Automated Teller Machine [ATM]

Concept of an ATM

The introduction of ATMs has provided customers with an option to access the banking services beyond the regular banking hours. An ATM is a device for receiving and dispensing cash, round the clock, and may be placed either inside or outside the banks premises.

Initially, ATMs were introduced as stand alone machines and were used only as cash dispensers. There was neither inter-connectivity between ATMs nor connectivity of the ATM network with the core banking software of banks. As a result, even simple balance enquiry could not be performed through ATMs. However, recently, ATMs have developed with capabilities of performing a wide variety of banking functions.

Working of the ATMs

For availing the services of an ATM, a customer needs to have an ATM card, debit card, or credit card, as well as Personal Identification Number [PIN]. PIN is issued to the customers along with the card. PIN is a randomly generated sequence of digits. Only the customer knows the PIN and has to secure it.

A magnetic strip is fixed on the back of the cards that holds information about the customers PIN and the account number. When the customer swipes the card, the account number is validated by the ATM and if the ATM finds that the number is valid, it then prompts the customer to enter the PIN. Customers can choose given on the ATM menu and proceed with the transactions provided by the ATMs. ATMs provide a host of core services and value added services to the customers.

Core Services

The core services provided by ATMs include:

• Cash withdrawal
• Cash or cheques deposit
• Ultra fast cash
• Funds transfer
• Balance enquiry
• Mini statement
• PIN change
• Check book requests

Value added services

Some of the value added services offered by ATMs include:

• Recharging of mobile services
• Topping up mobile services
• Buying the internet packs
• Paying utility service providers bills
• Buying mutual funds
• Giving charity and donations

Types of ATMs

• Onsite ATM: is situated either within the branch premises or in very close proximity of the branch.
• Offsite ATM: is not situated within the branch premises but is located at other places, such as shopping centres, airports, railway and petrol stations
• Worksite ATM: is located within the premises of an organization and is generally meant only for the employees of the organization
• Cash dispenser: Allows only cash withdrawal, balance enquiry, and mini statement requests. Unlike an ATM, CD cannot be used for depositing cash or cheques.
• Mobile ATM: refers to an ATM that moves in various areas for the customers. Few private banks have introduced ATM on wheels.

Benefits of ATMs

To the customer:

• Provide 24 x 7 and 365 days a year service
• Offer quicker and efficient service
• Allow privacy in transactions
• Are errors free
• Enable cardholders to access cash at any location regardless of where they maintain their accounts
• Offer flexibility of cash withdrawal to the customer
• Enable fund transfers across branches or banks, in the linked accounts
• Offer anywhere banking facility

To the banks:

• Is an alternative to extended banking hours
• Is cheaper if transactions are large in number, thereby, reducing footfall at the branches
• Alternative to opening new branches
• Reduces operating expenses of the banks
• Helps banks to avoid transportation of cash and cash handling by the employees
• Increases market penetration

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