INTRODUCTION

An Automated Teller Machine (ATM) allows customers to perform banking transactions

anywhere and at anytime without the need of human teller. By using a debit or ATM card at an ATM,
individuals can withdraw cash from checking or savings accounts, make a deposit or transfer money
from one account to another or perform other functions. You can also get cash advances using a credit
card at an ATM. Individuals should be aware that many banks charge transaction fees generally
ranging from Rs 50-150 per transaction - for using another banks ATM.

The ATM is online with the bank, that is, each

transaction will be authorised by the bank ondemand and directly debited from the account's
owner. The ATM works as follows. First, the client

will

insert his/her client card in the ATM and then the

ATM will ask for a Personal Identification Number
(PIN) , if the number is entered incorrectly several
times in a row, most ATMs will retain the card as a
security precaution to prevent an unauthorised user

from

working out the PIN by pure guesswork.

Once the correct PIN is given, the ATM will ask for the amount of money to be withdrawn. If the
amount is available and if the client has enough money on his credit then the said amount of money
will be paid. Whether the amount of money is payable or not, i.e. the ATM has enough cash but could
1

be the case the ATM has no change for that amount, will be also checked. Once the money is offered
to the client a countdown is started, i.e. the client has a determined amount of time to pick up the
money. If this timeout is over, the money will be collected by the ATM and the transaction will be
rolled back.

The class Card input has the methods for reading the code of the client's card and for ejecting
the card from the ATM. The class Card input will interact through the Controller with the class
Terminal, where the methods Requested PIN and Requested amount are defined, in order to get the
PIN of the user and to verify if the given PIN is correct or not. The class Card will have the
information of the cardholder, that is, the Card number, PIN, and Account number. The Controller
will interact with Bank using the information of the cardholder in order to get the authorization to pay
(or not) the requested amount. The bank interface will send the request to the Accounting class, which
belongs to the Bank package, in order to call the Debit method of the accounting class. The
Accounting class has the methods Rollback, Authorization and Debit which directly interact with the
Accounts class. Rollback is for roll back a transaction (for the case anything is wrong) and should
leave the account and the teller machine in the original state; Authorization will authorize or not an
operation and Debit will extract the requested amount of money from the account in the case the
operation is authorized.

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.

Automated Teller Machines (ATMs) have gained prominence as a delivery channel for
banking transactions in India. Banks have been deploying ATMs to increase their reach. As
at the end of December 2007, the number of ATMs deployed in India was 32,342.

From first day of April 2009, entire ATM network is now available to customers from
any bank for transactions for no fee at all, irrespective of the banks in which they have
their accounts, Now Customers will not be levied any fee on cash withdrawals using
ATM and debit cards issued by other banks. This will in turn increase usage of ATMs in
India.

More people are now moving towards using the automated teller machines (ATM) for
their banking needs. According to a survey by Bank net India, 95% people now prefer
this modern channel to traditional mode of banking. Almost 60% people use an ATM at
least once a week.

Increased ATM usage is also helped by the fact that customers have now the flexibility
of using ATMs of other banks, as most of the banks are part of major interbank networks
like National Financial Switch (NFS), Miter, BANCS, Cash tree and Cash net. The
interbank networks have brought together ATMs of several banks so that consumers
would gain access to any of the participating banks ATMs. Banks find it cheaper to pay
membership fees to these networks as against setting up additional units in expensive-todeploy areas.

ATMs are now seen to be more than mere cash dispensing machines. Customers use
ATMs to recharge their mobile phone pre-paid connections, pay their utility bills, even
mutual fund transactions making them at par with flexibility given in internet banking
3

only more secure. Of the value-added services provided at ATMs, bill-payment is the
most used service, followed by prepaid mobile talk-time recharges. However, still about
one third of the respondents do not use any value added services at ATMs.

The ATM market in India is not yet saturated. Though the concentration of ATMs is
greater in metros, the demand is increasing for other cities and even rural areas. ATM's
per million people approximately is 33 units is very low. Experts forecast that the growth
rate (CAGR) is expected to grow 18 percent up by 2013. Banks going into a self service
model can have huge saving potential for banks and may also increase the convenience
for the customers. Many ATM vendors have devised specialized machines, embedded
with biometric devices for authentication. Catering to the rural population, these
machines have enabled them to interact with the machine in their local language and on a
graphical user interface. The rural customer has seemed to accept this new medium. This
has the potential to further widen the scope of ATM usage in the interior parts of the
country.

There is also interest towards white-label ATMs. Many companies are interested in this
model, where the ownership of the ATM will not be with the banks but with third parties
who deploy them and make money on fees charged on every transaction. The concept is
prevalent in the American continent.

HISTORY OF ATM

As is often the case with inventions, many inventors contribute to the history of an
invention. In the case of the ATM, Don Wetzel invented the first successful and modern ATM
in the USA, however he was not first inventor to create an ATM. In 1939, Luther George
Simjian started patenting an earlier and not-so-successful version of an 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. Don Wetzel was the

co-

patentee and chief conceptualist of the automated teller machine, an idea he said he thought of
while waiting in line at a Dallas bank.

At the time (1968) Wetzel was the Vice President of Product Planning at Docutel, the
company that developed automated baggage-handling equipment. The other two inventors
listed on the 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 of the
modern ATM first began in 1968, a working prototype came about in 1969 and Docutel was
issued a patent in 1973.

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 ATM. Therefore, 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. Wetzel, Barnes and Chastain developed the
first real 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.

WHY GO FOR ATM?

An automatic teller machine increases existing business. The typical ATM customer
5

will spend 20-25% more than a non-ATM customer, according to research conducted
by AT&T Global Information Solutions.

An automatic teller machine generates new business. Customers are more likely to
seek out a location with an automatic teller machine; in addition to convenience, there
are a number of safety benefits associated with an in-store automatic teller machine,
according to survey results published in Petroleum Marketer magazine.

An automatic teller machine provides additional revenue streams. Each ATM

withdrawal transaction generates surcharge ("convenience fee") income for the owner
of the automatic teller machine. Additionally, an automatic teller machine can provide
revenue from on-screen advertising, couponing, and alternative media (e.g., prepaid
phone-cards, postage stamps) dispensing opportunities.
An automatic teller machine reduces risk and lowers costs. Having an automatic teller
machine on the premises can reduce the number of bad checks and cut credit card
expenses because customers have the option of withdrawing cash instead.

PARTS OF ATM
As told earlier, there are mainly two input devices and four outputdevices for an ATM. The
input devices are:
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Card Reader
This is a part of the identification of your particular account number. For this the magnetic
stripe on the back of the ATM card is either swiped or pressed on the card reader so that it
captures your account information. To understand the account information of the user, the
data from the card is passed on to the host processor. The host processor thus uses this data to
get the information from the card holders bank.

Keypad
After the card is recognized, the machine asks further details like the type of withdrawal you
prefer.Your balance has a unique PIN number, there is very little chance for someone else to
withdraw money from your account. There are also separate laws to protect the PIN code
while sending it to the host processor. So, the PIN number is mostly sent in encrypted form. If
your pin number is correct the ATM amount, enquiry and your personal identification number
(PIN) and so on.

Receipt printer
All the details regarding your withdrawal like the date and time and the amount
withdrawn and also the balance amount in the bank is also shown in the receipt. Thus a paper
receipt of the current transaction is obtained by the user.

Cash dispenser:
This is the central system of the ATM machine. This is from where the required money is
obtained. From this portion the person can collect the money.

Functions of the Cash Dispenser:

As the whole mechanism is regarding the withdrawal of cash, thecash dispenser should be
highly efficient. These are the main functionsthat are to be carried out by the cash dispenser. It
is the duty of the cash dispenser to count each bill and give the required amount. If there are
cases where the bills are stuck together they should be rejected and instead new notes should
be taken. If the money is worn, or even folded, they will be moved to another section called
the reject bin. All these actions are carried out by high-precision sensors. There may be cases
where the sensors may go wrong. To know this, the person responsible for the machine checks
the number of rejected notes at a certain interval. If the numbers of notes are a lot than
expected, then it would indicate that either the quality of the bills is not good or there is a
problem with the cash dispenser. A complete record of each transaction made by a particular
ATM machine is recorded each day and is kept as a journal. This journal is later collected and
then printed out at times. This information regarding the transaction is kept by the authorities
for
period
of
2
years.
As
there
may be cases regarding a particular transaction going wrong, the account owner or also the
bank officers have a right to see the transaction. With this printout the account holder can
contact the host processor.

ATM Networking:
8

When a transaction is made, the details are inputted by the cardholder. This information is
passed on to the host processor by the ATM machine. The host processor checks these details
with the authorized bank. If the details are correct, the requested cash by the card holder
istaken with the help of an electronic fund from the customer's bank account to the host
processors account. After this function is carried out,the processor sends an approval code to
the ATM machine so that thecash can be transferred.

STEPS TO USE AN ATM MACHINE

1.Insert your ATM Card into the machine.

2. Select a language. Note that this option often only comes up where your card is
registered as being from another country, unless you live in a country or region with
languages other than English are in major use.

10

3. Enter your PIN (Personal Identification Number), then press Enter,

make sure you enter correct pin.

11

4.Select a transaction.

5. Deposit money. If you want to deposit (put in) money:

12

5.1 Enter the amount you will deposit. Confirm the amount.

6.Withdraw money. If you want to withdraw (take out) money, select or enter the amount
to withdraw.
6.1 Most machines dispense money in fixed amounts. You may be given a choice between
common amounts or you may be asked to enter a number that is a multiple of 20 (20, 40, 60,
80, etc.).

13

6.2 Take the cash when the door opens. Put it directly into your wallet.

7.Choose whether to do an additional transaction. Select Yes or No.

14

8. Choose whether you want a receipt, select Yes or No. Take the receipt if you
requested it.

9. Wait while the system processes your transactions.

When the machine beeps at you, take your card, cash, and receipt (if applicable). Always
make sure that you have both your cash and your card.

10. Use the receipt to record the transaction in your check register or
passbook.

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USES OF ATM

Cash Withdrawal and Balance Enquiry:

In spite of a number of innovative services being made available at many ATMs, cash
withdrawal still remains the most accessed service at ATM's. However,the migration of
routine bank transactions like cashwithdrawals and balance enquiries from teller counters to
ATMs significantly raises the potential for savings in employee costs and greater employee
focus on value-added revenue enhancing activities such as selling other financial products and
advisory services to customers.

Cash /Cheque Deposit:

A gain, due to the strong cash culture in India, cash deposits are most likely higher than in
other markets, especially cash deposits made by commercial customers such as retail shop
keepers and those whose work involves substantial traveling. A high cash withdrawal rate
results
in higher ATM servicing costs due to frequent cash replenishment
requirements.
Recent developments in ATM technology have made it possible to recycle cash in ATMs.
Currency notes received as cash deposits are counted soiled notes separated and deposited
cash dispensed to fulfill withdrawal transactions. ATM with Cheque deposit facility is not
picking up in India, like other countries. One of the reasons is the delay in collection of the
chequed deposited in ATMs. Cheque deposited in ATMs is to be collected and deposited in the
designated branch for collection where customers can deposit their cheques which are
collected at intervals which may be difficult in ATMs.

Bill Payments :
Most utilities have inadequate infrastructure for receiving bill payments,resulting in long queu
es at collection centres arrangements with bill-payment service providers. ATM users
register their water, electricity and telephone utility accounts with banks, check their dues at
ATMs, approve bill payments that are debited to their bank accounts and receive printed
receipts for the transactions. This service has the effect of improving customer satisfaction for
both the bank as well as the bill payment service providers. Some bank ATMs even accept
charitable contributions to Temples.

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Sale of Paper sled Products:

ATMs are ideally suited to sell paper-based products and services such as tickets, wireless
phone recharge cards, financial products, etc.The screen interface allows browsing and
customization, access to bank accounts facilitate payments and printing capabilities produce
the actual product/service.
A number of banks including ICICI Bank, SBI and PNB have ATMs at Mumbais local
railway stations to dispense season tickets to commuters. Own-bank customers pay no extra
charge while other bank customers pay a fee of Rs. 50 for this extremely useful service of
anytime ticket purchase.

Money Transfers:
Indians, who have migrated abroad or to cities, regularly use money orders and wire transfers
to send money to their families back home. ATM growth, especially in rural India, will
capture
substantial business from the expensive wire transfer agents network and the
customer-service lacking postal network. In line with international trends, ATMs can be made
capable
to
dispense
printed
money
orders
or
initiate
wire transfers against a charge on customers bank accounts. After addressing
regulatory
hurdles,
these
services
can
even
be
made
available
to nonaccount holders through cash payments using the currency acceptors built into ATMs. ATMs
can also facilitate the encashment of wire transfer amounts by allowing even non-account
holders to withdraw cash based on Pins or previously mailed special-purpose ATM cards.

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Advantages of ATM

CONVENIENCE
It is very convenient to carry to carry a card as compared to cash. Its acceptance is better than
cash. Risk of theft is less and if stolen, stoppage and recovery is better than cash and cheque.
It is even more convenient for unplanned purchases and needs as one may not carry enough
cash every time.

SPOT CREDIT
As and when required, credit is available. Its pre-determined (decided) credit limit which can
be availed of whenever desired. Credit is free of interest till first immediate billing cycle. This
improves purchasing power.

REWARD POINTS AND DISCOUNTS

These are additional benefits provided by issuer for usage of card. Reward points can be
converted to discounts and gifts as per the catalogue of the issuer.

PRIVELEGES
Access to VIP lounges at the airport and star hotels is an additional privilege for the
cardholder.

INCRESED PROFITABILITY/ REDUCED EXPENSES

Cutting costs is a top priority for every business in todays sluggish economy. As such, the
reduced manpower as well as the savings made from lower maintenance costs can be
reinvested to realize more profits. The ability to be able to operate terminals at a lower cost
also means the low cost passes to your company.

PROFESSIONAL IMAGE
Branding is one of the most tedious processes in the management cycle. Any time you work
with a reputable ATM co-branded, your image is enhanced quickly due to the top quality
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services. If your bank or company is hampered by unprofitable off-site ATM machines, cobranding is the way forward to maintaining brand exposure.

INCREASED ACCESSIBILITY
The co-branded provides 24/7 hour support which in most cases, your bank might not
provide. This creates customer loyalty due to efficiency.

REDUCED CASH EXPOSURE

Your business avoids the huge responsibility that comes with cash exposure since the co
partner handles cash replenishment. Issues including theft of cash during transit do not arise.
The process of co-branding is quite simple. After identifying the ATM machines company
through a thorough search, check their services and fill out the form provided. The checking
of your machines outlay leads to a quotation of monthly charges after agreements on all
details concerning the co-branding concept. The best co-branded really should have
experience and its also wise to read testimonials and reviews of their services.

OTHER LOANS

Bankers provide personal loans, car loans, etc. with some priority and ease if cardholder's
payment history is good.

ATM SHARING FEES

Bankers who establish their own ATMs get sharing fees from other banks if other banks
customers use their ATM. This is additional income for them.

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BENEFITS FOR CONSUMERS

Use an ATM card to keep accurate records of banking transactions. Monthly statements,
usually available online or printed and mailed, itemize each transaction made with the card.
This benefit leads to fewer accidental overdrafts, and provides a visual record of spending
habits, unlike using cash. Transactions are processed quickly with an ATM card. Sliding the
card is faster than writing a check, more accurate than paying with cash (since change can be
miscounted), and makes some transactions quicker. For example, using an ATM card at a
gasoline pump eliminates the hassle of standing in line in a convenience store to complete the
sale. After a quick swipe and approval, a receipt is often printed at the gas pump for user
convenience. ATM cards are usually free, according to Merchant's State Bank. Unlike checks,
many financial institutions do not charge their customers for an ATM card.

BENEFITS FOR BUSINESSES

When consumers use ATM cards to pay for purchases, funds are deposited quickly into the
business account. In as little as 48 hours, businesses will have access to money from ATM
card transactions. Checks can take up to seven days to clear, putting a hold on accessible
funds. Business owners pay to offer the convenience of credit card transactions for their
customers. For each transaction, a small percentage is paid to the credit card company as a
convenience fee. ATM card transactions are a win-win for both the businesses that accept the
ATM card and the consumer. When consumers pay retailers with an ATM card, the business
owner doesn't have to pay a fee. And, consumers don't have to pay interest or annual fees
when using an ATM card, like they would with use of a credit card.

BENEFITS FOR TRAVEL

When you're trying to pack light, leave the checkbook and stack of paper money at home. One
simple ATM card can pay for purchases with funds directly withdrawn from your checking
account. The small card is simple to tuck in a small purse or in a snug pocket. When cash is
needed, get a better exchange rate in foreign countries by using an ATM card. Foreign ATM
machines offer users access to the wholesale exchange rate, which is often less expensive than
paying service fees when exchanging cash or travelers checks in a foreign bank or currency
exchange.

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DISADVATAGES OF ATM
In the United States, there are approximately 400,000 automatic (or automated) teller
machines, also known as ATMs. The ATM was perfected by Luther George Simjian, a New
York inventor, who convinced a city bank in the 1930s that immediate check deposit from
local workers would be an advantage to the bank. The experiment lasted only six months due
to disinterest from the g

eneral working population. The modern ATM was used first in London in 1967, before the use
exploded in the 1980s. Economists speculate that the decline in the number and use of the
machines over the past few years is related to increased ATM fees.

FRAUD
The potential for identity theft is a major disadvantage related to automatic teller machines.
Fraudulent card readers, called skimmers, are placed over the authentic reader to transfer
numbers and codes to nearby thieves. Spy cameras are also used by password voyeurs to
collect access codes. Lost access cards are another potential for fraud. The Federal Trade
Commission states that people are not responsible for unauthorized use of a card, if it is
reported immediately. If the loss is not noticed immediately, consumers may lose all funds in
an account, if notice is not given before money transfers are made. Incorrect withdrawals
noted on monthly statements must be reported, or else consumers are responsible for the
amounts, even when removed by fraudulent means, according to the U.S. Federal Trade
Commission.

THEFT
ATMs are a magnet for easy theft. Robbers are guaranteed cash from consumers visiting the
money machines. Although ATM robberies are not common (only one attack in every 2.5
million transactions), according to the California Banking Industry, the U.S. Department of
21

Justice (DOJ) reports that approximately 15 percent of people attacked and robbed at ATM
stations are killed or injured. The DOJ claims the average loss is between $100 and $200.

COST / INTEREST

Cost of card is high. Annual fees, APR ( Annual Percentage rate), penalties, ATM usage
charges, lost card replacement charges is significant.

OVERSPENDING

As purchasing power is not limited to cash, people tend to spend more. It's a machine to
provoke consumerism in the society. It's in favour of capitalism and against socialism.

SERVICING COST

Cards are technology oriented. Cards are costly. Issuance process, billing and pament
processing is a laborious and costly affair.

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FISCAL PLANNING ISSUES

As a safety measure, many ATMs list only the deposit or withdrawal amount and omit the
balance from the account. People using an ATM for frequent banking are not informed of the
total amount in the account when funds are withdrawn or deposited, as opposed to traditional
checking which provides a register to maintain a running account of the balance. This lack of
recording allows some customers to overdraw accounts, adding penalty charges.

OPERATION ISSUES
ATMs located in busy locations may not have adequate funds for busy holiday weekends
when large numbers of people are taking out cash. Most machines require envelopes to
deposit checks and cash, and these may also be in short supply, preventing customers from
depositing funds. Damaged machines leave the bank client with no alternative during nonbanking hours.

BANK FEES

As bank consolidation continues, fewer companies own ATMs, and they limit access to
automated banking. U.S. Senator John Kerry states that two banks, Fleet Bank and Bank
Boston, operate nearly two thirds of all the ATMs in New England. This monopoly reduces
competition. Kerry warns that "policy makers should be watchful of the capacity to which
ATM surcharges become more prevalent." Reliance on automatic teller machines for personal
banking means increases in bank fees. Most banks allow an unlimited number of withdrawals
from same system.

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FUNCTIONS OF ATM MACHINES

The automatic teller machine (ATM), used by banks and customers for a variety of functions,
was patented in 1939, but failed initially due to limited functionality. Something more similar
to the modern ATM emerged on the streets of London in 1967, introducing a new era of
banking convenience. The functions of ATM machines include:

Withdrawals

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Perhaps the most common function of the modern ATM, withdrawals are usually allowed
from a user's savings or checking account.

Deposits
Similarly, most (but not all) ATMs allow deposits to be made to both checking and savings
accounts. These deposit functions usually require cash or checks in envelopes, and can
sometimes be accomplished by credit card.

Balance Inquiries
Another common function of the ATM is the ability to check account balance, for savings or
checking, and to print out that balance for future reference.

Account Transfers
Account transfer is a popular function for those who carefully manage the funds in more than
one account, and can be used to move funds from one account (for example, a checking
account) to another (like a savings account).

Stamp Purchases
An increasingly popular function of modern ATMs is the ability to buy stamps. Although this
functionality is not available at all ATMs, its popularity has been sufficient.

Types of ATM Cards

More people use plastic to pay for items than cash. There are many different types of cards
used
to
make
purchases
or
withdraw
money
and
many people don't think about the differences. There are significantdifferences between ATM,
debit and credit cards. There are several different types of cards that fall under the category of
an ATM card.
25

Basic ATM Card

Your basic ATM card only has a few uses. It can be used at any ATM machine for the bank
that issued it and sometimes at other banks for a fee. You can use your ATM card to withdraw
and deposit money, check your account balance and transfer funds. Some ATM cards also
have a few more uses like paying loans and getting cash advances, however ATM cards
cannot be used to make purchases.

Debit ATM Card

An ATM debit card has all the features of a regular ATM card with the added features of a
debit card. This card can be used to make purchases at any store or online. Typically they will
have a credit card logo on them, although they do not work the same way as credit cards.
Every time an ATM debit card is used, money is taken out of the checking account it is linked
to.

ATM Credit Cards

A new type of debit card is available at some banks. This type of card has all the features of
the ATM debit card plus the features of a credit card. This card is not only attached to a
checking account, but also to a line of credit. This means that if the person overdrafts on
their account they will not incur any fees and will instead have money taken out of their credit
line to be paid back with interest when funds are made available.

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Brown Label ATMs

'Brown label' ATM are those Automated Teller Machines where hardware and the lease of the
ATM machine is owned by a service provider, but cash management and connectivity to
banking networks is provided by a sponsor bank whose brand is used on the ATM.
The `brown label' has come up as an alternative between bank-owned ATMs and 'white label'
ATMs. As in India white label ATMs were not allowed by RBI (in February, 2012, RBI has
issued the draft guidelines for introduction of white ATMs, but final approval has yet to
come.), the concept of Brown Label ATMs started picking up.

What is the Status of Brown label ATMs in India?

In view of the high cost of ATM machines and RBI's guidelines for expansion of ATMs, the
concept of Brown Label ATM network is likely to expand at a brisk pace in next few years. In
the recent years, there is a visible shift in the way banks look at the ATM business. From the
earlier model where banks used to buy outright the ATM machines and bear the cost of
service, they are now preferring brown label ATMS i.e. where the machine and service is
outsourced. There are indications that as many as 50% may soon be under this category.
However, after approval of white label ATMs, the bankers will review the expansion model
for their ATMs.

White Label ATMs

These are ATMs which are not owned by banks but by private ATM service providers.
Customers from any bank can deposit or withdraw money from such ATM,s. Your banks pay
a service fee for the usage.
Such ATMs will help take banking services to remote places, official sources said.
Besides, it will help sponsored banks to set-up ATMs without incurring capital expenses for
owning money dispensing machine.
The Finance Ministry has given its view to the Reserve Bank in this regard, adding that the
lead bank or sponsored bank of a district would be given the responsibility of filling cash and
meeting other operational requirement.
Thus, the bank will be saved from making investment for setting up ATMs, and even other
expenses like technical infrastructure and security would be borne by non-bank entities.
State-owned IDBI Bank is considering to create a separate venture with private ATM service
providers for running white-label ATMs, so called because they are not owned by any bank.
Such entities should have a minimum net worth of Rs. 100 crore at the time of making the
application and on a continuing basis after issue of the requisite authorization. Other
27

guidelines for applying to the apex bank for authorisation under the PSS Act are available at
the RBI official website.
Currently, only banks are being permitted to set up Automated Teller Machines (ATMs) in
India. Banks have played a major role in encouraging ATM adoption and modifying
behavioral strategies in the domain of personal banking. The banking space has seen
considerable growth through the ATMs, which currently stands 87,000 nos. and has been
restricted principally to the urban/metro areas.

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ATM FRAUDS

In general ATM frauds can include any deliberate criminal technique which involves
the use of an ATM to obtain something of value.
Attacks against ATMs may be classified as ATM physical attacks and ATM frauds.

GROWING ATM THREATS

More than 70% of financial institutions experienced an increase in ATM/debit card

fraud claims in 2011.
Ram cards are those threats when criminals physically break out ATMs from the wall
at the institution.
Criminals can go through financial institutions telephone banking services to change
PIN number.

HOW TO AVOID ATM FRAUDS

Cover your hand when you enter in your PIN.

Ensure that no one is peeking while you enter your PIN.
Avoid using ATM in isolated locations.
Always prefer ATM machines near bank locations.

ATM SKIMMING

ATM Skimming is a device card reader which can be disguised to look like a part of
the machine. The card reader saves the user card number and the pin code, which is
then replicated into a counterfoil copy for theft.
It helps criminals in knowing the customers account information and pin compromise.
ATM card slot skimmers have various shapes and sizes.

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PHYSICAL PROTECTION OF ATM FOR OWNERS

Use of up to date technology

Security CCTV Cameras
Alarm clock
Safe and locks
Video monitors in function with sensors
Ensuring best locations for ATM deployment

CHOSE AN ATM SERVICE PROVIDER WHICH GIVES

Very high security level

Alarm system
Branded and Top quality machines
Latest software and technology
Enhanced ard reader slots

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SCOPE OF ATM IN INDIA

Automated
Teller
Machines
(ATMs)
have
gained
prominence
as
a
delivery channel for banking transactions in India. Banks have been deploying ATMs to
increase their reach. As at the end of December 2007, the number of ATMs deployed in India
was 32,342. for transactions for no fee at all, irrespective of the banks in which they have
their accounts. Now customers will not be levied any fee on cash withdrawals using ATM and
debit cards issued by other banks.

This will in turn increase usage of ATMs in India. More people are now moving towards using
the automated teller machines (ATM) for their banking needs. According to a survey by
Bank net India, 95% people now prefer this modern channel to traditional mode of banking.
Almost 60% people use an ATM at least once a week. Increased ATM usage is also helped by
the fact that customers have now the flexibility of using ATMs of other banks.

Banks find it cheaper to pay membership fees to these networks against setting up additional
units in expensive-to-deploy areas. ATMs are now seen to be more than mere cash dispensing
machines. Customers use ATMs to recharge their mobile phone pre-paid connections, pay
their utility bills, even mutual fund transaction, making them at par with flexibility given in
internet banking only more secure. Of the value-added services provided at ATMs, billpayment is the most used service, followed by prepaid mobile talk-time recharges. However,
still about one third of the respondents do not use any value added services at ATMs. The
ATM market in India is not yet saturated.

Though the concentration of ATMs is greater in metros, the demand is increasing for other
cities and even rural areas. ATM's per million people approximately is 33 units is very low.
Experts forecast that the growth rate is expected to grow 18 percent up by 2013.

Banks going into a self service model can have huge saving potential for banks and may also
increase the convenience for the customers. Many ATM vendors have devised specialized
machines, embedded with biometric devices for authentication. Catering to the rural
population, these machines have enabled them to interact with the machine in their local
language and on a graphical user interface.

The rural customer has seemed to accept this new medium. This has the potential to further
widen the scope of ATM usage in the interior parts of the country. There is also interest
towards white-label ATMs. Many companies are interested in this model, where the
ownership of the ATM will not be with the banks but with third parties who deploy them and

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make money on fees charged on every transaction. The concept is prevalent in the American
Continent.

CASE STUDY

Problem with Money Withdrawal from an ATM machine

A customer used his State bank of India debit card with a local ATM machine of a different
bank. He withdrew money one time and everything was fine.
He then wanted to withdraw more (5000 INR), introduced the card, put his Pin code and
waited.
At this moment, the ATM machine restarted and kept his card.... after 5 minutes of waiting,
the machine gave back his card, but not the 5000 INR he was supposed to get.
However, he recently checked his balance, and this money has been deducted from his
Account.
What should he do now, seeing as this is an ATM machine of another bank? Who will be
responsible for repaying this money to him, his bank (SBI) or the bank the ATM machine
belongs to?

SOLUTION
The customer will have to inform the bank where he has his account i.e. in this case SBI. SBI
will talk to the other bank (whose ATM he was using) and settle the transaction.
Another customer had similar problem and it took 3 months to get settled (in this case, the
customer was using ICICI Visa Debit card in SBI ATM and after such mishap, he was advised
to approach ICICI by the adjacent SBI bank branch).
Remember that you need to keep the ATM transaction slip (in case you have) with you very
carefully because this is the only proof you would be having about this "disputed" transaction.
The complaint was definitely resolved within a couple of weeks.

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QUESTIONAIRE

TO BANK EMPLOYEES:

What is Personal Identification Number?

PIN is a secret numeric password shared between the user and the system which
authenticates the user to the system. It is used in electronic transactions.

Can a replacement card be issued in case of lost/damaged card?

Yes, a replacement card is issued to the customer provided a proper procedure is
to be followed.

What is the maximum and minimum cash withdrawal limit per day?
Maximum cash withdrawal is Rs. 40,000.
Minimun cash withdrawal is Rs. 100 provided Rs. 50 should be maintained as the
minimum balance.

Can these cards be used at any bank ATM in the country?

Yes, these cards can be used all over India provided the are of the
same bank.

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TO CUSTOMERS:
What are facilities provided by ATMs other than cash withdrawal?
1.
2.
3.
4.

A/C to A/C balance transfer

Mobile recharge
Donations
Latest 10 transactions can be viewed

How frequently do you use ATM?

Maybe once or twice in a week, as per my requirements

What type of cards do you use at ATM?

1. Credit cards
2. Debit cards
3. Prepaid cards etc.

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CONCLUSION

In this era of growing competition among the banks, ATMs have played a vital role in
helping the bank to sustain in the market.
The ATM's have gained worldwide popularity. Within a few years ATM machines are easy
to operate and hence, attract more and more customers. There are quite of innovations,
which are being taken place in the ATM machine. The locations of ATMs are the key location
of any particular area. ATMs is a form of easy banking.
The aim of banks of setting of ATMs is to cater to the needs of the customers. The
flexibility of the ATMs has increased so much that now-a-days, have been reached the
doorsteps
of
the
customers.
The
customers
using
the
ATM's
are
satisfied with the service and have very less complaints aboutthe machines.

The following points should be kept in mind:

Chose your ATM machines carefully

Prefer ATMs near banks
Dont let anyone distract or assist you
Cancel your card immediately if it is lost
Check the card slot carefully
Ensure that there are no hidden cameras.

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BIBLIOGRAPHY

New Concepts of banking. S.S Kaptan, Sarup & Sons, 2002.

Virtual Banking Revolution, James Essinger, ITPB 1999.
Banking Law and Practices, P.N Varshney.

Websites:
www.idbi.com
www.hdfc.com
www.google.com

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