Contents
Introduction
ATM Machine
History & Invention
How Do ATMs Work?
Parts of the Machine
ATM Security
Benefits
ACKNOWLEDGEMENT
I am really thankful to all those
people, who have helped me in my project some way or the
other. Rakesh Mishra is responsible to bring out the text in
its present form..
Lastly, the blessing of my parents has
helped me to grasp the challenging subject mater.
Name: - Vishal Jaiswal
Roll No. 0202EC081087 BE
4ND SEMESTER.
Introduction
Automated teller machines can offer significant
benefits to both banks and their depositors. The machines
can enable depositors to withdraw cash at more convenient
times and places than during banking hours at branches. At
the same time, by automating services that were previously
completed manually, ATMs can reduce the costs of servicing
some depositor demands. These potential benefits are
multiplied when banks share their ATMs, allowing
depositors of other banks to access their accounts through a
bank’s ATM. The decision by banks to share their ATMs is
partially determined by the terms under which the sharing
would occur. In particular, there are several prices that can
be charged to or collected by the three main parties involved
in an ATM transaction, the cardholder, the cardholder’s
bank, and the ATM owner. How, and by whom, these prices
are set affects a number of economic decisions, including the
number of machines that banks and non-banks choose to
deploy, deposit market interest rates, distances traveled by
depositors and non-depositors that wish to withdraw cash,
profits of banks, and welfare of bank customers.
ATM machine
(Automatic Teller Machine machine) A banking
terminal that accepts deposits and dispenses cash. ATMs are
activated by inserting a cash or credit card that contains the
user's account number and PIN on a magnetic stripe. The
ATM calls up the bank's computers to verify the balance,
dispenses the cash and then transmits a completed
transaction notice. The word "machine" in the term "ATM
machine" is certainly redundant, but widely used.
Automated teller machine (ATM), device used by bank
customers to process account transactions. Typically, a user
inserts into the ATM a special plastic card that is encoded
with information on a magnetic strip. The strip contains an
identification code that is transmitted to the bank's central
computer by modem. To prevent unauthorized transactions,
a personal identification number (PIN) must also be entered
by the user using a keypad. The computer then permits the
ATM to complete the transaction; most machines can
dispense cash, accept deposits, transfer funds, and provide
information on account balances. Banks have formed
cooperative, nationwide networks so that a customer of one
bank can use an ATM of another for cash access; by 1997
there were more than 160,000 ATMs across the United
States. Some ATMs will also accept credit cards for cash
advances.
The first ATM was installed in 1969 by
Chemical Bank at its branch in Rockville Centre, N.Y.
A customer using a coded card was dispensed a package
containing a set sum of money.
History And Invention
The world's first ATM was developed by De La
Rue and installed in Enfield Town in North London on June
27, 1967 by Barclays Bank. This instance of the invention is
credited to John Shepherd-Barron, although Luther George
Simjian registered patents in New York, USA in the 1930s
and Donald Wetzel and two other engineers from Docutel
registered a patent on June 4, 1973. Shepherd-Barron was
awarded an OBE in the 2005 New Year's Honours.Atm
invention has changed not only the face of banking but also
the way we conduct our daily lives. It is a technology that
has altered our lifestyles more significantly than most other
inventions. The name of this inventor is John Shepherd-
Barron.
The invention of the ATM brought different ideas,
different experiences and different technologies together.
For example, Shepherd-Barron's armored trucking division
was then responsible for moving most of the cash in the UK.
He had earlier brought over the idea of armored trucking
from the U.S. But he had started his career with De La Rue
on the currency printing side of the business.Soon
afterwards, a deal was signed with the bank to develop six
ATMs (called then a DACS -- De La Rue Automatic Cash
System) for trial, followed by 50 more machines. It took one
year to develop the Asynchronous Transfer Mode Switching.
How Do ATMs Work?
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. Leased-line machines connect directly to the
host processor through a four-wire, point-to-point, 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.
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 merchant-owned machines.
Parts of the Machine
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.
An ATM has four output devices:
Speaker - The speaker provides the cardholder with
auditory feedback when a key is pressed.
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
color LCD.
Receipt printer - The receipt printer provides the
cardholder with a paper receipt of the transaction.
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.
Sensing Bills
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 folded.
ATM Security
ATMs keep your personal identification number (PIN)
and other information safe by using encryption software
such as Triple DES (Data Encryption Standard). But there
are lots of things that you can do to protect your information
and your money at an ATM.
Many banks recommend that you select your own PIN.
Visa offers 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.
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.
Some Facts about ATM Machines:-
ATM customers spend an average of 20 to 25%
more than non-ATM customers.
60% of Americans ages 25-34 and 51% ages 25-
49 use ATM machines 8 times a month,
withdrawing an average of $55.00 per
transaction.
In 1994, there were 8.3 billion ATM transactions
in the United States.
Bank ATMs average 6,400 transactions per
month.
The most popular day for ATM usage is Friday.
Among people that use both credit and debit
cards, debit cards are used most often. 5.9 times
per month versus 5.1 times per month.
Independent studies show that cash retention
among large retailers is 30-33%. Retention
among smaller retailers is 35-40%.
Night clubs are seeing 70-80% of the dispensed
cash staying at the club.
Retail location ATM machines that dispense
$20.00 bills increase store sales by over 8%.
Benefits
Consumers today see ATM'S as a necessity not just
convenience.Cash dispensing ATM'S have become the fastest
growing and must requested service.Intially banks operated
expensive lease line ATM'S with the Introduction of dial up
ATM'S owners became aware of the greater benefits of
having
one site.
Conclusion
From my point of view ATM is one of the gift from the
inventor to humanity.