Definition of automated teller machines (ATM)
What is an automatic teller machine (ATM)?
An automated teller machine (ABM) is an electronic point of sale that allows customers to complete basic transactions without the assistance of a branch representative or cashier. Anyone with a credit or debit card can access cash at most ATMs.
ATMs are convenient, allowing consumers to perform quick, self-service transactions such as deposits, cash withdrawals, bill payments, and transfers between accounts. Fees are usually charged for cash withdrawals by the bank where the account is located, by the ATM operator, or both. Some or all of these fees can be avoided by using an ATM operated directly by the bank that holds the account.
ATMs are known in different parts of the world as automated teller machines (ABMs) or cash machines.
Key points to remember
- Automated banking machines (ABMs) are electronic points of sale that allow people to make transactions without going to a branch of their bank.
- Some ATMs are simple cash machines while others allow a variety of transactions such as check deposits, balance transfers, and bill payments.
- The first ATMs appeared between the mid to late 1960s and their number grew to over 2 million worldwide.
- Today’s ATMs are technological marvels, many of which are capable of accepting deposits as well as several other banking services.
- To reduce ATM fees, use an ATM from your own bank as often as possible.
Click on Play to learn how ATMs work
Understanding Automated Banking Machines (ATMs)
The first ATM machine appeared in a branch of Barclay’s Bank in London in 1967, although there are reports of an ATM used in Japan in the mid-1960s. Interbank communication networks that allowed a consumer to use one bank’s card at another bank’s ATM came later, in the 1970s.
In a few years, ATMs have spread around the world, ensuring a presence in all major countries. They can now be found even in tiny island nations such as Kiribati and the Federated States of Micronesia.
There are now more than 2.2 million ATMs in operation around the world.
Types of ATMs
There are two main types of ATMs. Base units only allow customers to withdraw money and receive updated account balances. The most complex machines accept deposits, facilitate payments and line of credit transfers, and access account information.
To access the advanced features of complex units, a user often needs to have an account with the bank that operates the machine.
Analysts predict that ATMs will become even more popular and predict an increase in the number of ATM withdrawals. ATMs of the future are likely to be full-service terminals in place of or in addition to traditional bank machines.
Cryptocurrency enthusiasts can now buy and sell Bitcoin and other crypto tokens through Bitcoin ATMs, internet-connected terminals that will dispense money in exchange for crypto or accept cash or a credit card. credit to buy. There are now nearly 10,000 Bitcoin ATMs spread around the world.
ATM machine design elements
Although every ATM is designed differently, they all contain the same basic elements:
- Card reader: This part reads the chip on the front of the card or the magnetic strip on the back of the card.
- Keyboard: The keypad is used by the customer to enter information, including the personal identification number (PIN), the type of transaction required and the amount of the transaction.
- Cash machine: The tickets are dispensed through a slot in the machine, which is connected to a safe at the bottom of the machine.
- Printer: If necessary, consumers can request receipts which are printed here. The receipt records the type of transaction, amount and account balance.
- Filter: The ATM issues prompts that guide the consumer through the process of completing the transaction. Information is also transmitted to the screen, such as account information and balances.
Full-service machines now often have places to deposit paper checks or cash.
Special Considerations: Using ATMs
Banks place ATMs inside and outside their branches. Other ATMs are located in high traffic areas such as shopping malls, grocery stores, convenience stores, airports, bus and train stations, gas stations, casinos, restaurants and other places. Most ATMs found in banks are multi-functional, while others that are off-site tend to be primarily or entirely designed for cash withdrawals.
ATMs require consumers to use a plastic card, either a bank debit card or a credit card, to complete a transaction. Consumers are authenticated by a PIN code before any transaction.
Many cards come with a chip that transmits data from the card to the machine. These work in the same way as a barcode scanned by a code reader.
The average amount of cash withdrawn from an ATM per transaction.
Account holders can use their bank’s ATMs for free, but accessing funds through a unit owned by a competing bank usually incurs a fee. According to MoneyRates.com, the average total fee for withdrawing money from an off-network ATM was $ 4.55 in 2021.
Some banks reimburse the fees to their customers, especially if there is no corresponding ATM available in the area.
So if you’re one of those people who pull pocket money every week from an ATM, using the wrong machine could cost you almost $ 240 a year.
Ownership of ATMs
In many cases, banks and credit unions have ATMs. However, individuals and businesses can also buy or rent ATMs on their own or through an ATM franchise. When individuals or small businesses, such as restaurants or gas stations, own ATMs, the profit model is based on charging users of the machine a fee.
Banks also have ATMs for this purpose. They use the convenience of an ATM to attract customers. ATMs also take some of the customer service charges from bank tellers, saving banks money on payroll costs.
Use ATMs abroad
ATMs allow travelers to easily access their checking or savings accounts from almost anywhere in the world.
Travel experts advise consumers to use foreign ATMs as a source of money overseas, as they generally enjoy a more favorable exchange rate than most money changers.
However, the account holder’s bank may charge a transaction fee or a percentage of the amount traded. Most ATMs do not show the exchange rate on the receipt, making it difficult to track expenses.
How much can you withdraw from an ATM?
The amount you can withdraw from an ATM per day, week or month will vary depending on your bank and the status of your account at that bank. For most account holders, for example, Capital One imposes a daily ATM withdrawal limit of $ 1,000 and Well Fargo at just $ 300. You may be able to bypass these limits by calling your bank for authorization or improving your banking status by depositing more funds.
How do I make a deposit at an ATM?
If you are a customer of a bank, you may be able to deposit cash or checks through one of their ATMs. To do this, you may just need to insert the checks or cash directly into the machine. Other machines may require you to fill out a deposit slip and put the money in an envelope before inserting it into the machine. For a check, be sure to back the back of your check and also write âfor deposit onlyâ for added security.
Which bank installed the first ATM in the United States?
The first ATM in the United States was installed by Chemical Bank in Rockville Center (Long Island), NY in 1969 (2 years after Barclays installed the first ATM in the UK). By the end of 1971, more than 1,000 ATMs were installed around the world.