diff --git a/lamassu-next/apps/machine/src/App.vue b/lamassu-next/apps/machine/src/App.vue
index 7616400..1e85a76 100644
--- a/lamassu-next/apps/machine/src/App.vue
+++ b/lamassu-next/apps/machine/src/App.vue
@@ -1,13 +1,25 @@
 <script setup lang="ts">
 import { onMounted } from 'vue'
 import { useAtmStore } from '@/stores/atm'
+import { Badge } from '@/components/ui/badge'
+import { Button } from '@/components/ui/button'
 
 const atmStore = useAtmStore()
 
-onMounted(() => {
-  // Initialize the ATM state machine
-  atmStore.initialize()
+onMounted(async () => {
+  // Initialize the ATM state machine with Lightning.Pub
+  await atmStore.initializeWithLightning()
 })
+
+function toggleLiveServices() {
+  if (atmStore.useLiveServices) {
+    // Switch to mock
+    atmStore.initialize()
+  } else {
+    // Switch to live
+    atmStore.initializeWithLightning()
+  }
+}
 </script>
 
 <template>
@@ -16,12 +28,37 @@ onMounted(() => {
   >
     <router-view />
 
+    <!-- Connection status (top right) -->
+    <div class="fixed right-4 top-4 z-50 flex items-center gap-2">
+      <Badge
+        v-if="atmStore.connectionStatus === 'connected'"
+        class="bg-success text-success-foreground"
+      >
+        Live
+      </Badge>
+      <Badge
+        v-else-if="atmStore.connectionStatus === 'connecting'"
+        class="bg-warning text-warning-foreground"
+      >
+        Connecting...
+      </Badge>
+      <Badge v-else-if="atmStore.connectionStatus === 'error'" class="bg-destructive">
+        Offline
+      </Badge>
+      <Badge v-else class="bg-muted text-muted-foreground">Mock</Badge>
+    </div>
+
     <!-- Debug overlay (dev only) -->
     <div
       v-if="atmStore.debugMode"
       class="fixed inset-x-0 bottom-0 z-50 max-h-52 overflow-auto bg-popover p-4 font-mono text-xs text-popover-foreground"
     >
-      <div class="mb-2 text-success">State: {{ atmStore.currentState }}</div>
+      <div class="mb-2 flex items-center gap-4">
+        <span class="text-success">State: {{ atmStore.currentState }}</span>
+        <Button variant="outline" size="sm" class="h-6 text-xs" @click="toggleLiveServices">
+          {{ atmStore.useLiveServices ? 'Switch to Mock' : 'Connect Live' }}
+        </Button>
+      </div>
       <pre class="text-muted-foreground">{{ JSON.stringify(atmStore.context, null, 2) }}</pre>
     </div>
   </div>
diff --git a/lamassu-next/apps/machine/src/services/lightning.ts b/lamassu-next/apps/machine/src/services/lightning.ts
new file mode 100644
index 0000000..ea6ce1f
--- /dev/null
+++ b/lamassu-next/apps/machine/src/services/lightning.ts
@@ -0,0 +1,201 @@
+/**
+ * Lightning Services
+ *
+ * Connects to Lightning.Pub and provides real ATMServices implementation.
+ */
+
+import { NostrClient, generateIdentity, type MachineIdentity } from '@lamassu/nostr-client'
+import { LightningPubClient } from '@lamassu/lightning'
+import { CLINKClient } from '@lamassu/clink'
+import type { ATMServices, ATMContext } from '@lamassu/state-machine'
+
+// Development infrastructure configuration
+// In production, these would come from environment or secure config
+const DEV_CONFIG = {
+  // Lightning.Pub Nostr pubkey (from docker logs)
+  lightningPubPubkey: '0943fe710a0f48c77a0bdd11bd186d320cd1b01615cf9ec36fa2dc45bd86e92f',
+  // Local strfry relay
+  relayUrl: 'ws://localhost:7777',
+  // Admin token for HTTP API (development only)
+  adminToken: 'lamassu-dev-admin-token',
+  // Lightning.Pub HTTP API
+  lightningPubApiUrl: 'http://localhost:1776',
+}
+
+interface LightningServices {
+  nostrClient: NostrClient
+  lightningPub: LightningPubClient
+  clink: CLINKClient
+  identity: MachineIdentity
+  atmServices: ATMServices
+}
+
+/**
+ * Initialize Lightning services
+ */
+export async function initializeLightningServices(): Promise<LightningServices> {
+  console.log('[Lightning] Initializing services...')
+
+  // Generate a machine identity (in production, load from secure storage)
+  const identity = generateIdentity()
+  console.log('[Lightning] Machine identity:', identity.publicKey.slice(0, 16) + '...')
+
+  // Create Nostr client
+  const nostrClient = new NostrClient({
+    relays: [{ url: DEV_CONFIG.relayUrl }],
+    identity,
+  })
+
+  // Connect to relay
+  await nostrClient.connect()
+  console.log('[Lightning] Connected to relay:', DEV_CONFIG.relayUrl)
+
+  // Create Lightning.Pub client
+  const lightningPub = new LightningPubClient({
+    accountPubkey: DEV_CONFIG.lightningPubPubkey,
+    relays: [DEV_CONFIG.relayUrl],
+  })
+
+  lightningPub.initialize(nostrClient, identity)
+  console.log('[Lightning] Lightning.Pub client initialized')
+
+  // Create CLINK client
+  const clink = new CLINKClient({
+    nostrClient,
+    identity,
+    operatorPubkey: DEV_CONFIG.lightningPubPubkey, // Use Lightning.Pub as operator for dev
+    relays: [DEV_CONFIG.relayUrl],
+  })
+
+  clink.startListening()
+  console.log('[Lightning] CLINK client initialized')
+
+  // Create ATM services
+  const atmServices = createATMServices(lightningPub, clink, identity)
+
+  return {
+    nostrClient,
+    lightningPub,
+    clink,
+    identity,
+    atmServices,
+  }
+}
+
+/**
+ * Create ATMServices implementation using real Lightning clients
+ */
+function createATMServices(
+  lightningPub: LightningPubClient,
+  clink: CLINKClient,
+  _identity: MachineIdentity
+): ATMServices {
+  return {
+    /**
+     * Generate a CLINK offer (noffer) for receiving payment
+     *
+     * For cash-in: customer scans QR to receive sats
+     */
+    generateClinkOffer: async (context: ATMContext): Promise<string> => {
+      console.log('[ATM Service] Generating CLINK offer for', context.satsAmount, 'sats')
+
+      // Create a noffer for this specific amount
+      const noffer = clink.createOffer({
+        priceType: 'fixed',
+        amountSats: context.satsAmount,
+        description: `Lamassu ATM - ${context.satsAmount} sats`,
+        minAmountSats: context.satsAmount,
+        maxAmountSats: context.satsAmount,
+      })
+
+      console.log('[ATM Service] Generated noffer:', noffer.slice(0, 32) + '...')
+      return noffer
+    },
+
+    /**
+     * Generate a Lightning invoice for payment
+     *
+     * For cash-out: customer pays this invoice to receive cash
+     */
+    generateInvoice: async (amountMsat: number): Promise<string> => {
+      console.log('[ATM Service] Generating invoice for', amountMsat, 'msats')
+
+      const amountSats = Math.floor(amountMsat / 1000)
+
+      try {
+        const invoice = await lightningPub.createInvoice({
+          amountSats,
+          description: 'Lamassu ATM - Cash Out',
+        })
+
+        console.log('[ATM Service] Generated invoice:', invoice.paymentRequest.slice(0, 32) + '...')
+        return invoice.paymentRequest
+      } catch (error) {
+        console.error('[ATM Service] Failed to generate invoice:', error)
+        throw error
+      }
+    },
+
+    /**
+     * Get current exchange rate
+     */
+    getExchangeRate: async (currency: string): Promise<number> => {
+      console.log('[ATM Service] Fetching exchange rate for', currency)
+
+      try {
+        const rate = await lightningPub.getExchangeRate(currency)
+        console.log('[ATM Service] Exchange rate:', rate.satsPerUnit, 'sats/' + currency)
+        return rate.satsPerUnit
+      } catch (error) {
+        console.warn('[ATM Service] Failed to fetch rate, using fallback:', error)
+        // Fallback rate for development
+        return 2500 // sats per USD (~$40k BTC)
+      }
+    },
+
+    /**
+     * Send receipt via Nostr DM
+     */
+    sendNostrReceipt: async (context: ATMContext): Promise<void> => {
+      console.log('[ATM Service] Sending receipt to', context.userNpub)
+
+      if (!context.userNpub) {
+        console.log('[ATM Service] No user npub, skipping receipt')
+        return
+      }
+
+      // TODO: Implement NIP-04/NIP-44 encrypted DM with receipt details
+      console.log('[ATM Service] Receipt sending not yet implemented')
+    },
+
+    /**
+     * Dispense cash (mock for development)
+     */
+    dispenseCash: async (amounts: { denomination: number; count: number }[]): Promise<void> => {
+      console.log('[ATM Service] Dispensing cash:', amounts)
+
+      // In production, this would interface with the Rust HAL
+      // For now, simulate dispense delay
+      await new Promise((resolve) => setTimeout(resolve, 2000))
+
+      console.log('[ATM Service] Cash dispensed successfully')
+    },
+  }
+}
+
+/**
+ * Watch for invoice payment
+ */
+export function watchInvoice(
+  lightningPub: LightningPubClient,
+  paymentHash: string,
+  onPaid: (preimage: string) => void
+): void {
+  lightningPub.watchInvoice(paymentHash, (invoice) => {
+    if (invoice.preimage) {
+      onPaid(invoice.preimage)
+    }
+  })
+}
+
+export { DEV_CONFIG }
diff --git a/lamassu-next/apps/machine/src/stores/atm.ts b/lamassu-next/apps/machine/src/stores/atm.ts
index 652026b..5e99828 100644
--- a/lamassu-next/apps/machine/src/stores/atm.ts
+++ b/lamassu-next/apps/machine/src/stores/atm.ts
@@ -5,48 +5,48 @@ import {
   createActor,
   type ATMContext,
   type ATMServices,
+  type ActorRefFrom,
+  type SnapshotFrom,
+  type ATMMachine,
 } from '@lamassu/state-machine'
-import type { Actor, SnapshotFrom } from 'xstate'
+import { initializeLightningServices } from '@/services/lightning'
 
-// Service implementations will be injected
-// For now, use mock implementations for development
+// Mock services for development/fallback
 const mockServices: ATMServices = {
   generateClinkOffer: async (context) => {
     console.log('[Mock] Generating CLINK offer for', context.satsAmount, 'sats')
-    // Return a fake noffer for development
     return `noffer1mock${Date.now().toString(36)}`
   },
 
   generateInvoice: async (amountMsat) => {
     console.log('[Mock] Generating invoice for', amountMsat, 'msats')
-    // Return a fake invoice for development
     return `lnbc${amountMsat}n1mock${Date.now().toString(36)}`
   },
 
   getExchangeRate: async (currency) => {
     console.log('[Mock] Fetching exchange rate for', currency)
-    // Return mock rate: 2500 sats per USD (40k USD/BTC)
     return 2500
   },
 
   sendNostrReceipt: async (context) => {
     console.log('[Mock] Sending Nostr receipt to', context.userNpub)
-    return true
   },
 
   dispenseCash: async (amounts) => {
     console.log('[Mock] Dispensing cash:', amounts)
-    // Simulate dispense delay
     await new Promise((resolve) => setTimeout(resolve, 2000))
-    return true
   },
 }
 
 export const useAtmStore = defineStore('atm', () => {
   // State
-  const actor = ref<Actor<ReturnType<typeof createATMMachine>> | null>(null)
-  const snapshot = ref<SnapshotFrom<ReturnType<typeof createATMMachine>> | null>(null)
+  const actor = ref<ActorRefFrom<ATMMachine> | null>(null)
+  const snapshot = ref<SnapshotFrom<ATMMachine> | null>(null)
   const debugMode = ref(import.meta.env.DEV)
+  const useLiveServices = ref(false)
+  const connectionStatus = ref<'disconnected' | 'connecting' | 'connected' | 'error'>(
+    'disconnected'
+  )
 
   // Computed
   const currentState = computed(() => {
@@ -89,7 +89,7 @@ export const useAtmStore = defineStore('atm', () => {
     actor.value = createActor(machine)
 
     // Subscribe to state changes
-    actor.value.subscribe((newSnapshot) => {
+    actor.value.subscribe((newSnapshot: SnapshotFrom<ATMMachine>) => {
       snapshot.value = newSnapshot
       console.log('[ATM] State:', newSnapshot.value)
     })
@@ -99,6 +99,32 @@ export const useAtmStore = defineStore('atm', () => {
     console.log('[ATM] State machine initialized')
   }
 
+  /**
+   * Initialize with real Lightning.Pub services
+   */
+  async function initializeWithLightning() {
+    connectionStatus.value = 'connecting'
+    console.log('[ATM] Connecting to Lightning.Pub...')
+
+    try {
+      const services = await initializeLightningServices()
+      useLiveServices.value = true
+      connectionStatus.value = 'connected'
+      console.log('[ATM] Connected to Lightning.Pub!')
+
+      // Initialize state machine with real services
+      initialize(services.atmServices)
+    } catch (error) {
+      console.error('[ATM] Failed to connect to Lightning.Pub:', error)
+      connectionStatus.value = 'error'
+
+      // Fall back to mock services
+      console.log('[ATM] Falling back to mock services')
+      useLiveServices.value = false
+      initialize(mockServices)
+    }
+  }
+
   function send(event: Parameters<NonNullable<typeof actor.value>['send']>[0]) {
     if (!actor.value) {
       console.error('[ATM] Cannot send event: machine not initialized')
@@ -154,6 +180,8 @@ export const useAtmStore = defineStore('atm', () => {
     actor,
     snapshot,
     debugMode,
+    useLiveServices,
+    connectionStatus,
 
     // Computed
     currentState,
@@ -165,6 +193,7 @@ export const useAtmStore = defineStore('atm', () => {
 
     // Actions
     initialize,
+    initializeWithLightning,
     send,
     selectCashIn,
     selectCashOut,