Mrs. Debaswpna Mishra
Asst. Prof.,CSA Dept.
Mr. Jyotiprakash Das
MCA 5th Semester
Orissa University of Agriculture & Technology, Bhubaneswar
Table of Contents
5. ATM Charges
6. Hardware and Software
7. ATM Card VS Credit Card
8. How ATM Works
8.1 Parts of Machine
8.2 Settlement funds
9.1 Tips for Safe ATM usage
10. New Innovations
AUTOMATIC TELLER MACHINE
An Automatic Teller Machine (ATM) is a machine permitting a Bank’s
customers to make cash withdrawals and check their account at any time and
without the need for a human teller. Many ATMs also allow people to deposit cash
or cheque and transfer money between their bank accounts.
You're short on cash, so you walk over to the automated teller machine (ATM),
insert your card into the card reader, respond to the prompts on the screen, and
within a minute you walk away with your money and a receipt. These machines can
now be found at most supermarkets, convenience stores and travel centers. Have
you ever wondered about the process that makes your bank funds available to you
at an ATM on the other side of the country?
ATMs are a quick, convenient way to access money in your accounts.
ATMs are known by a wide variety of names, some of which being
more common in certain countries than others. Some examples are:
Automated Teller Machine
Automated Banking Machine
ATM Machine sic
Cash point (in the United Kingdom particularly)
Bancomat or Bank mat (particularly in continental
Europe Bancomat is a trademark of UBS AG
Geld automat Germany (Geld = money)
Post mat, Switzerland (Swiss Post Bank ATM)
Bank machine (in Canada)
MAC machine, or MAC, (for Money Access Center)
(particularly on the East coast in the United States, esp.
New Jersey and Pennsylvania)
The world's first ATM was installed in Enfield Town in the London Borough of
Enfield London on June 27, 1967 by Barclays Bank.
In modern ATMs, customers authenticate themselves by using a plastic card
with a magnetic stripe, which encodes the customer's account number, and
by entering a numeric pass code called a PIN (personal identification
number), which in some cases may be changed using the machine.
Typically, if the number is entered incorrectly several times in a row, most
ATMs will retain the card as a security precaution to prevent an unauthorized
user from working out the PIN by pure guesswork.
Most ATMs are connected to interbank networks, enabling people to
withdraw money from machines not belonging to the bank where they have
their account. (Deposits can only be made at machines belonging to the
bank that has the account.) This is a convenience, especially for people who
are travelling: it is possible to make withdrawals in places where one's bank
has no branches, and even to withdraw local currency in a foreign country,
often at a better exchange rate than would be available by changing cash.
Many banks in the USA charge fees for the use of their ATMs by nondepositors, for withdrawals over the network by their own customers, or both;
however, in the UK strong public reaction soon persuaded banks not to do
this. There is also now a flourishing business in the United States of placing
ATMs in grocery stores, malls, and other locations other than banks: some of
these machines have signs advertising "low" fees.
Hardware and Software
ATMs contain secure crypto processors, generally within an IBM PC
compatible host computer in a secure enclosure. The security of the machine
relies mostly on the integrity of the secure crypto processor: the host software
often runs on a commodity operating system.
In store ATMs typically connect directly to their ATM Transaction Processor
via a modem over a dedicated telephone line, although the move towards
Internet connections is under way. Along with the move to the internet, ATMs
are moving away from custom circuit boards (most of which are based on
Intel 8086 architecture) and into full fledged PCs with commercial operating
systems like Windows 2000 and Linux. A good example of that is Banrisul,
the largest bank in the South of Brazil, which has replaced the MS-DOS
operating systems in its automatic teller machines with Linux. Also are used
RMX 86, OS/2 and Windows 98 bundled with Java. The newest use
Windows XP or Windows XP embedded.
ATMs are generally reliable, but if they do go wrong customers will be left
without cash until the following morning or whenever they can get to the bank
during opening hours. Of course, not all errors are to the detriment of
customers; there have been cases of machines giving out money without
debiting the account or giving out a higher denomination of note by mistake.
Sometimes annoying software errors can occur which can appear as a dialog
ATM CARD VS CREDIT CARD
The card you use at the ATM is known as a debit card. When debit cards
first appeared it was easy to tell them apart from credit cards. Debit cards
didn't have a credit card company logo on them; instead, they usually just
had your bank name, your account number and your name.
Today debit cards look exactly like credit cards even carrying the same
logos. Both types of cards can be swiped at the checkout counter , used to
make purchases on the internet, or to pay for the fill-up at the gas pump.
When you use your debit card to make a purchase, it's just like using cash.
The account that is attached to your debit card, in most cases your checking
account, is automatically debited when you use your debit card. The cost of
your purchase is deducted from the funds you have in that account.
On the other hand, when you use your credit card to make a purchase you
are using someone's else's money, specifically the issuer of the credit card,
In effect, you agree to pay them back the money you borrowed to make
your purchase. In addition you will also pay interest on the money "loaned"
to you at the rate which you agreed to when you applied for their credit card.
This is known as the annual percentage rate (APR).
The protection offered to debit card fraud is similar but with a few exceptions. For
example, your liability under federal law is limited to $50, the same as for a credit
card, but only if you notify the issuer within two business days of discovering the
card's loss or theft. Your liability for debit card fraud can jump up to $500 if you don't
report the loss or theft within two business days.
And if you are the type of person that gives a passing glance to your monthly bank
statement, you could be totally liable for any fraudulent debit card charges if you wait
60 days or more from the time your statement is mailed.
Additional protection against fraudulent use of your credit or debit cards may be
available through your homeowner's or renter's insurance. Check your policy or with
your agent for more information about your coverage.
Also be aware that you should contact your card issuer by certified letter, return
receipt requested, after you've contacted them by phone to protect your consumer
As for which card to use for what type of purchase, most experts agree that you
should use your debit card for the same type of purchases you'd make as if you
were using cash. Therefore, it makes more sense to use your debit card than your
credit card at the grocery store or gas station (provided you have sufficient funds to
cover these purchases of course).
You should avoid using your debit card for any online purchase or for something
which is expensive. Why ? The main reason is that it is much easier to dispute a
charge when you use your credit card. If your gold-plated, limited edition, hipswinging Elvis wall clock arrives broken, your credit card company will remove the
charge until the problem is resolved.
With your debit card you are stuck dealing with the merchant directly to resolve any
problems with a purchase, even if your banking institution could really use a goldplated, limited edition, hip-swinging Elvis wall clock of their very own.
An ATM is simply a data terminal with two input and four output devices. Like any
other data terminal, the ATM has to connect to, and communicate through, a host
processor. The host processor is analogous to an Internet service provider (ISP) in
that it is the gateway through which all the various ATM networks become available to
the cardholder (the person wanting the cash).
Most host processors can support either leased-line or dial-up machines. Leasedline machines connect directly to the host processor through a four-wire, point-topoint, dedicated telephone line. Dial-up ATMs connect to the host processor through
a normal phone line using a modem and a toll-free number, or through an Internet
service provider using a local access number dialed by modem.
Leased-line ATMs are preferred for very high-volume locations because of their thruput capability, and dial-up ATMs are preferred for retail merchant locations where
cost is a greater factor than thru-put. The initial cost for a dial-up machine is less
than half that for a leased-line machine. The monthly operating costs for dial-up are
only a fraction of the costs for leased-line.
The host processor may be owned by a bank or financial institution, or it may be
owned by an independent service provider. Bank-owned processors normally
support only bank-owned machines, whereas the independent processors support
Parts of the Machine
You're probably one of the millions who has used an ATM. As you know, an ATM has
two input devices:
Card reader - The card reader captures the account information stored on the
magnetic stripe on the back of an ATM/debit or credit card. The host processor uses
this information to route the transaction to the cardholder's bank.
Keypad - The keypad lets the cardholder tell the bank what kind of transaction is
required (cash withdrawal, balance inquiry, etc.) and for what amount. Also, the bank
requires the cardholder's personal identification number (PIN) for verification. Federal
law requires that the PIN block be sent to the host processor in encrypted form.
And an ATM has four output devices:
Speaker - The speaker provides the cardholder with auditory feedback when a key is
Display screen - The display screen prompts the cardholder through each step of
the transaction process. Leased-line machines commonly use a monochrome or color
CRT (cathode ray tube) display. Dial-up machines commonly use a monochrome or
Receipt printer - The receipt printer provides the cardholder with a paper receipt of
Cash dispenser - The heart of an ATM is the safe and cash-dispensing mechanism.
The entire bottom portion of most small ATMs is a safe that contains the cash.
The cash-dispensing mechanism has an electric eye that counts each bill as it exits
the dispenser. The bill count and all of the information pertaining to a particular
transaction is recorded in a journal. The journal information is printed out periodically
and a hard copy is maintained by the machine owner for two years. Whenever a
cardholder has a dispute about a transaction, he or she can ask for a journal printout
showing the transaction, and then contact the host processor. If no one is available to
provide the journal printout, the cardholder needs to notify the bank or institution that
issued the card and fill out a form that will be faxed to the host processor. It is the
host processor's responsibility to resolve the dispute.
Besides the electric eye that counts each bill, the cash-dispensing mechanism also
has a sensor that evaluates the thickness of each bill. If two bills are stuck
together, then instead of being dispensed to the cardholder they are diverted to a
reject bin. The same thing happens with a bill that is excessively worn, torn, or
The number of reject bills is also recorded so that the machine owner can be
aware of the quality of bills that are being loaded into the machine. A high reject rate
would indicate a problem with the bills or with the dispenser mechanism.
When a cardholder wants to do an ATM transaction, he or she provides the
necessary information by means of the card reader and keypad. The ATM forwards
this information to the host processor, which routes the transaction request to the
cardholder's bank or the institution that issued the card. If the cardholder is
requesting cash, the host processor causes an electronic funds transfer to take
place from the customer's bank account to the host processor's account. Once the
funds are transferred to the host processor's bank account, the processor sends an
approval code to the ATM authorizing the machine to dispense the cash. The
processor then ACHs the cardholder's funds into the merchant's bank account,
usually the next bank business day. In this way, the merchant is reimbursed for all
funds dispensed by the ATM.
So when you request cash, the money moves electronically from your account to the
host's account to the merchant's account.
Early ATM security focused on making the ATMs invulnerable to physical attack;
they were effectively safes with dispenser mechanisms. A number of attacks on
ATMs resulted, with thieves attempting to steal entire ATMs by ram-raiding.
Modern ATM physical security concentrates on denying the use of the money inside
the machine to a thief, by means of techniques such as dye markers and smoke
canisters. This change in emphasis has meant that ATMs are now frequently found
free-standing in places like shops, rather than mounted into walls.
Another trend in ATM security leverages the existing security of a retail
establishment. In this scenario, the fortified cash dispenser is replaced with nothing
more than a paper-tape printer. The customer requests a withdrawal from the
machine, which dispenses no money, but merely prints a receipt. The customer then
takes this receipt to a nearby sales clerk, who then exchanges it for cash from the
ATM transactions are usually encrypted with DES but most transaction processors
will require the use of the more secure Triple DES by 2005.
There have also been a number of incidents of fraud where criminals have used
fake machines or have installed fake keypads or card readers to existing machines.
They have used these to record customers' PIN numbers and bank accounts and
have then used this information to create fake accounts and steal money from
A bank is always liable when a customer's money is stolen from an ATM, but there
have been complaints that banks have made it difficult to recover money lost in this
Many banks recommend that you select your own personal identification number
(PIN). Visa recommends the following PIN tips:
Don't write down your PIN. If you must write it down, do not store it in your
wallet or purse.
Make your PIN a series of letters or numbers that you can easily remember,
but that cannot easily be associated with you personally.
Avoid using birth dates, initials, house numbers or your phone number.
Visa also recommends the following tips for safe ATM usage:
Store your ATM card in your purse or wallet, in an area where it won't get
scratched or bent.
Get your card out BEFORE you approach the ATM. You'll be more vulnerable to
attack if you're standing in front of the ATM, fumbling through your wallet for your
Stand directly in front of the ATM keypad when typing in your PIN. This prevents
anyone waiting to use the machine from seeing your personal information.
After your transaction, take your receipt, card and money away. Do not stand in
front of the machine and count your money.
If you are using a drive-up ATM, get your vehicle as close to the machine as
possible to prevent anyone from coming up to your window. Also make sure that your
doors are locked before you drive up to the machine.
Do not leave your car running while using a walk-up ATM. Take your keys with you
and lock the doors before your transaction.
If someone or something makes you uncomfortable, cancel your transaction and
leave the machine immediately. Follow up with your bank to make sure the
transaction was cancelled and alert the bank to any suspicious people.
Many retail merchants close their store at night. It is strongly recommended that
they pull the money out of the machine when they close, just like they do with their
cash registers, and leave the door to the security compartment wide open like they
do with an empty cash-register drawer. This makes it obvious to any would-be thief
that this is not payday.
For safety reasons, ATM users should seek out a machine that is located in a welllighted public place. Federal law requires that only the last four digits of the
cardholder's account number be printed on the transaction receipt so that when a
receipt is left at the machine location, the account number is secure. However, the
entry of your four-digit personal identification number (PIN) on the keypad should
still be obscured from observation,
It's important to use a well-lit, public ATM machine at night
which can be done by positioning your hand and body in such a way that the PIN
entry cannot be recorded by store cameras or store employees. The cardholder's PIN
is not recorded in the journal, but the account number is. If you protect your PIN, you
protect your account.
Several companies are advertising ATMs for the blind. These machines would be
located at kiosks rather than bank drive-thrus. For several years, the keypads at
ATMs were equipped with Braille for the blind or visually impaired.
New innovations in this technology will include machines that verbally prompt the
customers for their card, their PIN and the type of transaction they would like to
Secure Crypto processor
: A secure crypto processor is a dedicated
computer for carrying out cryptographic operations, embedded in a packaging with
multiple physical security measures, which give it a degree of tamper resistance.
The purpose of secure crypto processor is to act as a keystone of a security subsystem, eliminating the need to protect the rest of the sub-system with physical
Modem : The word "modem", a portmanteau word constructed from "modulator"
and "demodulator", refers to a device that modulates an analog "carrier" signal
(such as sound), to encode digital information, and that also demodulates such a
carrier signal to decode the transmitted information. The goal is to produce a signal
that can be transmitted easily and decoded to reproduce the original digital data.
Primarily used to communicate via telephone lines, modems can be used over any
means of transmitting analog signals, from driven diodes to radio.
: "ACH" is short for "automated clearing house."
terminology means that a person or business is authorizing another
business to draft on an account. It is common for fitness centers
businesses to ACH a monthly membership fee from member accounts,
small businesses use ACH for direct deposit of paychecks
: is the act of using a heavy vehicle such as a small truck to
smash windows, tow away heavy objects, and other such actions.
DES : The Data Encryption Standard (DES) is a cipher (a method for encrypting
information) selected as an official standard for the United States in 1976, though it
subsequently enjoyed widespread use internationally. The algorithm was initially
controversial, with classified design elements, suspicions about a National Security
Agency (NSA) backdoor and a relatively short key length. DES consequently
became the most intensely studied block cipher ever, and motivated the modern
understanding of the subject. The cipher has since been superseded by the
Advanced Encryption Standard (AES).