Automated Teller Machine – ATM technology | How it functions

In the 1960s, the technology was invented known as the ATM – Automated Teller Machine. Before this invention, all bank services and businesses e.g. withdrawals and deposits were conducted inside of a bank with a teller, bank representative and the whole known process but after this, the necessity of entering a bank to execute transactions fell.

Here is an insight into this ATM technology and how it works.

What is an Automated Teller Machine?

The Automated Teller Machine, also known as an ATM, is a computer-like technology that renders electronic banking services, like money withdrawals, deposits, transfers, balance checks, etc, outside of a bank without the assistance of a bank staff or a teller. This usually requires a credit card, debit card or ATM card.

Although the word “machine” in the term “ATM machine” is not necessary and can be redundant because ATM is abbreviated from Automated Teller Machine which already has “machine” in it, it is still widely and popularly used.

How does the ATM function?

The machine requires you to insert your credit card, debit card or ATM card into a slot to start using the service or making transactions. This is followed by a 4-digit pin request after which you proceed to select the task you want to perform e.g. withdraw, transfer, check balance, etc and the machine completes the task after you’ve inputted the required information.

They are also usually monitored online by personnel to ensure there’s a good network, enough money is still available, it is not being tampered with, etc.

The provision of a cardless ATM service is also available in some ATMs in which you don’t have to insert or swipe your card in a slot or card reader before conducting transactions. It uses other forms of technology like fingerprints, verification codes, mobile bank apps linking to the ATM, etc as the security steps after which you’ll be able to perform the same tasks as though you used a physical card.

Contactless ATM services are also possible in which you don’t have to insert your card or make contact with the Automated Teller Machine to make transactions. This works when your card and the ATM possess a contactless symbol which looks like a Wi-Fi symbol drawn sideways, meaning they are capable of a contactless service.

Then you just have to place your card close to the symbol or tap the symbol to access the services instead of putting your card into a slot. This feature renders better security.

The technology behind the ATM – Automated Teller Machine

The ATM uses a CPU (Central Processing Unit) that governs transaction processes like currency validation, authentication, etc. The VDU (Visual Display Unit) controls the interface with the user e.g. screen and keyboard which the user interacts with.

An ATM contains a magnetic card reader used to identify the debit or credit card and get the necessary information needed for the transaction from it. There’s also a receipt printer that provides hard copy receipts for transactions made just like the ones received in a bank used as proof of transaction.

A money dispensing slot is present where money is received during a withdrawal. This dispensing slot is linked to the currency box where the money is kept in the ATM by rubber rollers which supply one currency note at a time from the box to the dispensing slot. The currency box usually holds about 2000 currency notes.

Amidst this dispensing process, the Automated Teller Machine contains a sensor that monitors if two or more notes adhere together and if the right denomination is being dispensed. Any mistake detected causes the notes to be inserted into a reject box in the ATM. This helps reduce errors during cash dispensing.

Some ATMs use key buttons to input information while most others are touch screen based. The variety depends on the type of bank.

ATMs usually have a withdrawal limit that differs with your account type or bank type. This is sometimes set to guarantee the machine does not run out of cash. The limit also helps protect your account from being completely siphoned whenever a thief gets hold of your debit or credit card.