What Is a Cashless ATM and How Does It Work?

A cashless ATM, also called a point-of-banking solution, is a payment method that allows customers to purchase goods or services using a debit card similar to the way they would withdraw cash from an ATM machine.

However, instead of dispensing cash, a cashless ATM terminal generates a receipt at the point of sale and those funds are deposited into the merchant’s account.

Initially, the system was designed to serve as an alternative payment option for high-risk businesses and it has been embraced by many business types such as those who rely on credit card processing.

Who Needs a Cashless ATM Solution?

Almost every business can use a cashless ATM. Some of the businesses that can easily use point-of-banking include the following:

Amusement parks
Adult services or products
Auto repair
Bars
Beauty salons
Bowling alleys
Bingo Halls
Catering companies
Pawnshops
Night clubs
Massage parlors

Features and Benefits of Cashless ATMs

Card present pin-based payments help in reducing fraud or chargebacks.
Domestic merchants can be approved without providing a lot of personal financial information.
They are easy to install in a physical location making them a plug and play solution.
Unlike conventional merchant accounts, there are no transaction charges or discount rates charged to the merchant, since cashless ATM fees are passed to the end customer.
With a cashless ATM, there is no need to get a traditional ATM for withdrawals.
Cashless ATMs make the purchasing process quick and easy. A user just swipes the card, inputs the pin, and then confirms the transaction.
It is a great solution for merchants who aren’t able to get traditional merchant accounts.
There is online reporting for merchants showing daily and monthly metrics.

How It Works

When the consumer or customer comes to the store, they will swipe their card and follow the instructions on the screen. After they have entered their 4-digit pin, a voucher will be printed to serve as payment for the service or product. The merchant is supposed to keep the receipt for reference. The money typically clears and reaches the merchant’s bank account within 48-72 hours.

Application Process

To begin accepting payments via cashless ATM, there are various steps involved:

Complete and sign the merchant application form.
The vendor will review the application and ship the cashless ATM.
The merchant then needs to connect the terminal to a power source and internet.

Application Requirements

There are several requirements that must be met in order for cashless ATM applications to be approved.

Complete and sign the application form.
Fill out and sign the ACH authorization form.
Verification of the bank account or voided check by the account provider.
Identification of the principles shown in the application form.
Signed W-9.

How Long Does It Take to Approve the Application?

For most cashless ATM providers, the application process is completed within 24-72 business hours. However, the applicant must ensure that all of the requirements on the application form have been met. As soon as the cashless ATM provider receives the application form, they will review it to ensure that the applicant has met all the requirements before shipping the terminal.

How Can Sellers Accept Card Payments Using Cashless ATMs?

All transactions done through cashless ATMs are regarded as ATM withdrawals. A buyer has to have the physical card with them and input the four-digit pin associated with it. This is possible for both credit cards and debit cards. Whenever a customer uses a credit card, the transaction will appear as a withdrawal on the side of the credit card company. The transaction will also appear as an ATM withdrawal on the user’s bank statement.

How Long Will It Take for the Funds to Reflect on the Account?

Cashless ATM transactions are on a real-time basis and the funds are available for use right away at the point of sale. The funds normally show up in the merchant’s bank account within 48 or 72 business hours.

However, all transactions processed outside banking hours or during U.S. National holidays are processed on the following day.

Important Things to Note About Cashless ATMs

Pre-programmed amounts are supposed to be in $10.00 or $5.00 increments.
It is important to have clear signage displayed on the building to let customers know that there is a cashless ATM available.
If a merchant is using a dial-up terminal, it is advisable to have a separate line in order to avoid interruptions when transactions are being processed.
Cashless ATM transactions should be considered as cash purchases and necessary change should be issued from registers.
There are four types of cashless ATM terminals available: Mobile 3G/4G, Ethernet, WIFI, and dial-up.
After making an application for a cashless ATM terminal, it will take approximately five business days to approve the application, program and ship it to the merchant’s destination.