Atm Credit Card Machines for Dummies
A Credit Article Contributed by Mark Mcclelland
How Do Atm Credit Card Machines Work
We're all familiar with those little machines that we simply slip our credit card into, punch in a few number on a keypad, and just like magic, deposit a pile of cash in our outstretched hands. The ATM, savior and scourge, at the same time. Savior when we just gotta have cash but only have a credit card, and scourge when we go to the machine, day after day, draining our resources to feed bad spending habits. But have you ever actually given any thought how these machines actually work? Well, Just like going into debt, it's really pretty simple.
All an ATM machine is really is a computer that has two ways getting data, including your credit card or ATM card data, and 4 ways of communicating with you - the user. Every ATM machine is connected to another computer - a central processor - owned by a bank or other financial institution, or by a 3rd party service provider who is, in turn, connected to a bank.
When you want some cash and insert your credit card into the machine, the ATM reads the information contained on the magnetic strip on the back, and matches that against the digits you enter on the keypad. If they match, the machine assumes the user if the owner of the card (now you know why it's important to protect your PIN numbers - the machine is really pretty stupid. If the PIN numbers match the card, the user - whomever the user actually is - is good to go).
Once this check is made, the ATM sends the request for cash to the central processor, which, in turn, sends the request to your bank. The central processor asks your bank to send money to the bank connected to the central processor. Once this transfer of funds is complete, the central processor tells the ATM machine that it can dispense the requested amount of cash..., which it does (minus, of course, the fee you paid for all this convenience). The central processor then sends the funds it received from your bank to the bank associated with the actual owner of the ATM machine.
So Can You Make Money Owning an Atm Credit Card Machine?
Absolutely. Couldn't be easier. The difficulty is that they're almost everywhere already; meaning that all the "good spots" have been taken. In order to make money you have to find a high traffic area where people are likely to need cash - hopefully lots of it, have ready access to their credit cards, as well as an area that isn't already swamped with cash dispensers. If you can find one, you can make money.
Lets say, for the sake of argument, that you stumble across the ideal location and install one of these machines. You decide that you're going to charge $2.00 for every transaction, and your machine is used 100 times a day, every day of the week. The math isn't difficult... that's $1,400 a week. Not too shabby... but now you know why they're already everywhere.
Not only that, but when the next guy puts in his own machine and starts competing for those 100 daily transactions you're probably going to have to lower your transaction fee to retain your customer base. You can certainly make some good money, but it's getting increasingly difficult to do so.
Future of Credit Card Machines
So how much of a future do all these credit card machines actually have? Well, they'll be around for a quite a while, that's for sure. But in all likelihood, what with the advent of new technologies that just make it all that much easier to separate us from our money, they'll likely be playing less and less of a significant role in your techno-financial future.
