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Assignment
Personal development & Information Technology:
Topic:
ATM (Automated Teller Machine)
NCBA & E

What is an ATM (Automated Teller Machine)?
An automated teller machine (ATM) is an electronic banking outlet, which allows customers to
complete basic transactions without the aid of a branch representative or teller.
When you insert your debit or credit card into the ATM, it reads the information encoded on the
magnetic strip on the back of the card. That black strip is encoded with your unique card number,
expiration date and personal identification number (PIN). Your card is basically a hard copy of
the access information to your account.
The ATM then asks for your PIN to verify your authorization to access account funds and
information. When you have verified your PIN, the ATM communicates with your bank to
access your account information. It can then display your account balance or distribute cash to
you from your bank account balance.
The ATM is connected to a collection of massive interbank networks. The two largest interbank
networks are Cirrus and Pulse, although there are many others. An ATM can only provide access
to bank accounts that are enrolled in the interbank networks it has access to; these are usually
listed on the side of the machine. These interbank networks use phone lines, internet access and
central computers to distribute information among one another and facilitate financial
transactions.
Some cards and charges use in ATM:-
 Debit Card
A payment card that deducts money directly from a consumer’s checking account to pay for a
purchase. Debit cards eliminate the need to carry cash or physical checks to make purchases. In
addition, debit cards, also called check cards.
 Cash Card
A cash card can be any card that you can insert into an ATM or other cash dispenser, or a
pre-paid credit card or a card with a preset cash value from a particular store (Costco or
Subway), which is read by a cash card reader and used to pay for products or services at
that retailer.

 Activity Charge
A fee charged to cover the servicing costs of an account. An activity charge is triggered by an
activity or event, and should follow a fee schedule outlined in the account contract. These fees
can be based on teller and non-teller activities.
 Service Charge
A service charge is a type of fee charged to cover services related to the primary product or
service being purchased.
 For example, a concert venue may charge a service fee in addition to the initial price of a
ticket in order to cover the cost of security or for allowing electronic purchases.
 Another example would be a fee for using the ATM of a competing bank.
 Quite a few things take place when you insert the card into an
ATM.
First and foremost the ATM awakens. Most modern ATMs go into a power saving mode, but
when the card is inserted, the ATM is now fully awake (from a power point of view).
ATMs (or Automated Teller Machines) are known as Alternative Delivery Channels.
 Alternative, because they are alternative to the human teller.
 Delivery because they are programmed to deliver a specific set of services, and
 Channel because in the banking world, all delivery mechanisms need a channel via
which the delivery would be made.

 ATMs or Auto Teller Machines follow a simple five step process:
1. Validate the card : if its really a debit/credit card that is acceptable in the machine
2. Read the account number : The account number of the card is coded on the black magnetic
script on the back of the card.
3. Validate the user : The user or cardholder is validated generally by asking for a 4 digit pin
code.
4. Connect to the network: All the above information (account number and pin code) is validated
on the bank's network through a satellite network. ATMs generally have a dish antenna nearby
them which are used for the communication with the bank's network through satellites.
5. Dispense the cash: The cash is dispensed from the trays inside the machine as requested by the
user.
After this a receipt is printed out and the transaction ends.
The validation and account number reading is done through 2 sensors in the panel where you
insert the card. The first sensor validates the card and second one reads the account number.
The cash is stored in trays inside the machine. Different trays are used to store different
denominations of bills. A single bill is taken out of each tray at a time to dispense. To validate
the bills being issued, a sensor is placed on the conveyer that carries the bills, which measures
the thickness of the bill. If the thickness is more than standard, there might be a possibility of
more than one bill being issued. If the thickness is less, the bill might be fake. So, all such
doubtful bills are separated and stored in a specified tray; these are sorted later manually.
The ATM machine is an impregnable vault that can take a lot of pressure or powerful impact
before breaking down to prevent the cash inside from being stolen. The trays have ink jets
installed in them which make the cash worthless by spraying ink over the bills in case of any
attempt to steal the cash.

ATM CONNECTIVITY
To understand how the ATMs work, it is a good idea to know how they connect:
Needless to say all ATMs connect to some server. This is called the Host Server or Host Switch
(for the ATMs):
These Host Servers may be of your own bank or another bank. Whatever the case maybe, their
connectivity would usually look something like this:

ATMs on another bank network, connect to your bank's network through a network known
as interbank networks (networks that connect different bank).
A more singular connectivity diagram would look like this:
CHANNEL MANAGER
It is imperative that one understands the channel manager in the whole scheme of things. It has a
very important function.
A typical channel management manager (or switch) is a middle layer app controller.

The above is what a multi-channel manger would look like. Again, this is nothing more than a
software, middle-layer app server that is essentially doing a very crude form of financial routing.
BASIC CHECKS
when you insert a card into the ATM, the following (more or less) is checked for:
In the channel manage diagram, you will see something called the HSM that is the Hardware
Security Module.
This is where the PIN is kept (encrypted) and from where the PIN is confirmed.
Once the PIN is confirmed, the middle-layer will request access to the core-banking server and
here (like with any transaction, the user's bank account would be locked, till such time the
transaction is completed, so double-spend does not occur).
If all the validation checks for you being able to withdraw money from your account are good,
then the money will be dispensed by the ATM.

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What is ATM

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