Friday, August 28, 2015

Teach me about the economics of ATMs

A tiny family-owned convenience store in my neighbourhood has a Royal Bank ATM in it. Since the bank account from which I most often withdraw cash is with Royal Bank, I sometimes pop into this store to use the ATM.

However, I never buy anything from this store, because it doesn't have anything I need that can't be obtained at a significantly better price elsewhere in the immediate neighbourhood.

Am I making this store money by using the Royal Bank ATM located inside it? Or am I costing them money?

My googling tells me that no-name ATMs - the one that you often find in bars and restaurants and charge exorbitant fees - make money for the business in which they are located.  But do bank-branded ATMs also do that?  Even though they don't charge a transaction fee if you're a customer of that bank?  Or do the banks charge businesses to host the ATMs on the grounds that the ATM might attract people who will then become paying customers?  (I haven't been able to google up anything suggesting that they do, but it sounds like the kind of thing a bank would come up with.  Nor have I been able to google up anything suggesting that businesses make money from hosting bank-branded ATMs)

If it costs this little convenience store money for me to use their ATM, I'll get off my lazy ass and walk a block to the actual bank branch.  But if it's revenue neutral, I want to use it sometimes because it's more convenient for me on some of the routes that I take for various errands. And if it actually generates revenue for them, maybe I should use it systematically, rather than that revenue going to the bank or to Shoppers Drug Mart.

Anyone have any insight about how this works?

1 comment:

laura k said...

I thought all the ATMs generated income for the stores. But now that you mention no-name vs bank-branded, I realize that was just an assumption on my part. Maybe the ATM itself doesn't generate money, but you might buy something when you're there? Let us know if you learn anything.