What is ATM? Full Form, Meaning, Types & How It Works?

What is the Full Form of ATM?

The full form of ATM is “Automated Teller Machine.” The term ATM comes from “Automated,” indicating it works automatically, and “Teller,” referring to the role of a bank employee, combined with “Machine” for the device itself.

What is ATM?

What are the Key Functions of ATMs?

1. Cash withdrawals

You can conveniently withdraw money from an ATM using your debit or ATM card. Simply insert your card, enter your PIN, and enter the amount you wish to withdraw.

2. Balance inquiries

 ATMs allow you to check your account balance, enabling you to stay updated on your finances.

3. Fund transfers

Many ATMs allow you to transfer funds between your accounts. This feature enables quick and easy money movement without visiting a bank branch.

4. Account deposits

Some ATMs are equipped with deposit functions, allowing you to deposit cash or cheques directly into your account via the machine.

Types of ATM

There are many types of ATMs, including:

1. On-site ATMs

• These ATMs are located within or adjacent to bank branches.
• They offer a full range of banking services, including cash withdrawals, deposits, balance inquiries, and account transfers.
• Being inside or near a bank ensures that they are secure and often staffed, providing customers with peace of mind when using the machine.

2. Off-site ATMs

• These ATMs are positioned in locations like shopping malls, airports, or convenience stores, away from bank branches.
• They typically offer limited services, primarily cash withdrawals and balance inquiries.
• Off-site ATMs are designed for convenience, providing access to cash in high-traffic areas where customers may need banking services outside of traditional banking hours.

3. Orange Label ATMs: Share transactions

• These ATMs are specially designed to handle share-related transactions, such as buying and selling shares or managing investments in the stock market.
• They provide a platform for customers to perform these functions conveniently without needing a broker.

4. Yellow Label ATMs: E-commerce transactions

• Yellow Label ATMs are tailored to support e-commerce transactions.
• Customers can use these ATMs to pay for online purchases or manage other financial transactions related to e-commerce.

5. Green Label ATMs: Agricultural transactions

• These ATMs are intended for agricultural transactions.
• Farmers and those in the agricultural sector can use them for tasks like obtaining agricultural subsidies, withdrawing funds from agricultural-related accounts, or conducting transactions related to farming.

6. White Label ATMs: Owned by TATA Group

• White Label ATMs are operated by non-banking entities, such as private companies.
• In India, the TATA Group, through its subsidiary Tata Communications Payment Solutions Limited (TCPSL), operates many White Label ATMs under the brand “Indicash.”
• These ATMs offer standard banking services like cash withdrawals, but do not belong to any specific bank.

7. Pink Label ATMs: For female customers

• Pink Label ATMs are designed with the safety and convenience of female customers in mind.
• These ATMs are often placed in secure locations and aim to encourage more women to use banking services independently by providing a safer environment.

8. Brown Label ATMs: Operated by a third-party service provider

• Brown Label ATMs are owned by banks but operated by third-party service providers.
• The bank handles the branding and cash management, while the service provider is responsible for the infrastructure and maintenance.
• This model allows banks to expand their ATM networks without managing the logistics directly.

What are the uses of an Automated Teller Machine?

ATMs (Automated Teller Machines) are your 24/7 personal bank teller, offering a range of convenient services:

1. Essentials Tasks

• Cash Withdrawals: The bread and butter of ATMs, get cash directly from your account.
• Balance Enquiry: Check your current account balance in real-time.
• Mini-Statement Printing: Print a record of your recent transactions for your reference.
• All these essential functions can be done without visiting a physical branch.

2. Transactions on the Go

• Deposits (on select ATMs): Skip the teller line and deposit cash or checks (depending on the ATM) into your account.
• Fund Transfers: Move money between your own accounts or send funds to someone else’s account within the same bank.
• Bill Payments: Pay your utility bills, phone bills, or even top up your mobile phone credit – all directly from the ATM.

3. Advanced Options (on select ATMs)

Some ATMs go beyond basic transactions, offering features like:

• Open Fixed Deposits: Start a fixed deposit account for your savings goals.
• Apply for Loans: Initiate the loan application process conveniently.

How to Withdraw Money from ATM?

You need to follow the below-given steps to withdraw money from an ATM –

STEP 1: Insert Card

 Look for the card slot on the ATM and insert your ATM card with the chip facing up or as indicated by the machine. 

STEP 2: Select your preferred language

Once the machine reads your card, you are required to select your preferred language for the transaction. 

STEP 3: Enter your PIN securely

 Enter your PIN using the physical or on-screen keypad. 

STEP 4: Select the transaction type

After entering your PIN, you will see a menu of transaction options on the screen. These options may include “Withdraw Cash,” “Deposit Cash,” “Transfer Funds,” “Balance Inquiry,” and more. Select “Withdraw Cash” for this specific transaction. 

STEP 5: Select Bank Account Type

Choose which type of bank account (savings or current) you want to withdraw money from

STEP 6: Enter withdrawal amount

Enter the amount of money you need to withdraw from your account.

STEP 7: Collect your cash

Once you have confirmed all details on the screen, including the withdrawal amount, press “Enter” or the equivalent button on that specific machine. Your cash will get dispensed within a few seconds and you can collect it from the dispenser.

STEP 8: Print receipt

Some ATMs offer the option to print a receipt for your transaction. If you wish to have one, you can select this option on the screen and wait for the receipt to be printed.

How to Deposit Money in ATM?

While all ATMs allow cash withdrawals, not all devices offer a cash deposit facility. To deposit cash in your account, you need to follow the below-given steps – 

STEP 1: Insert your card

Begin by inserting your debit card into the ATM. Make sure the card is inserted in the correct orientation as indicated on the machine.

STEP 2: Enter your PIN

Enter your PIN using the keypad provided.

STEP 3: Choose an account type

After entering your PIN, you will be asked to select the account type (Savings or Current) or enter the account number of the account you wish to deposit the money into.

STEP 4: Insert cash

Insert the cash you want to deposit into the machine. Follow instructions provided on the screen regarding how to insert the cash properly into the deposit slot.

STEP 5: Confirm deposit amount

After you have inserted all the cash and it has been counted by the machine, carefully review and confirm the amount displayed on the screen. The money will reflect in your account within just a few seconds.

STEP 6: Confirmation receipt

Make sure to obtain a receipt for your records. The ATM will provide different options for receiving a receipt – it can be printed, emailed, or even sent as a text message.

What are the Design Elements of an ATM?

Each bank automated teller machine across the world is different, but all machines have a few basic elements in common, such as:

1. Input devices

Card reader

Every ATM has a card reader where you insert your debit or ATM card. This device recognizes the account details stored on the magnetic strip or chip of your card and passes them on to the server.

Keypad

The keypad on an ATM allows you to input numbers, clear inputs, or cancel any transaction. You can use it to enter your Personal Identification Number (PIN) and the amount you wish to withdraw. 

2. Output devices

Display screen

The display screen on an ATM is usually an LCD or CRT monitor that provides transaction information and guides you through each step of the process. It displays options for actions such as PIN change, quick cash withdrawal, balance check, and more.

Cash dispenser

Once you’ve completed your transaction, the cash dispenser stocked within the ATM allows you to collect the requested amount of cash.

Receipt printer

After finishing a transaction at the ATM, you can request a receipt from the receipt printer. This printer records important details such as the type of transaction, amount withdrawn, and remaining balance.

Speaker

Most ATMs are equipped with speakers that provide audio instructions for accessing the machine and performing transactions. 

Few full-service ATMs also have slots for depositing cheques and cash.

Do ATMs Charge Fees?

ATMs may charge fees for transactions like cash withdrawals or balance inquiries. These fees depend on your bank, account type, and the ATM network you use. While some banks offer free ATM transactions, others might charge a fee. Using an ATM outside your bank’s network often incurs additional surcharges. It’s wise to check your bank’s ATM fee structure or look for fee information displayed on the ATM itself before initiating a transaction.

ATM fees impact customer convenience and choices. For banks, they can serve as a source of revenue and influence competitive advantage.

History of ATMs

The concept of Automated Teller Machines (ATMs) was introduced by Barclays Bank in London during the late 1960s to provide banking services outside traditional banking hours and locations. Initially, there were technology issues and safety concerns, but advancements over time improved the reliability and security of ATMs. The introduction of PINs (Personal Identification Numbers) was a crucial step in enhancing ATM security, ensuring that only authorized individuals could access their accounts.

During the 1970s and 1980s, ATMs rapidly spread worldwide, revolutionizing banking transactions. This widespread adoption allowed individuals to conveniently withdraw cash, deposit money, transfer funds, check account balances, and perform various banking tasks without needing to visit a bank branch. Over time, ATMs have evolved to offer additional services such as bill payments, mobile recharges, balance inquiries, and mini-statements.

Conclusion

In conclusion, an ATM (Automated Teller Machine) is an electronic device that facilitates various banking transactions, enabling users to withdraw cash, deposit money, transfer funds between accounts, and check their balances. These machines provide unmatched convenience and accessibility, allowing transactions to be conducted 24/7.

Frequently Asked Questions

1. How important is an ATM card?

An ATM card is essential for accessing the services and benefits offered by ATMs. It allows you to conveniently withdraw cash, deposit money, transfer funds, and check your account balance at any time.

2. Which card type is best? 

When deciding on the best ATM card, consider factors such as the bank’s reputation, network coverage, fees and security features.

3. Who launched the ATM card?

The first ATM card was introduced by Barclays Bank in London, in 1967.

4. Is an ATM safe?

ATMs use advanced security features like encryption and PIN codes to protect your information. However, it’s important to be cautious and follow basic safety practices.

5. How to Use an ATM?

Using an ATM is simple. You need to insert your ATM card into the machine’s card slot with the chip or magnetic stripe facing up and toward the machine. Next, enter your 4-digit PIN. Now, select the language and transaction type and follow the instructions on the screen to complete your transaction.

6. Can I use an ATM with a credit card?

Yes, you can use a credit card at an ATM to withdraw cash, but this is typically considered a cash advance and may incur high interest rates and fees.