cashless atms

What Are Cashless ATMs?

While cash has been the go-to payment option for decades, it’s quickly being pushed aside by the convenience of credit and debit cards. Most people prefer to pay with a card rather than cash if it can be helped, to the point that some customers might not bother shopping in a place at all if they must use cash.

But what about businesses that normally work with cash payments? Well, that’s where cashless ATMs come in.

In this article, we’ll explain what cashless ATMs are and how they work, as well as their benefits, downsides, and application process. Let’s start. 

What Is a Cashless ATM?

Cashless ATMs are payment terminals that allow customers to make purchases using a debit card like they would if they were using an ATM to withdraw cash. These terminals are also referred to as point-of-banking technology or solution.

The difference is that instead of you getting the cash, the funds are directly deposited into the account of the merchant.

This system was designed as a way to provide an alternative payment option for businesses that were seen as high-risk, such as legal medical marijuana dispensaries. It was also used for businesses that typically accepted cash as the main form of payment and that were considered “blacklist”.

However, nowadays this payment method has been widely embraced by several types of businesses, including amusement parks, bars, bowling alleys, nightclubs, farmer’s markets, and pawn shops.

How Do Cashless ATMs Work?

The term cashless ATM tends to confuse people because of its association with the standard ATM. However, cashless ATMs are more like the standard point-of-sale devices used by merchants to process credit and debit card transactions.

Like with a POS device, you’ll use a small card reader to swipe your card and insert your PIN. However, here’s where a cashless ATM is more like its traditional bank counterpart. You’ll choose an amount of money to “withdraw”, usually in increments of $10 or $20, and the machine will print a voucher confirming the transaction. You don’t actually withdraw money, instead, the amount you choose gets directly deposited into the merchant’s account.

The customer gives the voucher to the merchant, and they get the goods they are paying for.

Like a regular ATM, you can get money in specific quantities and increments. So, if you are buying something that costs less than the amount of money you withdrew, the merchant will provide you with the change. For example, if you withdrew $50.00 to pay for a $45.50 item, the merchant will give you back $4.50 in return.

The key differences between a cashless ATM and a POS system are that you will always have to use your PIN, and that you can only pay in specific increments. In truth, from a customer’s perspective, they are not that different.

What Are the Benefits of a Cashless ATM?

There are many benefits to the use of cashless ATMs, for both vendors and customers. Here’s a list of them:

  • The need to use a PIN for the payment increases its security and reduces the chance of fraud, theft, or chargebacks.
  • Easy to set up, doesn’t take up a lot of space, and eliminates the need for a traditional ATM.
  • For places where cash is normally used, cashless ATMs make the purchase process much easier for the customer.
  • Significantly cheaper upfront than a regular ATM
  • Excellent for businesses that normally struggle to get a traditional merchant account.
  • Doesn’t have as many requirements for merchants as a traditional merchant account.
  • Reduces the amount of cash that merchants and customers need to handle.
  • Provides real-time reporting for the merchant.
  • Allows the merchant to accept PIN-based debit cards.
  • Funds are deposited into the merchant’s account within 48-72 hours.
  • A merchant can choose to charge a convenience fee to the customer, though this could hurt their relationship.
  • They can be programmed with different increment amounts, from smaller amounts like $5-$10, to larger increments such as $100 or even $1000.

Downsides of Cashless ATMs

Cashless ATMs are not without their downsides, both for customers and merchants. Some of these are:

  • Some vendors might charge a monthly fee to merchants for the use of the cashless ATM
  • Transactions can only be done in fixed increments, and change must be readily available.
  • Since the cashless ATM is an out-of-network bank ATM, customers will most likely be charged a cash advance or out-of-network fee.
  • Merchants may choose to charge a convenience fee to the customer for the use of the ATM.
  • Depending on how much a vendor charges for use of the machine, the fees might not justify the cost.
  • While they are far more secure, counterfeit receipts can still be fabricated.

What Is the Application Process and Requirements to Set Up a Cashless ATM?

While setting up a cashless ATM is simpler than a standard merchant account, it does have a set of requirements and steps to follow.

You’ll need to sign and complete an application form, as well as an ACH authorization form. The details of your bank account will need to be verified, either by your account provider or through a voided check. Finally, you’ll have to present a signed W-9 and prove you acknowledge the principles shown in the application form.

Once you submit your application, the vendor will review it and if accepted they’ll ship the cashless ATM unit to you. All you’ll have to do is connect it to a power source and to the internet.

All in all, the application process typically takes between 24 to 72 business hours.


A cashless ATM is just a payment alternative for businesses that, for one reason or another, can’t get a traditional merchant account for debit and credit card payments. As far as customers are concerned, they are not that different in functionality from an ATM or POS system.

If your business already uses a standard POS merchant account system for purchases with credit and debit cards, you probably won’t have much use for a cashless ATM. However, they can still be an attractive alternative to a standard ATM machine within the premises for businesses that typically work with cash-based payments.

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