ATM Operations, Location Strategy &
Effect of Consolidation
Rohan Kumar Sinha
2. Introduction to the ATM
3. ATM History
4. My Work
5. ATM Operations
6. Location Strategy of ATM
7. Effect of Consolidation
8. 21st Century ATM
The satisfaction and delight that accompanies the completion of any task would be incomplete
without mentioning the people who made it possible with their constant guidance and
encouragement which put the finishing touch to all the efforts with success.
I Rohan Kumar Sinha extend my intense gratitude and respect to Mr. Sumit Goyal, (my course
instructor) for providing a learning platform. I express my deep sense of gratitude and sincere
thanks to her for her valuable guidance.
I would like to thanks my seniors, who helped me thoroughly for shaping out things well in order.
Rohan Kumar Sinha
Introduction to the ATM
Automated Teller Machine
An automated teller machine (ATM) or
automatic banking machine (ABM) is a
computerised telecommunications device that
provides the clients of a financial institution with
access to financial transactions in a public space without the need for a cashier, human clerk or
bank teller. On most modern ATMs, the customer is identified by inserting a plastic ATM card
with a magnetic stripe or a plastic smart card with a chip that contains a unique card number and
some security information such as an expiration date or CVVC (CVV). Authentication is
provided by the customer entering a personal identification number (PIN).
16 Digits PIN CVV Number
Using an ATM, customers can access their bank accounts in order to make cash withdrawals (or
credit card cash advances) and check their account balances as well as purchase cell phone
prepaid credit. If the currency being withdrawn from the ATM is different from that which the
bank account is denominated in (e.g.: Withdrawing Japanese Yen from a bank account containing
US Dollars), the money will be converted at a wholesale exchange rate. Thus, ATMs often
provide the best possible exchange rate for foreign travellers and are heavily used for this purpose
Types of ATM
i. On-Site ATM- If the ATM is within 100 metres of bank premises then it referred as
ii. Off-Site ATM- If the ATM is far than 100 metres from bank premises then it is
referred as off-site ATM.
An automatic teller machine or ATM allows a bank customer to conduct their banking
transactions from almost every other ATM machine in the world. As is often the case with
inventions, many inventors contribute to the history of an invention, as is the case with the ATM.
Read each page of this article to learn about the many inventors behind the automatic teller
machine or ATM.
Luther Simjian vs. John Shepherd-Barron vs. Don Wetzel
In 1939, Luther Simjian patented an early and not-so-successful prototype of an ATM.
However, some experts have the opinion that James Good fellow of Scotland holds the earliest
patent date of 1966 for a modern ATM, and John D White (also of Docutel) in the US is often
credited with inventing the first free-standing ATM design. In 1967, John Shepherd-
Barron invented and installed an ATM in a Barclays Bank in London. Don Wetzel invented an
American made ATM in 1968.
However, it wasn't until the mid to late 1980s that ATMs became part of mainstream banking.
Luther Simjian's ATM
Luther Simjian came up with the idea of creating a "hole-in-the-wall machine" that would allow
customers to make financial transactions. In 1939, Luther Simjian applied for 20 patents related
to his ATM invention and field tested his ATM machine in what is now Citicorp. After six
months, the bank reported that there was little demand for the new invention and discontinued its
John Shepherd Barron
According to BBC News, the world's first ATM was installed in a branch of Barclays in Enfield,
North London. John Shepherd Barron, who worked for the printing firm De La Rue, was the chief
In a Barclays press release, the bank stated that comedy actor Reg Varney, star of TV sitcom "On
the Buses", became the first person in the country to use a cash machine at Barclays Enfield on
June 27th 1967 (see photo). The ATMS were at that time called DACS for De La Rue Automatic
Cash System. John Shepherd Barron was the managing director of De La Rue Instruments, the
company which made the first ATMS.
John Shepherd Barron - Slightly Radioactive
At that time plastic ATM cards did not exist. John Shepherd Barron's ATM machine took checks
that were impregnated with carbon 14, a slightly radioactive substance. The ATM machine would
detect the carbon 14 mark and match it against a pin number.
John Shepherd Barron - PIN Numbers
The idea of a personal identification number or PIN was thought up by John Shepherd Barron and
refined by his wife Caroline, who changed John’s six digit number to four as it was easier to
John Shepherd Barron never patented his ATM invention instead he decided to try to keep his
technology a trade secret. John Shepherd Barron stated that after consulting with Barclay's
lawyers, "we were advised that applying for a patent would have involved disclosing the coding
system, which in turn would have enabled criminals to work the code out."
Introduction to the United States
In 1967, a bankers' conference was held in Miami with 2,000 members in attendance. John
Shepherd Barron had just installed the first ATMs in England, and was invited to talk at the
conference. As a result, the first American order for a John Shepherd Barron ATM was placed.
Six ATMs were installed at the First Pennsylvania Bank in Philadelphia.
As is often the case with inventions, many inventors contribute to the history of an invention, as
is the case with the ATM. Read each page of this article to learn about the many inventors behind
the automatic teller machine or ATM.
Don Wetzel - Waiting In Line
Don Wetzel was the co-patentee and chief conceptualist of an automated teller machine, an idea
he said he thought of while waiting in line at a Dallas bank. At the time (1968) Don Wetzel was
the Vice President of Product Planning at Docutel, the company that developed automated
The other two inventors listed on the Don Wetzel patent were Tom Barnes, the chief mechanical
engineer and George Chastain, the electrical engineer. It took five million dollars to develop the
ATM. The concept first began in 1968, a working prototype came about in 1969 and Docutel was
issued a patent in 1973. The first Don Wetzel ATM was installed in a New York based Chemical
Editor's note: There are different claims to which bank had the first Don Wetzel ATM, I have
used Don Wetzel's own reference.
Don Wetzel Discusses His ATM Machine
Don Wetzel on the first ATM installed at the Rockville Centre, New York Chemical Bank from a
"No, it wasn't in a lobby; it was actually in the wall of the bank, out on the street. They put a
canopy over it to protect it from the rain and the weather of all sorts. Unfortunately they put the
canopy too high and the rain came under it. One time we had water in the machine and we had to
do some extensive repairs. It was a walk up on the outside of the bank.
That was the first one. And it was a cash dispenser only, not a full ATM. We had a cash
dispenser, and then the next version was going to be the total teller (created in 1971), which is the
ATM we all know today -- takes deposits, transfers money from checking to savings, savings to
checking, cash advances to your credit card, takes payments; things like that. So they didn't want
just a cash dispenser alone."
The first ATMs were off-line machines, meaning money was not automatically withdrawn from
an account. The bank accounts were not (at that time) connected by a computer network to the
Banks were at first very exclusive about who they gave ATM privileges to. Giving them only
to credit card holders (credit cards were used before ATM cards) with good banking records.
Don Wetzel, Tom Barnes and George Chastain developed the ATM cards, cards with a magnetic
strip and a personal ID number to get cash. ATM cards had to be different from credit cards (then
without magnetic strips) so account information could be included.
“In my term paper of Production & Operation Management, I am going to analyse
the ATM operations, its location strategy and effect of its consolidation. I am also
going to depict some view points on these topics.”
ATM cards use processors to connect to there various ATM networks. If you take your ATM card
out of your wallet now, you will see network logos (also known as bugs) on the back:
Here are 4 examples of network bugs.
We might notice that the Cirrus bug looks similar to the Master Card logo. That is because it’s the
ATM processing network of Master Card. The Plus network is the ATM side of Visa. Plus and
Cirrus are the National ATM networks. All other logos and bugs are regional networks.
Financial Institutions commonly referred to as Banks issue both credit cards and debit cards.
Debit cards can be ATM cards and/or Check Cards. When someone swipes or inserts a debit or
credit card into an ATM, it asks for a PIN (personal identification number).
When you process ATM transactions with ATMdepot.com your ATM machine will dial a toll
free number to begin the authorization process. Your ATM will be re-programmed with a TID
(terminal ID number) that will identify it on our processor so the networks will allow the
transaction to complete. This TID along with other identifying information lets the cardholder's
bank know that the transaction is taking place on your ATM.
Your ATM will connect to the networks through our processing center and then to the
cardholder’s bank. If there are sufficient funds in the ATM cardholders account for the
withdrawal request, the transaction will be completed. The ATM receives the authorization and
dispenses the cash requested. Your ATM can also be used if someone just wants to check their
account balance or transfer funds before or after withdrawing cash. There would be no
convenience fee charged by your ATM for non-cash withdrawal transactions.
Daily EOD reports from outsourced agencies
Collection and processing of ATM Deposit Envelopes everyday at 6.00 pm at OPEC
Disposing Captured Cards
Checking and proper storing of journal rolls
MIS to corporate office
Electronic Data Capture (EDC) storing
Informing respective agency any time if any problem with the ATM
ATM Departments in BANKS
AOC (ATM Operation Centre)
Taking care of all the ATMs in India 24 hrs.
Co-ordination of respective Delivery Channel Coordinator
Checking of ATM transactions & Reconciliation
CMC (Card Management Centre)
Preparing ATM cards as per the application from the respective branches (FATM)
PMC (Pin Management Centre)
Preparing PIN (personal identification Number) for all the ATM cards prepared by CMC
COC (Card Operation Centre)
Taking care of all the VISA Transaction all over India in GLOBAL BANK ATMs.
Co-ordination with VISA – Bangalore and Singapore.
Maintenance and proper care of VISA server at corporate office.
Location Strategy of ATM
For establishing a new ATM at any location bank generally consider following things:
Banks seeking sites for location for ATM, also need information from localities, land costs,
building availability and suitability, construction costs, local and state taxes, local and state
development incentives, availability and cost of energy, transportation costs to customers and
from suppliers, as well as such factors the location and market areas of competitors, the
availability of other infrastructure such as telecommunications, sewer, and water, as well as
factors related to quality of life.
2. Geographical locations
The geographical location of the branches and the ATMs are of vital importance to ensure either
responsiveness of efficiency of the supply chain. While analyzing the cash dispensed figures, for
the various ATM locations for Global Bank, certain location shows significant amount of
variability in the amount of cash dispensed. Depending on high volume of transaction or high
value of transaction, this could be attributed to the change in withdrawal pattern of the customers
in the catchment area. The ATMs around shopping complex and malls have enormously large
withdrawals in weekends and festival times.
3. Status of accounts
The asymmetry in the nature of accounts is one main factor leading to wide fluctuations in the
demand for / or supply of cash. The catchment area can necessarily have resident individuals,
shopping malls, or a large chunk salaried people (in a typical downtown location). In such a
scenario, the withdrawal of cash recurs on a fixed slot every month. Naturally banks should take
cognizance of this fact and accordingly plan the replenishment at these counters so as to avoid
any excess cash holding situation.
4. The ATMs are categorized by some of the banks depending on the volume of transaction that
takes place from the outlets. The following table shows the method of categorization used by
Global Bank to grade its ATMs.
Once the ATMs are categorized, a maximum cash retention limit is set on the basis of the
following calculation shown in the table:
The average volume of transaction is taken into consideration in each of the categories. This
value is multiplied by a factor of 3. This factor three has been derived through the following
Taking the data of the maximum withdrawals that has taken place from each of the ATMs
in the last 3 months and measuring the deviations.
Applying judgment to factor in any unexpected swings in demand and other external
Effect of consolidation
For the smooth operation of ATM in India various banks collaborated to each other under
different norms and conditions. The group is:
Cash Tree Banks-
The Lakshmi Vilas Bank Limited was founded seven decades ago ( in 1926) by
seven people of karur under the leadership of Shri V.S.N. Ramalinga Chettiar....
In these banks, there are two types of transaction charges.
1. Customers charge- On every transaction bank is deducting certain amount from customers’
account, if he/she takes the service of other banks’ ATM. In this process the charge varies from
Rs. 5 to 10 respective of agreement between related banks as well as between bank and customer.
2. Bank Charge- On the other hand, the bank related to the customers account holder is liable to
pay certain amount to the service provider bank. This amount varies from banks to bank i.e.
domestic to domestic or domestic to foreign have different charges payable. It varies from Rs 10
to 20 respective of their agreement.
21st Century ATM in India
1. Euronet Launches National ATM Switch in India
Euronet Worldwide, Inc., a leader in electronic payment solutions, announced that it has received
approval from the Reserve Bank of India (RBI) to operate a national shared ATM switch with
Industrial Development Bank of India (IDBI) Bank as the settlement bank. The network, which
will operate under the bank-independent brand Cashnet, is expected to commence operations next
Cashnet, India's first nationwide shared ATM switch will support ATMs for the existing founding
member banks: Citbank, IDBI Bank, Standard Chartered Bank (SCB) and Unit Trust of India
(UTI) Bank. IDBI Bank will act as the settlement bank for the network. Based on the member
banks' existing ATMs, Cashnet will provide access to more than 1,300 ATMs for the more than 6
million debit and credit cardholders of the member banks across more than 100 cities in India.
Customers from the member banks can use any ATM in the network. These transactions will be
supported by online connections between each bank and the Euronet processing center in
Mumbai, thus establishing the first shared ATM network in India to offer end-to-end online
transaction processing across the entire network.
The network will be implemented using Euronet's software, which has powered Euronet's
European Operations Center for the past eight years, processing more than 7 million transactions
a month. The Cashnet switch will process ATM transactions and provide daily settlement
between member banks.
Cashnet enables customers to enjoy additional access through an expanded transaction set,
allowing for easy access to their financial accounts. The transaction set includes cash
withdrawals, fast cash withdrawals, balance inquiries, mini-statements, PIN changes, checkbook
requests and ATM recharges, which enable consumers to purchase prepaid airtime for their
mobile phone accounts from the ATM.
2. State Bank of India signs for 300 solar-powered ATMs
State Bank of India (SBI) is rolling out over 300 solar-powered ATMs from local vendor Vortex
Engineering at rural and semi-urban sites across the country.
SBI has signed for 545 machines, of which over 300 will solar-powered Gramateller Duo ATMs -
developed in collaboration with IIT Madras - in the first large-scale deployment of its kind in the
The vendor says a conventional cash machine consumes about 1000 watts of power and requires
an air-conditioned environment, adding another 1500 watts. This means a normal ATM consumes
about 1800 units of power every month.
In contrast, Vortex claims that its machines consume less than 100 watts of power and do not
require air conditioning, thus using up less than 72 units per month. The saving of 1728 units per
month represents a cash benefit of Rs 1, 20,000 a year.
In addition, compared to conventional ATM installations, Vortex's machines reduce CO2
emissions by at least 18,500 kg per year.
V Vijay Babu, CEO, Vortex Engineering, says: "With an ATM penetration of about 0.04 per
1000 people in India, there is a huge need for Rural ATMs. With this solar innovation becoming a
viable option, Vortex looks forward to revolutionising the Rural ATM market."
In recent years, the banking industry has been undergoing drastic changes, reflecting a number of
underlying developments. Speed of information transmission has led to commoditization of
banks’ products and services—thus reducing the profits from product and service differentiation.
The rate of advancement in ATM processing leads India to a new height as well as provides the
customers with a wide range of services and benefits.