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  • Writer's pictureMark Walbank

ATMs for sale: Slave to your corporate POS device or financial freedom with owning your own ATM?

Updated: Dec 9, 2021

When you consider ATMs for sale, you need to consider the following: ATM transactions are free of GST, unlike POS transactions. You don't make any money from POS transactions. It's a pure cost for your business. Plus, every POS transaction in your business incurs a GST.

We'll cover quite a few interconnected topics here.

With ATMs, you make money from your first transaction. Yes, you might think that buying an ATM is a significant initial outlay for you. However, the ATM will pay itself in a few months from the monthly income you're making from ATM transactions in your business, especially if you don't give your customers any other option to pay you. Yes, you are the boss and owner of your business, and you decide how you want to be paid.

But don't leave your decisions to some extensive evil credit card network or a bank that is doing what is good for them. If you have seen the hit TV series Mr Robot, you know what I am talking about. Do what is good for you. Push back. Resist!

With an ATM within your business, your customers still have a very convenient way to pay you. All they need to do is walk a few steps to your ATM and withdraw the cash required to pay you. But, of course, if you provide a great product or service, your customers won't care to pay you in cash.

I can't tell you how annoyed I feel when I see a merchant bringing a POS device for a customer to tap for their $4 coffee. I know the price of doing business for that merchant rises since at least 100 customers will do the same tapping with that particular merchant every day. Some merchants decide to absorb the costs of the POS fees because they think that surcharging is illegal.

Many of these business owners are from non-Anglo-European backgrounds. They are unlikely to read documents issued by any government agency. Many of these merchants understandably don't trust governments for very good reasons, given the dictatorial regimes they have migrated from. They also believe that consumers will be angry and that irritated customers won't return to their businesses.

Consumers, If you care about the businesses you patronise, perhaps you need to start thinking about your payment habits. It doesn't have to be like this. You do have the power to say enough is enough.

Consumers lose too with the costs associated with POS payments. We wonder why our beloved morning coffee from our local barista has gone to $6 or somewhere even $8. And that's only one example, among so many other examples. No one is dumb enough to want to lose money from how they get paid. No merchant selling small goods had to think about this in the past. Before these payment 'disruptions', no merchant had to pay to get paid. Merchants who do not pass the surcharge to customers absorb the POS fees by increasing the prices of their products.

There is a myriad of ways merchants are pushing back. I know of a local hairstylist/barber who charges $15 for a men's haircut of you pay with cash. However, if you want to pay for the haircut with a credit card, you have to pay an additional $3.80, which increases the total price of the haircut to $18.80. That's a whopping 25 per cent increase in the cost of the haircut. The person who told me about it was pretty stung about it since he heard about the surcharge only once he got to pay for his haircut. This behaviour of this merchant is certainly not something I can commend, but I do understand the logic behind it. What this hairstylist is clearly telling us is that she wants to be paid in cash. Full stop. She might not be able to afford to get an ATM herself, but she signals to her customers that they need to come with cash to her store and pay her with cash.

I know the media like to cry crocodile tears when they publish stories about these merchants' behaviours, but they are always one-sided and poorly researched. I will even quote one of those below. They never tell the story of the merchant. Why, in good conscience, the merchant should lose money from how they get paid? So they will jack up the prices of their products or demand the customer to pay a surcharge fee for POS payments. Businesses exist to make money, not lose money.

ATM displays the fee they charge ATM users clearly on the ATM screen. Similarly, every merchant should disclose upfront how much surcharge they will charge if you want to pay with a credit card. We believe that merchants should have the freedom/right to charge any POS surcharge they like. This is the case with merchants who own their ATMs. The customer can always refuse to pay the surcharge and decide to pay in cash.

However, the regulatory bodies regulating payments in Australia use double standards. Full transparency for ATM charges and no transparency for POS charges. This lack of transparency in POS fees leads many consumers to believe that paying with a credit card is somehow free. Nothing is for free in a capitalist society. This erroneous belief certainly favours the banks and credit card networks.

However, as I said in another blog, even giant online retailers like Amazon are now pushing back against some of the greediest card networks. So when Amazon adds a Visa surcharge of 0.5% on a $2000 purchase, you pay an extra $10 for the privilege of using a Visa card. Is this the actual cost to process a transaction through the Visa system for this purchase? I don't know, but I doubt it. But Amazon is Amazon, good luck to any government trying to enforce 'fair' explicit price signalling on credit card payment surcharges. At leas, Amazon is telling you, pay with Visa and you'll pay more.

Let me talk about the cost of POS devices in Australia. I got the figures from this reliable Australian source. 'You'll typically end up paying approximately $1,500 upfront, and then around $1,800 per year to use your POS system'. However, this is a typically understated information about the costs of renting and processing POS transactions. The information that we really believe completely is the intelligence we receive from our new customers. One pizzeria told that they were paying $350 a month. The owner of another restaurant told us that he paid $1000 a month. That's unbelievable cost of $12,000 a year for a business with probably just over $500,000 annual turnover. Does this sound cheap to you? Especially, when we talk about small or micro businesses? So, large businesses with 6 devices will pay $6500 upfront and then ten to hundreds of thousands of dollars in POS fees. The cheapest Australian ATM is around $6900, and you actually make thousands of dollars a year. The math is very simple here.

By the way, the cost of leasing an ATM from us is only slightly higher than the monthly price the smallest businesses have to pay to their banks for their POS devices. So, if you are a business with a high volume of transactions, renting your POS device is often far higher than leasing an ATM from us.

You will never own the POS device. No matter how much money you pay to rent your POS device every month, it will always remain the bank's property. The POS system is rigged against you, my dear merchant.

With us, once you finished paying your 48 monthly leasing payments, the ATM is yours, and you are free to charge any ATM fee you like. The ATMs will go on for years, churning money for your year after year.

Slavery to a greedy corporation or financial freedom? The choice is yours, and don't believe anyone who tells you otherwise.

Whichever way you look at this, ATMs are on your side, and POS devices are on the side of banks and credit networks. You want to be tracked for every transaction your business or consumers make, go for POS. If a little less privacy in a digital age, where every detail of our lives are exposed to the world with many malicious actors in it, is essential to you, then definitely go for POS. Do consumers in Australia want some malicious hackers or bot farm based in a foreign country to know everything about their customer habits? Well, that's exactly what happens with POS transaction. More about that in my next blog. But if privacy and, more importantly, saving and making more money is vital to you, go for an ATM.

In fairness to the regulator of card payments, you can read the new RBA credit card payment guidelines here. However, in practice, things do not work according to the guidelines, as I already suggested above. I want to expand on this point a bit more here.

The guidelines state that merchants 'will retain the right to impose a cost-based surcharge on card payments, but any surcharge is limited to the amount it costs the merchant to accept that type of card for transaction' (from the above-quoted RBA page). Why? Why can't merchants make a little money from offering credit/debit card payments? Is the monthly rental of the POS device calculated as a cost to the merchant? I mentioned the actual costs of leasing a POS device. You can go and see those costs again here. And these are the understated figures, since the website compares and sells POS deals.

I don't think the RBA guidelines takes all the POS costs into account, which was the case with ATM costs incurred by independent ATM deployers in the early 2010s. Politicians and the media were whipping up a real frenzy about ATMs. My company actually provided a really valuable insight into the pricing behind various business models in the independent ATM industry. You can read that read that report by clicking on the arrow below the image of the report. The leadership of the Payments Division at RBA then, as well the then Commonwealth Treasurer, understood what we were saying with the report and we were left as an industry alone. The frenzy about the ATM stayed with the banks, where it always belonged. As a strategy to avoid scrutiny on this, and many other scandalous, unconscionable and criminal behaviours as exposed in the Royal Commission into the Banking Industry a few years later, the banks decided that they were going to drive customers to card payments at the expense of merchants. Merchants at that time were not aware that this double-sided card payment system would be completely tilted against them.

_The Price of Choice and Convenience_, Mandrake.ATM Report
Download PDF • 3.00MB

How is this POS transaction cost calculated? It is not entirely clear. It seems your bank or the RBA decides what the cost is based on some obscure formula. I remember reading somewhere, but I am yet to locate the reference was 0.65 cents per transaction. The same figure was floating about the costs of an ATM transaction. There was an ATM Taskforce set up by the Treasurer to investigate the ATM industry. We convincingly showed that that the often quoted cost of an ATM transactions was a complete fabrication regarding the private ATM industry. We used using actuarial accounting expertise to debunk this phantom figure that was circulating around.

An ABC article on 'inflated EFTPOS charges' had absolutely nothing to say what the actual price for processing POS transactions was, apart from shaming the businesses that charged a surcharge fee from 4% to 10%. If you don't know the actual cost of a POS transaction, how could you go around and accuse these businesses of having done something wrong. Again, these businesses are signalling that they prefer to be paid in cash, but don't want to offend customers who want to pay with tap and go, and pay and wave. I would urge these businesses rather than ending up in shamelessly one-sided stories in the ABC to get an an ATM for their businesses. They can stop credit card payments altogether.This one-sided story, that completely took the side of some frustrated customers, passes for investigative journalism at the ABC these days. If anyone needs to be ashamed here are the author and the editor who approved this story.

Shaming won't work. It will have the opposite effect. Businesses will only get angry, understandably so, and dig their heels. Businesses won't talk to media or journalists with clear agendas against them. But businesses, have to get honest with themselves too. They can't seat on both side of the POS/ATM fence. You want to make money from POS and ATM. I get it completely.

But, unfortunately the current RBA guidelines and consumer expectations are against you, the business owner, when you try to make a profit from POS charges. With an ATM that you own, there are no legal, ethical or consumer dilemmas with which to grapple when its comes to making money from how you get paid. Everybody knows what to expect with an ATM in a shop. As a consumer, you take a sum of cash that you can use for multiple purchases and all you have paid is somewhere between $2.50 to $2.90. With POS surcharging you will definitely pay more for one-time purchase of a product or service. I am sure you haven't forgotten the true story about that hairdresser that I told you.

Now let's talk about price signalling clarity regarding the 900,000 POS devices in this country. Now, I wonder if the mandarins from the RBA go to restaurants, stay in hotels, go to cafes, bakeries, and so many other businesses all over Australia. Where have they seen this explicit price signalling for POS surcharging?

I personally have come across only one business, a bakery in Edward St, Brisbane CBD, that displays on their POS device the surcharge that they will charge and then ask you whether you want to proceed with the transaction. This is one business among hundreds I have patronised in the last 5 years. ATM operators can't get away with this behaviour. We all clearly display our fees on the ATM screen, and you have to option to proceed or stop your ATM transaction.

There are no signs near the cash register or POS device clearly stating the surcharge anywhere I go. Merchants either jack up the price of their products and services to absorb the cost of credit card payments or charge you a surcharge anyway and tell you later. If merchants are honest about the credit card surcharging then I can make an informed decision not to pay that way.

A fancy hotel in central Sydney charged me a surcharge of close to 2% of the total bill for paying with a credit card. It was a very hefty surcharge, running in the few hundred dollars. Actually, I paid with a debit card, and I should not have been charged anything for paying my bill. I had to have a big fight with the hotel management to get the unauthorised surcharge back. Imagine the cheek demanding hundreds of dollars to pay a bill in the thousands of dollars. But that's the world we live in. The RBA main office is just a few blocks away from this hotel. Direct price signalling? Please, give me a break. At least, the hotel offered a room upgrade if I chose to stay there again. I doubt I will ever stay in that hotel. I am tired of fighting for things I shouldn't fight about at all.

I regularly deal with companies that charge 2%, 3% or even 4% for paying with credit cards. There is no clear price signalling here at all. Instead, you are charged or told about the charges after the fact.

If the RBA guidelines allow merchants to profit from credit card payments, perhaps merchants would be more honest and actually clearly signal the surcharge for credit card payments. Why can't merchants make a little money from providing credit/debit card payment options? Why should they be the only ones not profiting from this convenience payment system? Customers unhappy with merchants surcharging POS fees, can simply go and get some cash from an ATM, rather than waste energy whining on social media or complaining to the ABC, or any other media outlet. The complainers must be people on secure public service salaries and simply don't understand how tough and precarious running a small business is, especially in these awful COVID times. Try live with your income being slashed in half, or completely taken away, without any government support for working directors of small business companies, which is a very significant number of small businesses.

Is the monthly rental of the POS device calculated as a cost to the merchant? I don't think so. How is this cost calculated? It is not clear at, as we saw from the quoted ABC article above. All we get is 'oh, that doesn't seem right' or 'oh, that's too high.' Just subjective suppositions. The powers to be that regulate the POS industry could easily regulate that industry as they regulated the ATM industry. Every POS device could be programmed in a way to includes a surcharge that the merchants could set themselves. After all, they pay hefty rentals and fees for these devices. But that is not in the banks' and the credit card newtorks' interest, because it completely turns their very profitable business models upside down. With POS, punish the merchant and reward the consumer is the mantra of the banks and credit card networks.

Brick and mortar businesses could certainly make far more financially beneficial arrangements about how to get paid (get an ATM and toss that POS device out the door).

In reality, many merchants do not see things the same way as the writers of the convoluted RBA bureaucratic document sees them. The RBA says that explicit price signalling is their goal with these new credit card payment guidelines. What I see around me is anything but. It's a complete zoo out there when it comes to POS changing and surcharging.

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