If you’re thinking of starting a new Bitcoin ATM business, then you have entered at an excellent time. The world of cryptocurrency is booming, and projected to grow rapidly in the coming years.
But before you jump in, you’ll need to understand more about the industry, including the initial cost, maintenance fees, KYC requirements, reporting obligations, and marketing best practices. You need to know how to buy a Bitcoin ATM and where to put it.
It’s also helpful to be familiar with the broader cryptocurrency ecosystem, so you have a deeper level of knowledge surrounding your reporting obligations and potential profit margins.
The History of Bitcoin
The origins of Bitcoin are very relevant if you’re considering entering the Bitcoin ATM industry. Bitcoin was first released in January 2009 when the genesis block was mined. This was the first ‘block’ of the blockchain. It was created as an alternative to fiat money (Euros, Dollars, Pound Sterling) combating rampant money printing.
Despite a lot of criticism from central banks and political figures, the price of Bitcoin skyrocketed, as did adoption and usage. As the first cryptocurrency, it has the most significant trade volume and brand awareness. Its price is currently nearing $60,000, close to its all-time highs. This is one reason why Bitcoin ATMs are increasing across the world.
It has not all been smooth sailing. There have been ‘hard forks’ resulting in alternative cryptocurrencies such as Bitcoin Cash and Bitcoin SV. It has been banned in a few countries, and there is still a lot of regulatory uncertainty. There were times when it became expensive and slow to make transfers due to network congestion.
But Bitcoin has been a massive success, and this is why we are seeing so many Bitcoin ATM businesses springing up. An increasing number of people want access to this new digital asset class. And with the Bitcoin Lightning Network and innovations such as Segwit, the network is resilient, quick, scalable, and reliable. In short, it is ready for mass adoption and has surmounted all obstacles. So if you’re wondering how to buy a Bitcoin ATM to create your own business, then now is a perfect time.
What are Bitcoin ATMs?
A Bitcoin ATM, alternatively known as a Bitcoin kiosk, is the same as a standard ATM except with a different currency: Bitcoin. Most Bitcoin ATMs (BTMs) also offer other cryptocurrencies, including Litecoin (LTC), Ethereum (ETH), and Bitcoin Cash (BCH). Bitcoin ATMs need an internet connection to make the transactions successful.
Bitcoin ATMs are either Two-Way/Bi-directional or One-Way/Unidirectional. With a Unidirectional Bitcoin ATM, you can only purchase the cryptocurrency. This is what most customers will be looking for. With a Bidirectional ATM, you can buy and sell cryptocurrency.
While Bidirectional BTMs are in less demand right now, more and more customers will want this feature moving forward. Most Bitcoin ATMs are Unidirectional, but newer models tend to be Bidirectional.
You have to decide whether you wish to purchase a Two-Way or One-Way BTM. One-Way BTMs are cheaper though they may not have as many features. Furthermore, the customer cannot sell crypto for cash, which may cost you total transaction volume.
The Bitcoin ATM Transaction Process
There is a specific process through which the customer proceeds through the transaction process. This will vary depending on the location, the total transaction amount, and the rules instigated by the Bitcoin ATM operator.
Generally, however, the following steps are to be expected for the purchase of Bitcoin or another cryptocurrency:
- The customer locates the nearest Bitcoin ATM.
- The customer fills in transaction details (transaction amount, cryptocurrency type, etc.)
- Customer inserts the One Time Password via SMS
- Customer scans identity verification document
- Customer inserts fiat cash
- Customer reviews wallet address to receive BTC
- Customer waits for confirmation (~10 minutes)
If the transaction is under a certain amount, KYC or SMS verification may not be required. It all depends on the jurisdiction and the rules enforced by the Bitcoin ATM business.
How Much Does it Cost to Purchase a Bitcoin ATM?
If you’re looking to start a Bitcoin ATM business, one of the first questions you’ll need to ask is how much they cost. The price will depend on a lot of factors, including:
- Whether it is a Bidirectional or Unidirectional Bitcoin ATM
- The size of the Bitcoin ATM
- The weight of the Bitcoin ATM
- Delivery and installation costs
- Quality of printer
- Quality of scanner
- Quality of card reader
- Quality of camera
- Level of software sophistication
- Level of KYC/AML sophistication
- The number of supported cryptocurrencies
All the above will affect how much you pay for your Bitcoin ATM. You can request add-ons or special features that will cost a bit more. Most vendors will supply free delivery and installation when you purchase the Bitcoin ATM.
Taking all the above into account, you can pay anywhere from $3,000 - $15,000 for your Bitcoin ATM. Two-Way ATMs tend to be more expensive.
How to buy a Bitcoin ATM
The prominent Bitcoin ATM manufacturing companies include Genesis Coin, General Bytes, and BitAccess. So you would purchase your Bitcoin ATMs from these manufacturers and then find a place to put them. The manufacturers will usually deliver and install the machine.
The Bitcoin ATMs will typically come with the needed KYC/AML features, but you will still need to ensure compliance.
Store owners can purchase from the manufacturers directly if they want one of these machines in their establishments. Coffee shops and small restaurants tend to be very profitable as the people who visit the Bitcoin ATMs will often stop for food each time they visit.
But you may want to consider incorporating as an LLC to tackle legal and regulatory complexities. You can’t just buy a BTM and collect a fee without doing your due diligence.
Where to place Bitcoin ATMs
Understanding how to buy a Bitcoin ATM is only the first step. To maximize your profits, you’ll want to consider where to place your Bitcoin ATM.
The prime consideration is foot traffic. This is similar to legacy ATMs which are placed in high traffic areas. You may also want to put it in areas where people typically spend money, like shopping malls, cinemas, restaurants, financial institutions, supermarkets, coffee shops, etc.
But unlike legacy ATMs, there is an added dimension to consider with BTMs. You will want to add them to online directories so people can find them. With legacy ATMs, people could go to an urban environment, and they would quickly come across one. But with BTMs, people tend to locate them online first to make sure there is one in the area.
So make sure that you list your BTM in as many online directories as possible while also locating it in a busy area. The more attention, the better. Popular Bitcoin ATA directories and resources include:
Are Bitcoin ATMs Profitable?
If you’re thinking about entering the Bitcoin ATM business to make money, you need to understand the potential profit margins and associated costs. This will depend on several factors:
- The initial cost of purchase.
- The number of users.
- Total transaction volume
- How much markup do you charge?
- Ongoing fees for reporting, maintenance, upgrades, compliance, etc.
In terms of transaction volume, you can expect to see around $30,000 per month. This is the average as reported by Coin ATM Radar, though figures can range from $15,000 - $100,000.
The average Bitcoin ATM fees are around 8% - 12%. If you charge higher than 15%, you might not get the same business level. For selling BTC, the Bitcoin ATM fees are typically lower, around 5% on average.
Remember you will have maintenance costs, legal compliance costs, rental costs, advertising costs, etc. The BTM will also have to be regularly stocked up with cash, or it won’t generate any money. Theft and vandalism are also a concern though you can purchase insurance. Ultimately, you’ll need to craft a strong business plan and weigh the pros and cons.
People who purchase Bitcoin ATMs will benefit from the fees and increased business. Bitcoin ATM owners might make around half of their markup. So if there is a 10% markup, a 5% profit might be the result minus all expenses. These are very general figures but should give you an indication of what to expect.
KYC/AML Compliance Procedures for Bitcoin ATM Businesses
The single most important item to consider before starting a Bitcoin ATM business is regulation and compliance. KYC/AML has always been the biggest stumbling block for the proliferation of the new asset class.
At the Federal level, all Bitcoin ATM businesses must register with the Financial Crimes Enforcement Network (FinCEN) as a Money Services Business (MSB). This is required due to the Bank Secrecy Act (BSA).
It also means you have to appoint a dedicated compliance officer and develop a set of internal compliance policies. While this can be cost-prohibitive if you hire a professional, you can fulfill the role yourself.
At the Federal level, there are also specific rules and requirements surrounding Bitcoin ATM businesses. You may also need to get a Money Transmitter License depending on your operation state.
To recap, you will need to:
- Register with FinCEN as an MSB
- Appoint a dedicated compliance officer
- Maintain a series of internal KYC policies
- Get a Money Transmitter License (this will depend on your state)
You might want to book a consultation with an attorney specializing in Bitcoin ATM businesses so you don’t overlook anything. Most Bitcoin ATMs will come with AML/KYC compliance software, so this can take a lot of the stress from new owners.
Crypto Dispensers - A successful Bitcoin ATM Business
One of the most successful Bitcoin ATM operators in the USA would be Crypto Dispensers. They have been in business since 2017, intending to make cryptocurrency more accessible to US citizens.
Not only do they offer low and transparent rates (10% and a small network fee), but they have innovated to provide customers with many easy ways to gain access to cryptocurrency.
You can purchase cryptocurrency from them directly by ACH wire transfer or depositing cash through your nearest local retail location. When the money is in your crypto dispensers account, you can easily purchase without visiting the Bitcoin ATM.
If you do visit a Crypto Dispensers Bitcoin ATM, no KYC is required up to $900 daily. There are a whopping 12,000 locations in the USA where you can deposit cash into your Crypto Dispensers account and have installed BTMs in over 50 US locations. Moreover, they have facilitated over $100 Million in transactions since 2017.
One of the main selling points aside from the ease of depositing is the transparent fees. 10% is a low fee structure with no hidden charges. Some ‘Shark’ Bitcoin ATM operators can charge 20% and upwards when everything is calculated. And these fees are typically not disclosed to the customers.
Why Should I Use Crypto Dispensers?
Crypto Dispensers is one of the more prominent Bitcoin ATM businesses on the market. They have ironed out their KYC/AML procedures and started off with a vision to take cryptocurrency mainstream through the installation of BTMs.
In short, rates are extremely reasonable (10%), customer service is top-notch, and the compliance requirements have been dealt with. Crypto Dispensers is a great place to go for those who are looking to purchase cryptocurrency at the best possible rates with the least amount of risk. The transaction can be completed in less than 10 minutes.
It’s great to use Bitcoin ATMs for initial crypto purchases. It provides an easy means of exposure to the new asset class as the kiosk is familiar to customers. Crypto Dispensers have these BTMs in easy-access locations.
Alternatively, you can top up at the nearest RiteAid or CVS and purchase your cryptocurrency from the comfort of your computer.
What Companies Make Bitcoin ATMs?
Crypto Dispensers is a Bitcoin ATM business, they purchase from the manufacturers and then place the ATMs in strategic locations. The customer service, AML/KYC standardization, smooth transaction process, and agreements with national retailers serve to enhance value to the customer.
But if you’re looking to start your own Bitcoin ATM business and need to understand how to buy a Bitcoin ATM, then you’ll have to contact one of the leading manufacturers. These manufacturers include:
- Genesis Coin
- General Bytes
Of these, the top 3 Bitcoin ATM manufacturers (Genesis Coin, General Bytes, BitAccess) have a stronger market presence. Genesis Coin has about 40% of the market and General Bytes about 20%, while BitAccess has about 15%. This is according to the latest data from Coin ATM Radar.
It’s best to focus on the features you require as costs will vary depending on what you are looking for. Above all, rates need to be reasonable and the transaction process needs to be as easy and streamlined as it can be. There are multiple models available from each manufacturer.
Summary: How to Buy a Bitcoin ATM
How to buy a Bitcoin ATM? You can buy a Bitcoin ATM from the manufacturers, namely Genesis Coin, General Bytes, and BitAccess. They will cost you between $3,000 - $15,000 depending on the model. Around $7,000 will get you a high-quality Bitcoin ATM with all the necessary features. The manufacturer should provide you with delivery and installation.
Bitcoin ATMs can make around $30,000 a month (though the volume has been reported to reach $100,000). Typical rates are between 8% - 12% exclusive of a small network fee. Remember to add up the monthly cost for rental ($100 - $500), compliance ($120), insurance ($50), stationery ($30), and staff (variable costs).
The running costs reduce your profits by around half. But if you place your Bitcoin ATM in a strategic location, then it will still be an extremely lucrative purchase.
Visit your nearest Crypto Dispensers ATM or retail location here.