made out of thick steel, with heavy-duty locks on access doors. Enclosures that are big enough for a person to walk into are even more secure, because technicians and cash-loaders can lock themselves inside while they do their work — and the machine can be serviced even if it’s raining or snowing outside.

In addition, enclosures offer protection from the weather and vandalism. By adding heating, cooling and humidifier units, an ATM owner can maintain an optimal operating environment, maximizing uptime, extending the machine’s life and cutting down on service calls.

Then there’s branding. A standard enclosure might be 6 feet square and 8 feet high. That’s a pretty big billboard that can help draw attention to both the ATM and your store.

Finally, enclosures offer a lot of flexibility. Buyers can choose from standard models or a custom design, a big footprint or a small one. More importantly, they allow machines that weren’t designed for outdoor use to be put outdoors, giving buyers a much wider range of ATM models and applications to choose from.

Enclosures can be pricey. While the structures themselves run just a few thousand dollars, site preparation can range from a few hundred dollars into many thousands, depending on how much electrical, concrete and excavating work needs to be done.

But for high-volume locations, or places where competition makes standing out crucial, enclosures offer an unbeatable combination of security, availability and branding.

Many buyers focus heavily on the first transaction, and that’s understandable: they’re spending a couple thousand dollars on a piece of hardware. They want to make sure they get the right machine at a good price, along with decent after-the-sale support like shipping, installation, training, warranties, repairs and so on.

But a lot of ATM owners don’t pay enough attention to the second transaction, and that’s a mistake: in the long run, the processing company you choose will have a bigger effect on your business than the model of ATM you bought or the price you paid for it.

Consider two owners who buy the same machine. One pays $2000; one pays $2500. The machines both earn $500 a month, on top of the other ATM benefits like increased sales and reduced bad-check charges.

The first owner will pay off the machine in four months; the second owner will pay it off in five months. After that, there’s no difference in the profitability of the machines.

But processing contracts tend to cover long periods of time — five years or more. So the processing company you choose will affect your business long after you’ve forgotten how much you paid for your machine. That’s why it pays to choose your processor even more carefully than you choose your machine.

Here are some things to look for in a processing company:

Do they have a track record?

You’re going to be trusting your business to your processor for a long time. You want some assurance that they will be around for the long haul. Find out how long they’ve been in business and how many machines they handle processing for. Ask for customer testimonials or industry endorsements.

Are they trustworthy?

This is a big one. You depend on your processor for all of your ATM profits. They’re responsible for calculating your surcharge revenue and paying it to you every month, accurately and on time. Your processor also reimburses you for money that customers withdraw from the machine. Can you trust them to handle all that money and get it to you on time, every time?

In Arizona, for example, an ATM company named Global Cash was recently fined and nearly barred from doing business in the state because it defrauded banks by miscoding cash advance transactions and then misled regulators about it.

In California, the owner of All States ATM recently pleaded guilty to charges of defrauding investors by claiming to be an eight-year-old company with hundreds of employees and ATMs, when in fact there was nothing.

Clearly, you don’t want to trust your money and ATM income to a processor that is at risk of legal trouble or willing to cut ethical corners. Either one can hurt your business, even if you’re not a direct victim of their actions.

What services do they provide?

Does the company merely process transactions? Do they have a service department in case your machine breaks down? Do they offer on-going technical support for operating your machine? Do they provide guidance on how to get the most value out of your machine through proper placement, signage and use? Do they offer ways to upgrade or customize your machine, such as wireless connections, advertising surrounds or custom advertising screens? When you have problems or questions, are they easy to reach? Or do you always get voicemail and they never return your calls?

Do your homework on your processing company, and you’ll be much happier — and more profitable — in the years to come.

ATM Network

So how does ATM Network stack up? Quite well, we think. Some things to know about us:

• We’ve been in business for 13 years.
• In that time we’ve grown steadily, and now service more than 5,000 locations.
• We’ve been a member of the Better Business Bureau since 2001.
• We’re listed on Dun & Bradstreet.
• We have a nationwide service and parts department, staffed with skilled technicians who can fix your machine or help you access advanced features.
• We’re the exclusive online ATM provider for Sam’s Club.
• We have lots of customer testimonials and industry endorsements.
• We provide 24/7 customer service, with fast, helpful response times.
• We offer automatic direct deposit of your money — on time, every time. Every day we reimburse you for customer withdrawals, and every month we send you your surcharge income.
• We offer lots of customization and upgrade options, as well as kiosks and advertising surrounds.

Even better, processing with ATM Network costs you nothing. We make our money from your customers’ banks, not you. So you keep 100% of your surcharge revenue while knowing your processing is being handled by one of the most stable, responsive and trustworthy companies in the business.

We also offer great prices on ATMs. Why? Because we make money on processing. Without the machine, there are no transactions to process. So we sell our ATMs almost at cost in order to get your processing business. Then we ship it to you for free, advise you on the best place to put it, install it, train you to operate it and give you signs to advertise it.

That’s why we’ve been in business for 13 years. It’s why we have thousands of locations, and a long list of endorsements and testimonials. And it’s why thousands of smart ATM owners trust us to handle their processing.

Over the past 3-4 weeks we have been converting our ATM machines to ATM Network. At first, the task seemed insurmountable. We were in a race against time with our previous vendor, who temporarily locked us out of the data-tracking website; shut down one of our machines; removed another one of our machines from a very profitable site and replaced it with his own machine without any discussion with us; and then, it appears, starting changing system and maintenance passwords….

Our initial contacts with Steve Fisher gave us not only confidence in your company, but hope to save our small business. He is diligent about returning e-mails and phone calls and communication was our lifeline. He, in turn, got (service manager) Tom James involved; and I cannot tell you how helpful, kind and patient Tom has been through all of this. With Tom walking me through every step, we did a whirlwind of conversions. I made mistakes, dumped screens, etc. but thankfully became more proficient with each conversion. Although I have not met Tom … he is one of the most decent, caring and helpful individuals I have ever communicated with.

I don’t know how many clients give you feedback; but I wanted you to know what a fine team you have put together. … Most of all, I don’t feel like a client; I feel like I am their friend.

Lori Manning
Independent OSO

Read more customer testimonials on our testimonials page, or by clicking on the “Endorsements” category in the left column.