Misplaced Pages

Revision as of 03:11, 13 March 2006

For other uses of ATM, see ATM.

An automated teller machine, automatic teller machine (ATM) or cash machine is an electronic device that allows a bank's customers to make cash withdrawals and check their account balances without the need for a human teller. Many ATMs also allow people to deposit cash or cheques, transfer money between their bank accounts, top up their mobile phones' pre-paid accounts or even buy postage stamps.

History

The world's first ATM was developed by De La Rue and installed in Enfield Town in North London on June 27, 1967 by Barclays Bank. This instance of the invention is credited to John Shepherd-Barron, although Luther George Simjian registered patents in New York, USA in the 1930s and Donald Wetzel and two other engineers from Docutel registered a patent on June 4, 1973. Shepherd-Barron was awarded an OBE in the 2005 New Year's Honours.

The first ATMs accepted only a single-use token or voucher, which was retained by the machine. These worked on various principles including radiation and low-coercivity magnetism that was wiped by the card reader to make fraud more difficult.

The idea of a personal identification number (PIN) stored on a physical card being compared with the PIN entered when retrieving the money was developed by the British engineer James Goodfellow in 1965, who also holds international patents regarding this technology.

The world’s first talking ATM for the blind was an NCR machine unveiled by the Royal Bank of Canada on October 22, 1997 at a bank branch on the corner of Bank Street and Queen Street in Ottawa, Ontario. The talking ATM was a result of concerns Chris and Marie Stark, two blind customers, raised with the bank beginning in 1984. Their concerns turned into a discrimination complaint with the Canadian Human Rights Commission in 1991. The machine was manufactured by NCR and adapted by Ottawa based T-Base Corp. at a cost of about 500,000 Canadian dollars, the October 23, 1997 Ottawa Sun reported. By the summer of 2001, an inquiry to the Royal Bank found only about 50 talking ATMs and these machines were scattered throughout Canada. Four years after the first talking ATM, only royal bank had deployed the machines in Canada.

The first public actions in the United States to achieve ATM access for the blind occurred in June 1999. On June 3, Mellon Bank and PNC Bank were sued in federal courts in Philadelphia and Pittsburgh respectively, the June 4, 1999 Philadelphia Inquirer reported. On June 25, 1999, Wells Fargo became the first bank in the United States to commit to installing talking ATMs. In a legal settlement with blind community leaders, the bank agreed to install a talking ATM at all of its 1,500 ATM locations in California. The company has subsequently installed talking ATMs at all ATM locations in all states. In July 1999, Citibank agreed to pilot five talking ATMs in and around San Francisco and Los Angeles. The Citibank machine represented a marvel of rehabilitation engineering and research at the time as it was the first public touch screen interface without any kind of keypad to offer access to the blind. All Citibank locations with this kind of machine have been adapted with talking functionality.

The first talking ATM in the United States was a Diebold machine installed on October 1, 1999 in San Francisco’s City Hall by the San Francisco Federal Credit Union. Like the royal Bank machine, it was adapted by T-base corp. of Ottawa. In March 2000, Bank of America became the first financial institution to commit to installing a talking ATM at all of its ATM locations nationwide. A legal settlement called for the installation of hundreds of machines with later negotiations for a schedule for the remainder.

In the early 2000s, many of the largest banks in the United States and Canada announced plans to install substantial numbers of talking ATM’s. This included royal Bank, which announced an additional 250 talking ATM deployments in early 2003, the January 28, 2003 Edmonton Journal reported. As of fall 2005, talking ATMs are being deployed to a substantial number of locations by the majority of the biggest banks in all regions of the United States and Canada. Many mid-sized banks and some smaller banks are also making talking ATMs available to their customers. By 2005 there were approximately 30,000 Talking ATMs in the United States.

Usage

In most modern ATMs, the customer identifies him or herself by inserting a plastic card with a magnetic stripe or a plastic smartcard with a chip, that contains his or her account number. The customer then verifies his or her identity by entering a passcode (PIN) of four or more digits. If the number is entered incorrectly several times in a row (usually three), most ATMs will retain the card as a security precaution to prevent an unauthorised user from discovering the PIN by guesswork (these cards are often destroyed if the ATM owner is not the card issuing bank as non customer's identities cannot be checked). In some cases, the customer's PIN may be changed using the machine.

Networking

Most ATMs are connected to interbank networks, enabling people to withdraw and deposit money from machines not belonging to the bank where they have their account. This is a convenience, especially for people who are travelling: it is possible to make withdrawals in places where one's bank has no branches, and even to withdraw local currency in a foreign country, often at a better exchange rate than would be available by changing cash. Some examples of interbank networks include Hong Kong's JETCO and the Philippines' Expressnet.

ATMs rely on authorization of a transaction by the card issuer or other authorizing institution via the communications network.

Usage fees

Many banks in the United States charge fees for the use of their ATMs. In some cases, these fees are assessed solely for non-bank members, in other cases they apply to all users. Many oppose these fees because ATMs are actually less costly for banks than withdrawals from human tellers. Two charges exist in the consumer world of ATM usage, the surcharge, and the foreign fee. The surcharge fee may be imposed by the ATM deployer and will be charged to the consumer using the machine, this fee has been on the rise as ATM deployment continues to rise and ATM transaction volumes remain stagnant. The foreign fee or transaction fee is a fee charged by the card issuer (financial institution, stored value provider) to the consumer for conducting a transaction outside of their network of machines in the case of a financial institution, this fee is also on the rise as financial institutions seek more fee based income.

When the ATM surcharges emerged in the 1980s, they usually were on the order of $0.25. Quickly, however, they climbed. ATM fees now commonly reach $1.50, and can be as high as $5.00, especially around bars and casinos. In cases where fees are paid both to the bank and the ATM owner withdrawal fees could potentially reach $10. This would be an example of a foreign fee and a surcharge coming together.

ATMs are placed not only near banks, but also in locations such as shopping centres/malls, grocery stores, and restaurants. These represent two types of ATMs, on and off premise. On premise ATMs are usually more advanced machines and thus more expensive machines, off premise machines are deployed by financial institutions and ISO's or independent sales organizations. ISO's are the driving force in ATM deployment in the U.S. today representing over 60% of the 396,000 ATMs nationwide. Sometimes, ATMs are advertised for their fees. This is more of a cautionary statement. ATMs are required by law to inform you of the fees that the machine will charge you, this may come in the push through menu or it may be on a sticker on the machine. The foreign fee, however, will not be listed as neither the ATM nor its owner charges the fee.

In the United Kingdom, public reaction to proposed increases in fees was so strong that fees were removed altogether for using ATMs at banks, regardless of whether the user is a customer of that bank. However, each time a bank's customer uses a rival bank's ATM, the customer's bank has to pay a fee to the rival bank, which the customer's bank absorbs. As a result, First Direct wrote to its customers in December 2005 asking its customers wherever possible to use ATMs of HSBC, its parent bank, in order to keep First Direct's costs down. There are a growing number of machines in locations such as garages, nightclubs and other venues which do charge. The fee is usually between £1.50 and £2.00, but occasionally they have been known to charge up to £5 and in one central London club £10. There has been some debate in recent years about the location of machines which charge in deprived areas, where the larger banks which would have provided free ATMs have closed branches.

In many places, one can circumvent ATM fees by using debit cards at retailers by adding cash to a POS or point of sale transaction. Many stores allow a debit card user to receive "cashback" with an order; that is, one can make a withdrawal by adding an additional amount of money onto the charge, with the retailer providing the difference in cash. The downside to this is that charging for these transactions is on the rise by financial institutions which treat the transaction as a foreign withdrawal. There are other drawbacks as well, namely the limitations on transaction types and the amount of the withdrawal. Most retailers limit the cash element of a POS transaction to $40 (£50 in the UK), mainly to limit fraud with stolen cards.

Hardware and software

ATMs contain secure cryptoprocessors, generally within an IBM PC compatible host computer in a secure enclosure. The security of the machine relies mostly on the integrity of the secure cryptoprocessor: the host software often runs on a commodity operating system.

ATMs typically connect directly to their ATM Transaction Processor via either a dial-up modem over a telephone line or directly via a leased line. The latter is preferable as the time required to establish the connection is much less. Such connections are rather expensive, though, meaning less-trafficked machines will usually rely on a dial-up modem. That dilemma may be solved as more ATMs use dedicated high-speed Internet connections, which are much cheaper than leased lines. Encryption, required by law in the United States, is used to prevent theft of personal or financial information.

In addition, ATMs are moving away from custom circuit boards (most of which are based on Intel 8086 architecture) and into full-fledged PCs with standard operating systems such as Windows 2000 and Linux. An example of this is Banrisul, the largest bank in the south of Brazil, which has replaced the MS-DOS operating systems in its ATMs with Linux. Other platforms include RMX 86, OS/2 and Windows 98 bundled with Java. The newest ATMs with Microsoft technology use Windows XP or Windows XP embedded.

Reliability

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 higher value notes as a result of incorrect denomination of banknote being loaded in the money cassettes. Errors that can occur may be mechanical (such as card transport mechanisms; keypads; hard disk failures); software (such as operating system; device driver; application); communications; or purely down to operator error.

Many ATMs usually print each transaction in a paper journal that is rolled into a roll of paper stored inside the ATMs, which allows both the users of the ATMs and the related financial institutions to settle things based on the records in the journal in case there is a dispute. In some cases, transactions are posted to an electronic journal to reduce the need for paper trails.

Some ATMs, in particular those situated in retail outlets, are stocked with cash by the store, causing the possibility that a customer can receive forged banknotes from the ATM.

Security

Early ATM security focused on making the ATMs invulnerable to physical attack; they were effectively safes with dispenser mechanisms. A number of attacks on ATMs resulted, with thieves attempting to steal entire ATMs by ram-raiding.

Modern ATM physical security, per other modern money-handling security, concentrates on denying the use of the money inside the machine to a thief, by means of techniques such as dye markers and smoke canisters. This change in emphasis has meant that ATMs are now frequently found free-standing in places like shops, rather than mounted into walls.

Another trend in ATM security leverages the existing security of a retail establishment. In this scenario, the fortified cash dispenser is replaced with nothing more than a paper-tape printer. The customer requests a withdrawal from the machine, which dispenses no money, but merely prints a receipt. The customer then takes this receipt to a nearby sales clerk, who then exchanges it for cash from the till.

ATM transactions are usually encrypted with DES but most transaction processors will require the use of the more secure Triple DES by 2005.

There are also many "phantom withdrawals" from ATMs, which banks often claim are the result of fraud by customers. Many experts ascribe phantom withdrawals to the criminal activity of dishonest insiders. Ross Anderson, a leading cryptography researcher, has been involved in investigating many cases of phantom withdrawals, and has been responsible for exposing several errors in bank security.

There have also been a number of incidents of fraud where criminals have used fake machines or have attached fake keypads or card readers to existing machines. These have then been used to record customers' PINs and bank account details in order to gain unauthorised access to their accounts.

A bank is always liable when a customer's money is stolen from an ATM, but there have been complaints that banks have made it difficult to recover money lost in this way.

In some cases, bank fraud occurs at ATMs whereby the bank accidentally stocks the ATM with bills in the wrong denomination, therefore giving the customer more money than should be dispensed. Individuals who unknowingly use such ATMs are probably never tried, but those who withdraw a second time are usually prosecuted.

In some areas, multiple security cameras and watch guards are an ubiquitous ATM feature.

The issue of customer security appears to have been abandoned by the banking industry; efforts are now more concentrated on deterring legislation than on solving the problem of forced withdrawals. This may be reflective of the industry's greater concern with the image of safety as opposed to actual safety. At least as far back as July 30, 1986, critics of the industry have called for the adoption of an emergency PIN system for ATM users (See comments of Representative Mario Biaggi, Congressional Record, July 30, 1986, Page 18232 et seq.) Legislative efforts to require an emergency PIN system have appeared in Illinois, Kansas and Georgia, but none have succeeded as of yet.

Fraud

In the early 2000s, ATM-specific crimes became common. These had two common forms. In the low-tech form, the user's PIN is observed by someone watching as they use the machine; they are then mugged for their card by a second person, who has taken care to stay out of range of the ATM's surveillance cameras. However, this offers little advantage compared to simply mugging the victim for their money, and carries the same risks to the offender as other violent crimes. By contrast, the most common high-tech modus operandi involves the installation of a magnetic card reader over the real ATM's card slot, and the use of a wireless surveillance camera to observe the user's PIN. Although the latter fraud would have seemed like something from a spy novel until recently, the availability of low-cost commodity wireless cameras and card readers has made it a relatively simple form of fraud, with comparatively low risk to the fraudsters.

As of 2005, banks are working hard to develop countermeasures for this latter kind of fraud, in particular by the use of smart cards which cannot easily be read by un-authenticated devices, and by attempting to make the outside of their ATMs tamper evident.

Alternate uses

Although ATMs were originally developed as cash dispensers, they have evolved to include many other bank-related functions. In some countries, especially those which benefit from a fully integrated cross-bank ATM network (e.g.: Multibanco in Portugal ) ATMs include many functions which are not directly related to the management of one's own bank account, such as:

• Paying routine bills, fees, and taxes (utilities, phone bills, social security, legal fees, taxes, etc.)
• Loading monetary value into pre-paid cards (cell phones, tolls, multi purpose stored value cards, etc.)
• Ticket purchases (train, concert, etc.).

Many ATMs in the United States also allow users to purchase stamps.

In Japan, where banks charge for cash withdrawals, ATMs are not very popular. In the hopes of attracting more users, new Ogaki Kyoritsu Bank ATMs will include games of chance that allow users to waive these fees or win 1000 yen, while Bank of Tokyo Mitsubishi ATMs include biometric security technology.

Talking ATM

A Talking ATM is a type of ATM that provides audible instructions so that persons who cannot read an ATM screen can independently use the machine. All audible information is delivered privately through a standard jack on the face of the machine. A user plugs a standard headset into the jack, and can hear instructions such as "press 1 for withdrawal", "press 2 for deposit." There is an audible orientation for first time users, and audible information describing the location of features such as the number keypad, deposit slot, and card slot. The first Talking ATMs were installed in Canada in 1999, and the first U.S. Talking ATM was installed in October of that year in San Francisco. By 2005, there were over 30,000 Talking ATMs in the United States, and audible machines installed in other countries as well. The blind community in the United States advocated heavily for development and installation of Talking ATMs, supported by the federal Americans with Disabilities Act.

Names

ATMs are known by a wide variety of names, some of which are more common in certain countries than others. While some names in use are generic, others are trademarks identifying certain ATM networks. Examples include:

• خودپرداز بانکی ، عابر بانک in Persian
• ABM (Automatic Banking Machine) in eastern Canada
• ATH (A Toda Hora ), in Costa Rica,Puerto Rico and Colombia
• ATM Machine (which is a pleonasm, though many people say it anyway)
• ATM (Anjungan Tunai Mandiri = Autonomous Cash Platform) in Indonesia
• ATM (Any Time Money in India)
• ATM (Αυτόματη Ταμειολογιστική Μηχανή), seldomly also called Μηχάνημα Εικοσιτετράωρων Συναλλαγών (24-hour transactions machine) in Greece
• AutoBank
• Automated Teller Machine
• Bancomat or Bankomat, particularly in continental Europe – Bancomat is a trademark of UBS AG
• Bancomat, in Italy and Switzerland
• Bancontact, in Belgium
• Banklink in the Republic of Ireland (Technically, "Banklink" is the brand of ATMs operated by AIB but is now commonly used to describe machines operated by any institution)
• Bank Box
• Bankamatik, in Turkey
• Bankomat, in Sweden, Austria, Czech Republic, Slovakia, Slovenia, Poland, Croatia and Serbia and Montenegro
• Bankomat (Банкомат), in Belarus, Bulgaria, Russia and Ukraine
• Bankomat or Caspomat (כספומט), in Hebrew, stemming from the words כסף (meaning "Money") and אוטומט ("Automat").
• BankMachine, in Hawaii (a trademark of Bank of Hawaii but also used generically) and Canada
• Caixa Eletrônico, in Brazil
• Cajero Automático, in Argentina, Chile, Colombia, Cuba, Peru, Spain and Mexico
• Cash Box
• Cash Dispenser
• Cash Machine
• Cashflow, in New Zealand (ASB)
• Cashlink, used by the Philippines' Security Bank
• Cashpoint, in New Zealand (National Bank) and the United Kingdom (Lloyds TSB). Cashpoint® is a registered trademark of Lloyds TSB Bank plc.
• CashPoints, in North Carolina for the feeless machines owned by the State Employees Credit Union.
• Cash Station, in the Chicago, Illinois area
• ChemKey, in some parts of Michigan
• Distributeur Automatique de Billets (Automatic Banknote Distributor) in France
• EasyBank
• EasyCash
• Electronic Teller (ET), used by the Philippines' Metrobank
• Electronic Teller Card (ETC) Machine, formerly used by HSBC in Hong Kong but since been retired in favour of ATM.
• Experteller, used by the Philippines' Export and Industry Bank
• Express Teller, used by the Philippines' BPI
• Fasteller, used by the Philippines' PCI Bank and is now used by Equitable PCI Bank
• GAB (Guichet Automatique Bancaire = Automatic Bank Teller) in French-speaking Canada
• Geldautomaat, in Dutch (Geld = money)
  • Also known as a pinautomaat (see PIN) (verb. pinnen)
  • Also (slang): flappentap (Flappen = bank notes, tap = tap/spigot)
• Geldautomat, in Germany (Geld = money) (some ATMs of the Philippines' United Coconut Planters Bank can be designated as such)
• Green Machine, in Canada (the brand name of TD Canada Trust ATMs)
• "Hole-in-the-wall", soon to be used by Barclays Bank in the United Kingdom by May 2006. Has also long been a slang term in the UK.
• Hraðbanki (literally: fast-bank), in Iceland.
• Handybank (Westpac Bank), Australia
• InstaBank, in Canada (the brand name of Bank of Montreal ATMs)
• Khodpardaz (خودپرداز) in Iran, meaning Automatic payer in Persian.
• MAC machine, or MAC (Money Access Center), particularly on the East coast of the United States (esp. New Jersey and Pennsylvania) (registered trademark of MAS Inco Corporation)
• Minibank, in Norway and used by the Yorkshire Bank in the United Kingdom.
• Money Machine, in New Zealand and Canada
• Multibanco, in Portugal
• Night and Day ATM, in New Zealand (ANZ)
• Otto (in Finland)
• Pangaautomaat, in Estonia
• Pankkiautomaatti, in Finland
• Pengeautomat in Denmark (Penge = money)
• Pesapoint, in Kenya
• Pinautomaat in the Netherlands
• Postomat, in Switzerland (Swiss Post Bank ATM)
• Quick Cash, used by the Philippine Bank of Communications
• Robotic Teller
• Smarteller, used by the Philippines' Banco de Oro
• Superteller, used by the Philippine National Bank
• Telebanco or Bankomato, in Spain (registered trademark of the 4B ATM alliance)
• TYME Machine (stands for "Take Your Money Everywhere"), in Wisconsin
• "Ugly Teller"
• Unionteller, used by the Philippines' Unionbank
• Versateller, in California (the brand name of Bank of America's ATMs)
• Veteran Teller, used by the Philippine Veterans Bank
• White ABM/ATM, in Canada (used to describe ATMs not operated by a financial institution, and usually charge additional fees well beyond that normally levied by the bank networks)
• Zidong tikuanji (自动提款机) or Zidong guiyuanji (自动柜员机), in Chinese
• Saraph 'Ali (صراف آلي)in Arabic

See also

• Financial cryptography
• Personal Identification Number
• RAS syndrome
• Payroll Card

External links

General

• How ATMs work – From website Howstuffworks.com
• The Money Machines – An account of U.S. ATM history; By Ellen Florian, Fortune.com
• ATM timeline – Includes picture of original ATM opening
• Enfield's claims to fame
• Banrisul Linux-ATM project
• ATM inventor honoured
• Who invented the ATM?

Some ATM manufacturers

• Perto S.A.
• KEBA
• HATEF
• Diebold
• NCR
• IBM (Wincor Nixdorf partner)
• Wincor Nixdorf
• Tidel
• Triton

ATM Software Companies

• KAL
• Phoenix Interactive

Template:Link FA

• Banking terms and equipment
• Embedded systems
• Payment systems