ATM Contracts & How They’ve Been Abused

By Vito | April 30, 2010

Contract ImageDuring my time in the ATM business, the issue of contracts and how to structure them has always been an interesting issue. The idea of having long-term contracts with your clientele obviously originates from the premise of locking them in and ensuring yourself a steady future income. Contracts vary in degrees of their complexity and their strength and careful consideration must be given to their formation and implementation.

A common, and often unscrupulous, tactic is the auto-renew clause. Many ATM contracts implement an auto-renew clause at the end of the initial term. For instance, if I’ve placed my ATM in Jack’s Bar and have signed him to a 36 month contract, Jack receiving $1 of a $3 surcharge, I might be inclined to insert a clause that states at the end of the initial 36 month term, unless Jack notifies me in writing, the contract will renew itself for another 36 months. As long as this is clearly stated, and there is a relatively easy avenue to discontinue the contract, there is really no issue with the contract being unethical.

However, I’ve seen these auto-renew clauses abused when the client’s right to discontinue happens to be framed in a small window and requires an absurd amount of effort. For instance, I reviewed seven year contract written by Cardtronics. But, in order to stymie the renewal of the contract, the owner was required to notify Cardtronics 60 – 90 days before the end of the initial term, not a day later and not a day sooner. And to top it, notification had to be made via certified mail! This was strictly a processing contract, but the owner of the ATM in question was extremely upset because his father was an immigrant and didn’t understand the nature of the terms he was agreeing to. Furthermore, on one occasion Cardtronics had provided poor service, allowing the machine to remain in disrepair for two weeks and then charging an exorbitant amount to finally fix the ATM. The owner said he had the days (a year after we began this dialogue) circled on his calendar to remind him when to send the certified letter!

I also saw a similar processing contract written so that the initial company had the right to match any competing offer after 5 year initial term. Seeing as interchange is the only revenue in question in a processing agreement, any competing company would never be able to actually “beat out” any offer that the initial company might be able to counter. There is a finite amount of interchange to be made off every transaction, so it would be nearly impossible to out do the initial company. In other words, they were more or less trapped, even if their decision was service based and not price based.

So, it’s important to protect oneself with contracts, however, many companies in this business have unabashedly operated with shady intentions when it comes to their manipulative contractual terms. Whichever route your ATM business takes, just keep in mind somebody sooner or later will actually read that contract, and once if the party has figured out they’ve been duped word will spread about your crooked practices.

Topics: Uncategorized | 7 Comments »

7 Responses to “ATM Contracts & How They’ve Been Abused”

  1. Joe
    9:22 am on April 17th, 2011

    I really appreciate the advice you have provided here on this website. Due to an upcoming move, it will be necessary for me to find someone who repairs/maintains and cash loads a few atm placements I have under contract. I have obtained pricing with major carriers like Brinks, Pendum…or Loomis now, and have also spoken to some private companies such as Lowan Corporation. Do you have any advice on who to work with? My initial feeling was work with a known credible company such as Loomis and Pendum, but I see a “profit sharing” alternative with Lowan Corporation as an opportunity to expand the business more rapidly. Lowan has also shared a higher return on “interchange” as they own their own processing company sponsored by American State Bank. Please provide your thoughts. Thanks!

  2. Vito
    2:34 am on April 25th, 2011

    As a small operator it sounds as if Lowan will be your best bet. The larger companies are reliable, however quite expensive. I am not familiar with Lowan, but a profit sharing plan seems far more ideal than the flat rate that the big companies charge. Of course, as with any new vendor, I’d test the waters with them, assigning them only to a handful of machines before handing over the entire account. I’d be very attentive as to their turnaround time for fixing bill jams, and of course ensuring that they are not leaving the machines empty. Once you’re confident they’re doing their job on both these fronts you know you have a good thing going. Good luck.

  3. sam
    9:31 am on June 21st, 2011


    Thank You so much for sharing many good ideas, I would appreciate very much if you can help me to have the phone number of the Lowan Corporation, also I would appreciate if you can call me at 718-503-2355 maybe we can share ideas.


  4. Donna
    8:24 am on December 26th, 2011

    There is some kind of fraud or theft going on with a particular ATM I used today, My bank said to find out own owned the machine, no nothing posted, just something Lowan. Who would I contact in the banking business? They deducted to much money out of my checking account.

  5. Vito
    8:42 am on December 26th, 2011

    Your bank should be the ones to handle this, so it’s surprising they are directing you to the ATM owner. If nothing posted to your account, this could be the reason why. If ultimately nothing posts then you may have gotten lucky and you were dispensed the money for free. I’d keep an eye, however, on your account and once something posts you should be able to resolve this through your bank.

  6. Eric
    1:57 pm on December 27th, 2011

    Where is this Lowan company out of?

  7. Vito
    9:27 am on January 29th, 2012

    Unfortunately I’m not sure. What little research I did on the internet yielded no results.


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