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What is ATM? Research Team | Posted On Sunday, February 22,2009, 03:12 PM

What is ATM?



What is ATM?

An automatic teller machine (ATM) is a machine permitting a bank's customers to make cash withdrawals and check their account balances at any time and without the need for a human cashier. ATMs also allow people to deposit cash or cheques, transfer money between their bank accounts. ATMs are generally reliable, but if they do go wrong customers will be left without cash until the next morning or whenever they can go to the bank during opening hours.

Automated Teller Machine (ATM) system is a device used by bank customers to process account transactions. Normally, a user inserts into the ATM a special plastic card that is encoded with information on a magnetic strip. The strip contains an identification code; the modem will transmit it to the bank's central computer. To avoid unauthorized transactions, a personal identification number (PIN) must also be entered by the user using a keypad. The computer then allows the ATM to complete the transaction; nearly all machines can dispense cash, transfer funds, accept deposits, and provide information on account balances. Banks have formed cooperative, nationwide networks so that a customer of one bank can use an ATM of another bank for cash access. Some ATMs will also accept credit cards for cash advances. The first ATM was installed in New York, in 1969 by Chemical Bank at its branch in Rockville Centre, in that a customer using a coded card was dispensed a package containing a set sum of money.

ATM cash machines have been integrated in our way of life. They offer a real convenience to people but at the same time offer an element of risk. Using an ATM machine safely requires proper understanding and a little planning. Just because an ATM machine is open and available 24-hours a day doesn't mean it is safe to use. Most of the ATM robberies happen at night between 8:00 PM and midnight. ATM robbers are usually males under 25 years of age and most will be working alone. ATM robbers usually position themselves nearby waiting for a victim to approach and take out cash. Most ATM robbery victims were women and were alone when robbed. Most state that they never saw the robber coming. Most ATM robbers used a gun or some other hidden weapon when confronting the victim and demanding their cash.

Following diagram shows the data flow in an ATM.


This diagram shows the Automatic Teller (ATM) System software and the hardware that it interacts with. The arrows show the direction and type of data flowing between the software and hardware element. The descriptions of external units are described below:

Control System:

This system enables and disables the customer interface and accepts customer requests and system reports. A suitable Control System would be a personal computer connected to a central computer system with access to the Accounts Database. The customer interface such as keypad, display, etc are controlled by enabling and disabling the Card Reader, which is the customer's entry-point to the system. Requests for statements and cheque books are posted to the Control System. It also takes delivery of status reports for low printer-paper and cash levels.

Card Reader:

The Card Reader receives the customer's card and recovers the PIN and account number stored on it. This information is transmitted to the software system which facilitates the Customer Keypad and initiates the PIN verification procedure. When business is completed the Card Reader will return the card to the customer. If the customer enters an incorrect PIN, a fixed number of re-tries are permitted, after which the Card Reader is instructed to confiscate the card.

Customer Keypad:

The Customer Keypad permits a customer to enter a PIN number, select options and enter cash values. The keypad is enabled only when a card is detected in the Card Reader.

Customer Display:

The Customer Display presents messages, options and reports to the customer. The display is active at all times.

Printout Dispenser:

This provides the customer with a printed receipt of balance. The Printout Dispenser reports to the system whenever the paper level is low.

Cash Dispenser:

Cash Dispenser assembles and delivers cash to the customer. The dispenser receives information about the values and quantities of notes to dispense. The Cash Dispenser reports to the system if the cash level in the machine is low.

How to use ATM safely?

Use ATM machines only in well-lighted, high-traffic areas. Don't use ATM machines that are remote or hidden like being located behind buildings, behind pillars, walls, or away from public view.   Beware of noticeable hiding places like bushes or overgrown trees. ATM robbers always like to have the element of surprise and no witnesses. Robbers like good escape routes such as nearby freeway on-ramps or high speed thoroughfares.

Prefer an ATM that looks and 'feels' safer, even if it is a couple of miles out of the way. Try to limit your use only to daylight hours. While going to ATM take someone with you, if you can. When you drive up to an ATM location, search the area for any suspicious persons. If you see anyone suspicious, standing nearby or sitting in a car, drive away. When you approach an ATM on foot be ready and have your access card ready. Learn by heart your personal PIN number to prevent loss and speed the transaction. After inserting your card and your PIN number keep an eye out behind you. Never accept an offer to help or request for help from a mistrustful male ahead of you at the machine. If anyone doubtful or seemingly dangerous approaches terminate your transaction and leave immediately, even if it means running away and leaving your ATM card in the machine. Tell the suspicious male in a loud, firm voice to "back-off" and leave you alone. This is designed to frighten the person and give you time to escape, if appropriate. When you receive cash from the machine put it away without any delay, extract your card and walk away.

If you are using your car at a drive-thru ATM machine the same rules apply. Keep the car in gear, with your foot firmly on the brake, while using the ATM machine. Keep a close eye on your rear and side view mirrors during the transaction. Robbers almost always approach from the back on the driver’s side. If you see anyone approaching, drive off even if it means leaving your ATM card behind. If you are tackled by an armed robber, just give up your money without argument. The cash is not worth serious injury or death. Get to a safe place and call the police immediately.

Other things to remember

  • If lights around the ATM are not working, don't use that machine
  • Avoid ATM machines adjacent to obvious hiding places
  • Have your card ready and leave quickly, not counting your cash in public
  • Beware of offers for help from strangers during an ATM transaction 
  • Don't fight with or attempt to follow the robber
  • Drive or walk to a safe place and immediately call the police


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