New
January 30, 2023
By
Shreeja Ray

ATM - Automated Teller Machine : How It Works

An automated teller machine, sometimes known as an ATM, is a type of electronic banking outlet that enables consumers to carry out routine financial operations without the assistance of a teller or branch employee. At most automated teller machines (ATMs), one only needs a credit card or debit card to withdraw cash.

Anatomy of an ATM

The designs of automated teller machines (ATMs) range widely. However, they all consist of the same components:

1. Card readers are devices that read the chip and magnetic stripe on credit and debit cards, thereby establishing a connection between the card and the appropriate bank account.

2. Customers are able to select the amount of cash they wish to withdraw and input their personal identification number (PIN) using the keypad.

3. The cash dispenser is the slot that bills are dispensed through; it is attached to a safe that is located at the very bottom of the machine.

4. Printer: A printer for the purpose of producing balance statements and advisory slips

5. The prompts that are displayed on the screen serve to make the user interface more accessible. A touch-screen interface is common in many automated teller machines.

Businesses frequently make use of automated teller machines, in addition to banks, which frequently have an ATM located outside of their facilities. ATMs are frequently utilized in retail establishments, particularly convenience store franchises, as well as in pubs, arcades, and casinos.

Businesses can either purchase or lease these on their own or do so through franchises that specialize in the operation of ATMs. The person making the cash withdrawal is often responsible for paying a nominal fee that is assessed in conjunction with the transaction.

Types of ATM Machines

The following is a list of the various varieties of cash machines that are available on the market today: The vast majority of the host CPUs are able to support either dial-up or leased-line machines.

Automated Teller Machines With Leased Lines

Through the use of a four-wire point-to-point dedicated telephone line, the leased line machines are able to establish a direct connection with the host CPU. The use of machines similar to these is strongly encouraged. The expense of maintaining and operating these machines is highly expensive.

Dial-Up ATM Machines

A standard phone line and a modem are used to establish a connection between the dial-up ATM and the host processor. These need a standard connection in order to function, but the initial expense of installing them is far lower. When compared to the running costs of leased line machines, these machines have a lower cost of ownership.

White Label ATM

These automated teller machines are arranged, operated, and owned by businesses that are not banks. The Reserve Bank of India (RBI) is the organization that initiated the installation of these automated teller machines (ATMs) in order to promote financial inclusion and increase ATM access across the nation. These automated teller machines will not display the logo of any particular bank. TATA introduced the world's first automated teller machine (ATM) with a white logo and the brand name Indicash in India.

ATM with Brown Label

Brown label automated teller machines (ATMs) were maintained and owned by a service provider, while a supporter bank took care of network connectivity and cash organization. The supporter bank's brand could be shown on the ATM.

Onsite ATM

These automated teller machines can be found in any place that also contains a branch of the bank. Therefore, the bank as well as the ATM can both be utilized physically for a variety of purposes if one is present at the location. The amount of time it takes for consumers to complete their banking activities can be cut down significantly if they take advantage of this feature that allows them to avoid waiting in line at the bank branch.

Offsite ATM

These machines are set up on a distinct basis from one another, which means that if the bank has a location where there is just one ATM machine, then that location is considered to be an offsite ATM. Even if there isn't a branch of the bank in the area, this can be done to ensure that the bank is accessible to individuals in a wider variety of geographic regions so that they can take advantage of the services it provides. Therefore, these machines will function outside of the traditional banking establishments.

How to Operate an ATM Machine?

Operating an automated teller machine is relatively easy. The next section discusses the ATM operation's step-by-step algorithm.

1. You must first go to the local ATM location and insert your ATM card into the machine.

2. Choose a language from the list that appears on the ATM monitor, such as Hindi, English, or your native tongue.

3. Choose the transaction type from a variety of transactions, including deposits, withdrawals, and money transfers.

4. Select the type of account, such as savings or current.

5. Enter the appropriate withdrawal amount and your 4-digit ATM pin number.

6. Bring the cash and your receipt together.

7. You can choose the option to perform further transactions as well.

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