How do gas station ATMs work?

They are everywhere.

Nonbank ATMs — run by independent operators — that sit inside gas stations and convenience stores.

Per The Wall Street Journal, there are ~225k of these ATMs across America. In 2020, they collectively processed $90B.

These ATM operators…

… depend on major bank chains to deliver the cash that fills the machines (think armored cars). The operators also need 2 bank accounts:

• The 1st account holds cash for ATMs and receives deposits from a user’s bank when they withdraw money
• The 2nd account receives the fees that a user pays to use the ATMs

Banks are souring on the relationship

Why? Per WSJ, regulators are concerned that independent ATM operators are “a higher fraud and money-laundering risk.”

The operators say they are serving underbanked populations, especially in areas without traditional bank branches (regulators do acknowledge this fact).

To make it worth their time, banks are raising fees on servicing the ATMs. If you hate that “convenience fee,” well, now you know where some of it comes from.