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Venco Business Solutions' John Newberry Explains The ABCs Of ATM Success

Posted On: 3/4/2012

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John Newberry

BLAND, VA -- Automated teller machines have become attractive options for coin machine operators, finding especial favor with bulk vendors and amusement and music companies. Operators have found ATMs not only valuable tools for securing new locations, but a profitable addition to the equipment mix. They are particularly attractive in high-traffic stops already equipped with as many games and/or venders as they can support.

Some operators nevertheless are wary of entering the ATM business. Selling cash seems to be a very different proposition than selling a recreational experience or a toy, and perhaps to require much closer control.

John Newberry, a veteran operator who now heads Venco Business Solutions (Bland, VA), understands these concerns. While ATM operation does require some additional skills, he reports, the learning curve is not very steep. Newberry's career in coin-op has spanned four decades, and he started running automated teller machines seven years ago. Today, Venco Business Solutions offers a number of ATMs, including models by Genmega, Hantle, Hyosung and Triton.

Newberry reports that ATMs can provide a profitable revenue stream, if operators are willing to devote some time and effort to learning a few basic guidelines.In many cases, he said, an ideal ATM location is not much different from a high-performing location for other equipment. The same need for heavy foot traffic generally applies, though ATMs also can do well in locations like motels, hotels and fraternal organizations' facilities.

However, there are also differences that can affect the profitability of a location, Newberry pointed out. One key variable of running an ATM as part of a route is its cash load, he explained. The trick is loading the machine with enough cash to satisfy the location's patrons, but not so much that an excessive amount of money is sitting idle out on the street. This requires careful balancing of the "waste" associated with overloading against the risk of missing sales because the machine has run out of money.

"We try to run about 20% to 25% headroom," Newberry reported. "So, if a machine dispenses $2,000 a week, we load it back to $2,400. And most operators fill the units every other week."

However, there are exceptions. For instance, the first of the month can be an especially busy time for an ATM if a location caters to customers who make extensive use of the EBT (Electronic Benefit Transfer) cards that dispense cash to recipients of government assistance. In those locations, operators are likely to see a pronounced spike in use at the beginning of every month.

"And Friday, of course, is your largest ATM transaction day of the week," Newberry added. "And then there's tax season; you'll dispense more money, because H&R Block and Jackson Hewitt now give out cards with refunds loaded on them."

This kind of scheduling may not be as cut and dried as it sounds, particularly when placing a machine in a new location. "It takes an ATM between four to six months to build up to its average transaction volume," he said. "People are creatures are habit. It takes them a while to recognize and remember the location of an ATM. That's why putting signs up on the door is always a good idea."

Consumers respond differently to ATMs than to coin-operated equipment on location, the industry veteran explained. A crane or bulk vender, for instance, often experiences an initial spike in sales during its first week on location, before leveling off and producing a consistent revenue stream. By contrast, consumers require time to adjust their behavior to the appearance of an ATM in a familiar place.

This is one of several reasons for monitoring ATMs remotely, Newberry emphasized. "Operators should be able to view their ATMs online, depending on which processor they use," he said. "Some processors will provide a program that gives you 'days to cash load' -- how many days the machine can run until it needs refilling."

This type of monitoring is a critical component of offering good service. It adds value for location management, who may not have the time or resources to keep an eye on the cash load. And, as Newberry added, a location whose management is unhappy with its current service is one of the best sales prospects.

Store-owned machines represent an enormous opportunity for operators right now, Newberry emphasized. As of March 15, all ATMs have to be in compliance with the Americans With Disabilities Act. That means signage that is "up to code," access for the sight- and hearing-impaired and other requirements besides. For location managers, particularly small business owners focused on their primary tasks, turning the ATM sideline over to an operator who will install ADA-compliant machines may make a lot of sense.

Basically, cash is always a profitable commodity, Newberry concluded. Whether dispensing it from ATMs is a good move for an operator depends on his or her willingness to put in the time and the effort to do it professionally.

For additional information on Venco Business Solutions and ATM marketing, contact John Newberry by calling (800) 762-9962 or (276) 613-5555.