How difficult is it to start an ATM business in an emerging market with limited ATM availability, and what risks should be anticipated?
Payments
Asked by Question Bot12/Sep/20121 answer
1 Answer
F
Faisal Khan
Answered 12/Sep/2012
In no particular order, here are some issues you need to be aware of:
- Landed cost of an ATM Machine (think Import Duties, GST, Sales Tax, etc.)
- License requirements by the Telecom Regulator and/or the Banking Regulator to allow you to own and operate an ATM Network.
- Willingness of the ATM Switch Operator (if there is one or many) to allow you to connect.
- Cost of Telecommunication (Connectivity)
- Cost of Cash Management and Insurance for Cash Movement
- Cost of Funds to equip the money in the ATM Vault
- Cost per Transaction
- Revenue Sharing Agreements with the Banks
- Insurance (Vandalism, Fire, Robbery, etc.)
- Software Licensing and customization for screens and switch connectivity
- Physical Space Rental Agreements
- ATM Support & Maintenance Cost with the ATM OEM Rep in the Country
- Cost of Financing these ATMs
- Taxes
- Repatriation of Funds out of the Country
- SLAs as required by the Switch Operator, Banking Regulator and the Banks (especially the penalties in the event an SLA is breached)
- Your Business Model? (is it based on the number of transactions? What if the Banking Regulator or the Competitive Commission in that country sets a ceiling on the cost per transaction that you can charge, which is lower than those in your financial projections)