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Definition: Automated Teller Machine (ATM)
Also known as an Automated banking machine or a cash machine, an ATM is an electronic telecommunications device enabling financial transactions (primarily cash disbursal) without the intermediation of a bank officer or cashier/teller. As opposed to performing basic banking transactions with the aid of a bank teller/representative, an ATM (Automated Teller Machine), allows customers to complete their basic transactional requirements through the electronic banking outlet that is the ATM.
The key value proposition of an ATM is its ability to cater to cash needs, during out of hours time periods of banks and financial institutions. The first ATM was put to use, by Barclay’s Bank in London, 1967, the invention of which was credited to John Shepherd-Barron of De La Rue.
Generally there are 2 primary types of ATMs, - the first allows for only basic cash withdrawal and account reporting facility, whereas the second type involve complex capabilities, including accepting credit card payments, deposit and advanced customer informational capability. ATMs can also be white label ATMs or specific bank affiliated ATMs. Many banks charge differential ATM-usage fees.
Certain kinds of ATMs also provide the best possible exchange rates for foreign travellers and are hence preferred.
How does an ATM work?
The ATM is connected to an immense network of interbank networks, such as Pulse, NYCE, PLUS, Cirrus, etc, enabling people to withdraw and deposit money from third party banks if needed. Any person with an ATM debit or credit card can access an ATM, as ATMs are scattered throughout the city, it makes it easier for a customer to access an ATM. A customer is identified via his unique debit or credit card whose magnetic stripe contains the customer data, authentication is through a personal identification number (PIN). Communication is over a telecommunications network with encrypted data messages.
Risks involved in ATM usage include, confidentiality, threat of data theft, security of ATM installations, etc.