Two random questions that have come up, mostly in lunchtime conversation. They’re outside my field, so don’t hold bad terminology or errors of fact against me.
So if you have answers to (or additional information about) these questions, let me know.
Rate of Flow of Cash at a Small Business
A business (say, a restaurant) has cash going in and out. Some kinds of cash (bills and coins) primarily flow out. For example, very few people bring pennies into a restaurant, while people paying with bills often get a few pennies in change. The converse is also true: businesses today must get lots of $20’s since that’s the only bill that ATMs output.
For each unit of currency (pennies, nickels, dimes, quarters, dollars, $5s, $10s, $20s, $50s, $100s), what is the average net change per day for a restaurant (say, McDonald’s)? for an upscale restaurant (say, McCormick and Schmidts)? for a grocery store? What were these values like in 1980 before ATMs were widely used?
Cost of an ATM
What is the incremental cost of maintaining a second ATM (automated teller machine) at a site that already has one?
The example: Wells Fargo Bank had two ATMs on the first floor of ISI (back before they removed their branch). A few months after the branch moved out they removed one of the ATMs. Why?
Defining the problem: There are a set of fixed and incremental costs to maintaining an ATM. The fixed costs are things like the cost of buying and installing the ATM. Incremental costs are the costs of visiting the ATM to pick up deposits and add cash and deposit envelops, servicing it when it breaks, and so on.
Once the fixed costs of installing an ATM were paid (as they had been), I would have thought that the fixed costs were small. Furthermore, the costs of removing the ATM would be exceeded by the small benefit of having two ATMs.
I don’t know the costs involved, but I’d guess it’s about $10k for a machine, about $10k to have it installed and about $5k to have it removed. The incremental costs of maintaining a second machine must be small (the crew who reloads it already must pay the cost of getting there and handling a second machine can’t take that long). The cost of keeping a second machine stocked with envelopes must be fairly small. There’s also the cost of keeping it filled with cash.
So what of the incremental costs makes it worth the cost of taking out an existing second machine? My only guess is that the cost of keeping the machine stocked with cash is substantial, or that the bank needed the ATM somewhere else and moving this one was cheaper than buying a new one.
Update April 2003: a person who works for a bank pointed out that there is also an incremental cost of communications. Assuming “conservative” networking (one leased 56k frame relay line per ATM), the incremental cost of this is (in 2003) about $100/month. (Obviously this could be reduced by using a simple phone line and modem, or by having both ATMs share a phone line, but those choices are less conservative.)
Update Jan 2004: Wells Fargo finally lost their lease on the ATM slot and so now both ATMs are gone :-)