ATM - Automated Teller Machine

ATM is the abbreviation of Automated Teller Machine. In old days, people used to stand in long queues in front of the banks to collect their salaries. Now, people visit the ATM nearest to their place and enjoy safe transactions.

What is an ATM

An automated teller machine facilitates the transactions without involving a bank employee to deal with the customer's transaction. It has made transactions easy and hassle-free. Additionally, it has significantly reduced the bank workload. For any individual to complete transactions using an ATM, it is necessary to have a credit or debit card. Through these cards, any bank account holder can access their balance, or withdraw, deposit, or transfer cash from their account. The customers can perform these functions without visiting their bank branch. Hence successful transactions can be made without filling slips, forms and without standing in long queues.

An ATM charges fees for cash withdrawal. This fee is charged by the bank, the ATM operator, or both. To avoid any fees for cash withdrawal, one should prefer using the ATM of the same bank in which they hold their account. ATMs are known by different names, such as cash machines and automated bank machines (ABM).

How to use an ATM

1. After visiting the ATM, insert the card in the card slot.
2. Select the options from the display of the ATM.
3. Select the function to be performed from the displayed options, which includes deposit, balance inquiry, transfer, and cash withdrawal.
4. Select the account type from the salary, savings, and current.
5. Type the amount which you want to withdraw using the keypad and also provide the ATM pin.
6. Collect your cash from the cash slot.
7. Collect the receipt from the printer.
8. Select the other option instead of cash withdrawal for another transaction like cash depositing.

History and Invention of the ATM

The idea of after the hours cash became popular in the 1960s. People started developing new machines to withdraw cash after bank hours and according to their convenience. A cash dispenser was used in the mid-1960s in Japan.

A cash depositing machine known as Bankograph was developed in 1960. Luther George Simjian invented it.

The era of ATM began with Barclays bank setting up its first ATM in its London branch in 1967. John Shepherd Barron is known to invent this ATM. It had a limit of GBP 10 at one time while withdrawing cash.

Donald Wetzel was the first to develop an ATM in the U.S., set up a Chemical bank branch in New York in September 1969.

The technology of Personal Identification Number (PIN) was developed in 1970. It was proposed by James Goodfellow. The invention of PIN accelerated the growth of the ATM.

The network of banks such that the card of a bank could be used on the ATM of another bank was developed in the 1970s.

Afterward, ATMs were adopted by many countries. Since ATMs have become irreplaceable and save time and effort for the customers.

ATM Cards

ATM cards help the user to access their account through ATM. It is a plastic card that contains the customer account information in the form of a magnetic strip. An identification code is encrypted in the magnetic strip and contains all account details of the customer. This identification code is used for the authentication of the customer with the centralized bank. ATM cards are available in India's different forms, including Visa, Mastercard, Maestro, and RuPay cards.

Functions of an ATM

The main functions of ATMs are cash withdrawal, cash deposit, and transfer of money from one account to another. These can be described as -

1. Cash withdrawal - Any bank account holder can withdraw cash from their account.
2. Cash deposit - Any bank account holder can deposit cash to their account.
3. Cash transfer - Any bank account holder can transfer money from one bank account to another.
4. Balance inquiry - Any bank account holder can check their available balance and sometimes even a few last transactions.

Types of ATM

The two types of ATMs are basic ATMs and complex ATMs. The function of a basic ATM is usually facilitating cash withdrawal along with an available balance statement. The complex ATM is responsible for multiple functions like displaying account information and providing transaction history and cash deposits.

Some other types of ATMs are discussed below:

Brown Label ATM: A Brown Label ATM is the one in which the service provider of the ATM owns the lease of the machine. Although the lease has been owned by the service provider, the network and connection with the bank are managed by the sponsor bank.

Cash Dispenser: The ATMs that only dispense cash and are used for balance inquiry and mini statement. No other transactions are possible on these

Green Label ATM: Green Label ATM facilitates agricultural transactions.

Mobile ATM: Mobile ATM is the type of ATM which moves from one place to another, providing service to its customers. The covid-19 pandemic has led to the rise in the number of mobile ATMs in the cities.

Off-site ATM: These machines are installed outside the premises of the bank.

On-site ATM: These machines are installed within the premises of the bank.

Orange Label ATM: These ATMs facilitate share transactions.

Pink Label ATM: Pink label ATMs are specially made for women.

White Label ATM: These ATMs are provided by companies that are financial but are in a non-banking domain.

Worksite ATM: These ATMs are installed in the bank premises, but only bank employees can use these.

Yellow Label ATM: These ATMs are used for online shopping.

Design of an ATM

ATM is carefully designed by combining the individual components which are used for a particular function. The parts of the ATM are listed below -

• Screen: Screen is used to guide the customers through the various options in a transaction process. The account information like account balance etc., is also displayed on the screen.
• Keypad: The keypad is used as an input device to the ATM. It is used to enter a PIN, transaction type, and the amount of cash for any function.
• Card Reader: A card reader interprets the account information by reading the card using the magnetic strip.
• Cash dispenser: It is an ATM, which is a slot that provides cash to the customer.
• Printer: An ATM printer is used to print receipts of transactions whenever a customer requests it. It provides written information which includes the current account balance, etc.

The Evolution of ATM

The first ATM

The era of ATM began with Barclays bank setting up its first ATM in its London branch; this was not until 1967.

Drive-up ATMs

The setup of drive-up ATM was first installed by Baton Rouge; this was not until 1980. The machine has been used for decades and was a successor to drive-up teller windows.

Multiple option ATMs

ATMs were then restricted to cash dispensing but were used for many purposes like stamps, etc. Eventually, all banks started adopting multiple service options through ATMs; this was not until 1988.

Video ATMs

The talking ATMs were developed to facilitate blind people to read. Now, they are no longer dependent on the braille keypads to complete their transactions.Video ATMs provided an intermediate solution in between the bank branch and the ATMs. A customer can video chat with the bank employees and proceed with their transactions.

ATMs without cards

ATMs without cards are the technology that proceeds the transactions without cards, simply using smartphones. People can access their accounts and complete transactions using one-time passwords (OTP) and their ATM pins.

Germ Killing Touchscreens

The screens of these ATMs have embedded silver ions. The embedded silver prevents the growth of bacteria, algae, and mold etc.

Bitcoin ATMs

These ATMs are part of a decentralized system of money transfer. They are not a part of the conventional banking system and still transfer money into the digital currency and vice versa. These machines cost a good sum of money but are still popular.

Modern ATM

Automated Teller Machines have changed over the years. The reason for the changes ranges from safety concerns to providing convenience to the customers. Some changes that largely affected the ATMs are -

1. Multipurpose Machine - ATMs have now changed and have become multipurpose. Hence ATMs can now perform more functions as compared to the conventional ATMs, which were known only for dispensing cash.
2. Overcome language Barrier -The language of the ATMs has been the problem for accessing ATMs for a long time. In a country like India, people practice different cultures and speak different languages; single ATM language barrier. Now, ATMs are multilingual; hence, users can select the language they are familiar with and continue their transactions.
3. Convenient for Users - ATMs have become convenient for people. Even specially-abled people and people with lower levels of education can even complete their transactions through ATMs. Convenience to use has made ATMs popular, and everybody could use ATMs with great ease and security.

Advantages of ATM

• Convenience - ATM is way more convenient than standing in long bank queues to withdraw cash, deposit cash or transfer it.With the wide application and increasing, public demand ATMs are now found in all the public places
• Not time-bound - Unlike banks, ATMs are not time-bound and provide24 x 7 hours a week and throughout the year. The money transactions can be done duringthe day or at night, making ATMs much more convenient to use.
• Faster transactions - ATM transactions are faster as compared to bank transactions. Neither standing in long queues nor filling of slips and receipts are required, this has made transactions faster, and people could now save their time.
• Easy Accessibility - ATMs are easily accessible in any area. Everyone holding a bank account can withdraw cash from their accounts with the help of ATM cards. The account can be accessed from anywhere worldwide. ATMs are installed in all public places, which gives convenience to the customers.
• Minimizes the bank workload - ATMs have supported banks by reducing their workload. The customers can directly approach the bank and do their transactions without visiting the bank branch. Eventually, the bank workload is reduced, and bank employees can manage people efficiently.
• Minimize transaction cost - Technological inventions have made transactions automatic without human intervention. ATM usage has reduced the overall cost of transactions as fewerhuman resourcesare utilized in transactions.

Disadvantages of ATM

• Cash Withdrawal Limit - There are restrictions on the daily cash withdrawal and even the number of free transactions. Some other restrictions are cash withdrawal at a time. Many bank ATMs have around 25,000 cash withdrawal limits for a single transaction.
• Transaction Charges of ATM - Fees id charged for various bank transactions. These are generally standard charges of the bank and sometimes may include the taxes on the transactions. ATM charges vary according to the bank. These can be avoided by using the same bank ATM in which the customer holds the account.
• Increased Frauds - Online transactions and ATM transactions are more susceptible to fraud. Through online transactions, hackers can get user data and steal money from customers' accounts.
• Non-Reachable in the Remote Areas - Due to the lack of proper structure and maintenance, there is a lack of high-tech banking systems in the remote areas of India. This has increased the need forhuman resources.

Impact of ATM on People

ATM has revolutionized the way transactions work and is an invention of great importance. People worldwide can make safe bank transactions irrespective of the bank account they hold and the location of their branch of the bank. The invention of the ATM has saved the time and efforts of people and made transactions more convenient and accessible. Nowadays, people rely on ATMs to withdraw cash and many other functions, which would take hours when done through the banks. ATMs have given a fair chance for the people from poor sections of society to rise and control their accounts.ATMs are an all-time option to go with in case of emergencies. The revolutionary invention of ATMs has changed the way people do their transactions worldwide.