Key ATM Finance Terms

ATM Surcharge Fee

This is a fee charged by the ATM owner to customers who are not cardholders of the bank or financial institution that owns the ATM. This fee is disclosed on the ATM screen before the transaction is completed, allowing the customer to decide whether to proceed.

Interchange Fee

This fee is paid by the card-issuing bank (the bank that issued the debit or credit card used) to the ATM owner or the network the ATM is connected to. The interchange fee compensates the ATM owner for the cost of providing the service and maintaining the ATM. It is a significant source of revenue for ATM owners.

Net Terminal Income (NTI)

NTI represents the total revenue generated by an ATM after deducting certain expenses. It’s calculated as: (Total Surcharge Fees + Interchange Fees) – (Operating Costs + Maintenance Costs + Communication Costs + Cash Replenishment Costs). A positive NTI indicates a profitable ATM.

Cash Replenishment

This refers to the process of refilling the ATM with cash. It involves armored car services, security protocols, and the actual cash itself. The cost of cash replenishment is a significant expense for ATM owners.

Vault Cash

Vault cash is the cash held by the ATM owner specifically to replenish the ATM. This cash is typically kept in a secure location and readily available for use. Effectively managing vault cash is crucial for ensuring the ATM always has sufficient funds for transactions.

ATM Processing

This encompasses the technological infrastructure and network services that facilitate ATM transactions. It includes the communication between the ATM, the payment network (e.g., Visa, MasterCard), and the card-issuing bank. Processors charge fees for their services, which are factored into the ATM’s operating costs.

EFT Network

An Electronic Funds Transfer (EFT) network connects ATMs to various financial institutions, allowing customers to access their accounts and perform transactions. Popular networks include STAR, Cirrus, and Plus. ATM owners typically pay fees to these networks for access and transaction processing.

Depreciation

As with any asset, an ATM depreciates over time. This depreciation reflects the gradual decline in the ATM’s value due to wear and tear, obsolescence, or other factors. ATM owners can deduct depreciation expenses from their taxable income.

Triple DES/ EMV Compliance

These refer to security standards implemented to protect ATM users and prevent fraud. Triple DES (Data Encryption Standard) is a data encryption algorithm, while EMV (Europay, MasterCard, and Visa) chip cards enhance security by using embedded microchips. ATMs must comply with these standards, which often requires upgrades and ongoing maintenance, incurring costs for the ATM owner.

Terminal Identification Number (TID)

A unique identifier assigned to each ATM, allowing the processing network to identify the specific machine originating a transaction. It is crucial for tracking transactions, resolving disputes, and ensuring network security.