The full form of ATM is Automated Teller Machine is an electronic banking outlet that allows customers to complete basic transactions without the aid of a branch representative or teller. Anyone with a credit card or debit card can access cash at most ATMs.

ATM Stands for

ATM Stands for Automated Teller Machine. ATM is an electronic telecommunications device that enables customers of financial institutions to perform financial transactions, such as cash withdrawals, deposits, funds transfers, or account information inquiries, at any time and without the need for direct interaction with bank staff.

What is ATM – Automated Teller Machine

ATMs are known by a variety of names, including automatic teller machines (ATM) in the United States (sometimes redundantly as “ATM machine”). In Canada, the term automated banking machine (ABM) is also used, although ATM is also very commonly used in Canada, with many Canadian organizations using ATM over ABM. In British English, the terms cashpoint, cash machine, and hole in the wall are most widely used. 

Other terms include any time money, cash line, tyme machinecash dispensercash cornerbankomat, or bancomat. Many ATMs have a sign above them indicating the name of the bank or organization that owns the ATM, and possibly including the networks to which it can connect. ATMs that are not operated by a financial institution are known as “white-label” ATMs.

About ATM

An automated teller machine (ATM) is an electronic banking outlet that allows customers to complete basic transactions without the aid of a branch representative or teller. Anyone with a credit card or debit card can access cash at most ATMs.

ATMs are convenient, allowing consumers to perform quick self-service transactions such as deposits, cash withdrawals, bill payments, and transfers between accounts. Fees are commonly charged for cash withdrawals by the bank where the account is located, by the operator of the ATM, or by both. Some or all of these fees can be avoided by using an ATM operated directly by the bank that holds the account.

ATMs are known in different parts of the world as automated bank machines (ABM) or cash machines.

Understanding Automated Teller Machines (ATMs)

The first ATM appeared at a branch of Barclay’s Bank in London in 1967, although there are reports of a cash dispenser in use in Japan in the mid-1960s. The interbank communications networks that allowed a consumer to use one bank’s card at another bank’s ATM came later, in the 1970s.

Within a few years, ATMs had spread around the globe, securing a presence in every major country. They now can be found even in tiny island nations such as Kiribati and the Federated States of Micronesia.

There are now more than 3.5 million ATMs in use across the world.

Types of ATMs

There are two primary types of ATMs. Basic units only allow customers to withdraw cash and receive updated account balances. The more complex machines accept deposits, facilitate line-of-credit payments and transfers, and access account information.

To access the advanced features of the complex units, a user must be an account holder at the bank that operates the machine.

Analysts anticipate ATMs will become even more popular and forecast an increase in the number of ATM withdrawals. ATMs of the future are likely to be full-service terminals instead of or in addition to traditional bank tellers.

Although the design of each ATM is different, they all contain the same basic parts:

  • Card reader:This part reads the chip on the front of the card or the magnetic stripe on the back of the card.
  • Keypad: The keypad is used by the customer to input information, including personal identification number (PIN), the type of transaction required, and the amount of the transaction.
  • Cash dispenser: Bills are dispensed through a slot in the machine, which is connected to a safe at the bottom of the machine.
  • Printer:If required, consumers can request receipts that are printed here. The receipt records the type of transaction, the amount, and the account balance.
  • Screen:The ATM issues prompts that guide the consumer through the process of executing the transaction. Information is also transmitted on the screen, such as account information and balances.

Full-service machines now often have slots for depositing paper checks.

Special Considerations: Using ATMs

Banks place ATMs inside and outside of their branches. Other ATMs are located in high traffic areas such as shopping centers, grocery stores, convenience stores, airports, bus and railway stations, gas stations, casinos, restaurants, and other locations. Most ATMs that are found in banks are multi-functional, while others that are offsite tend to be primarily or entirely designed for cash withdrawals.

ATMs require consumers to use a plastic card—either a bank debit card or a credit card—to complete a transaction. Consumers are authenticated by a PIN before any transaction can be made.

Many cards come with a chip, which transmits data from the card to the machine. These work in the same fashion as a bar code that is scanned by a code reader.

ATM Fees

Account-holders can use their bank’s ATMs at no charge, but accessing funds through a unit owned by a competing bank usually incurs a fee. According to, the average fee to withdraw cash from an out-of-network ATM was $4.61 as of late 2019.

Some banks will reimburse their customers for the fee, especially if there is no corresponding ATM available in the area.

So, If you’re one of those people who draws weekly spending money from an ATM, using the wrong machine could cost you nearly $240 a year.

ATM Ownership

In many cases, banks and credit unions own ATMs. However, individuals and businesses may also buy or lease ATMs on their own or through an ATM franchise. When individuals or small businesses, such as restaurants or gas stations own ATMs, the profit model is based on charging fees to the machine’s users.

Banks also own ATMs with this intent. They use the convenience of an ATM to attract clients. ATMs also take some of the customer service burdens from bank tellers, saving banks money in payroll costs.

Using ATMs Abroad

ATMs make it simple for travelers to access their checking or savings accounts from almost anywhere in the world.

Travel experts advise consumers to use foreign ATMs as a source of cash abroad, as they generally receive a more favorable exchange rate than they would at most currency exchange offices.

However, the account holder’s bank may charge a transaction fee or a percentage of the amount exchanged. Most ATMs do not list the exchange rate on the receipt, making it difficult to track spending.

Basic ATM Parts

The ATM is a user-friendly machine. It features various input and output devices to enable people easily withdraw or deposit money. The basic input and output devices of an ATM are given below:

Input Devices:

Card Reader: This input device reads the data of the card which is stored in the magnetic strip on the back side of the ATM card. When the card is swiped or inserted into the given space the card reader captures the account details and passes it to the server. On the basis of account details and the commands received from the user server allows cash dispenser dispense the cash.

Keypad: It helps the user to provide the details asked by the machine like personal identification number, amount of cash, receipt required or not, etc. The PIN number is sent in the encrypted form to the server.

Output Devices:

Speaker: It is provided in the ATM to produce the audio feedback when a key is pressed.

Display Screen: It displays the transaction related information on the screen. It shows the steps of cash withdrawal one by one in sequence. It can be a CRT screen or a LCD screen.

Receipt Printer: It provides you the receipt with details of transactions printed on it. It tells you date and time of transaction, the withdrawal amount, balance, etc.

Cash Dispenser: It is the main output device of the ATM as it dispenses the cash. The high precision sensors provided in the ATM allows cash dispenser to dispense the correct amount of cash as required by the user.

How ATM works

To start the functioning of ATM, you have to insert plastic ATM cards inside the ATM machines. In some machines you have to drop your cards, some machines allows swapping of cards. These ATM cards contain your account details and other security information in the form of a magnetic strip. When you drop/swap your card, machine gets your account information and asks for your PIN no. After the successful authentication, machine will allow financial transactions.

What ATM does

Now a day, ATM has a lot of functionalities along with its basic use of cash dispensing. Some of them are:

  • Cash and cheque deposit
  • Fund transfer
  • Cash withdrawal and balance enquiry
  • PIN change and mini statement
  • Bill payments and mobile recharge etc.

The first ATM was used to dispense cash for customers by Chemical bank at New York (USA) in 1969.

Important/Interesting Facts about ATM

Inventor of ATM: John Shepherd Barron.

ATM Pin Number: John Shepherd Barron thought to keep a 6 digits pin number for the ATM, but it was not easy for his wife to remember a 6 digits pin so he decided to prepare a 4 digits ATP pin number.

World’s first floating ATM: State Bank of India (Kerala).

First ATM in India: Installed by HSBC (Hongkong and Shanghai Banking Corporation) in 1987.

First ATM in the World: It was installed on 27 June 1967 at the Barclays Bank of London.

First Person to use ATM: The famous comedy actor Reg Varney was the first person to withdraw cash from the ATM.

ATM without an Account: In Romania, which is a European country, one can withdraw money from an ATM without having a bank account.

Biometric ATM: Biometric ATM is used in Brazil. As the name suggests, the user is required to scan his or her fingers at these ATMs before withdrawing money.

World’s Highest ATM: It is installed in Nathu-La mainly for the army personals. Its height is 14,300 feet above sea level and is operated by Union Bank of India.

ATM Machine and ATM

Let’s see the image of ATM machine.

ATM Machine

Let’s see the image of ATM card.

ATM Card

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