AUTOMATED TELLER MACHINE CHAPTER 1 INTRODUCTION The world is changing fast. The process of globalization has taken everything in its fold. New ideas and new economic thinking are taking over the world. Technology is considered to be the prime factor in leading the change. Technology is very dynamic force. It is changing the competitive landscape of the financial services and banking industry. It is influencing the way their products and services are sold and delivered. The banking industry has emerged as one of the driving forces behind the development of information based technologies. It has made significant progress in recapitalizing systems, in eliminating problem assets from balance sheet in improving supervisory and regulatory framework day to day transactions in banks are automated which better service in processing transactions. Better customer are provided using .IT aided developments such as introduction of ATM, magnetic Ink Character Recognition (MICR) cheques, credit cards, debit cards, smart card, 1
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AUTOMATED TELLER MACHINE
CHAPTER 1
INTRODUCTION
The world is changing fast. The process of globalization has taken everything
in its fold. New ideas and new economic thinking are taking over the world.
Technology is considered to be the prime factor in leading the change.
Technology is very dynamic force. It is changing the competitive landscape of
the financial services and banking industry. It is influencing the way their
products and services are sold and delivered.
The banking industry has emerged as one of the driving forces behind the
development of information based technologies. It has made significant
progress in recapitalizing systems, in eliminating problem assets from balance
sheet in improving supervisory and regulatory framework day to day
transactions in banks are automated which better service in processing
transactions. Better customer are provided using .IT aided developments such
as introduction of ATM, magnetic Ink Character Recognition (MICR) cheques,
credit cards, debit cards, smart card, digital e-cash and electronic fund transfer.
These developments have helped reduce the transaction processing time and
also have made available the services to the customer at a convenient place. The
advents of online transaction speedy and secure payments settlements have lead
to the globalization of financial services.
The developments in information technology, the advent of the personal
computer and networking technology have brought about partial relief in the
banking industry. The job at each seat was computerized by stand –alone
personal computers initially. There is accuracy as well as speed in the work.
Customers are provided error-free services. They are supplied with printed
account statements. Internet and e-commerce entered the scenario of global
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banking and financial institution. Simultaneously sweeping structural and
functional changes are overtaking the international banking and financial
markets. These changes are as follows:
Deregulation:
Growing deregulation in national financial markets in telecommunication and
data processing technologies resulted in the better integration of financial
markets in the countries as also between the domestic financial system and the
foreign banking non-banking institutions.
Internet banking:
Internet banking is a web-based internet banking which involves a customer
logging onto a banks online banking service via any compatible PC to perform
common banking transactions .The internet bank system allows the customers
to manage and monitor their accounts online and to use the full range of
electronic banking services from anywhere in the world using a personal
computer .A customer needs a connection to the internet and a browser such as
Microsoft Internet Explorer or Netscape Navigator to use the Internet bank
system .Internet is one of the channels of service delivery to a banking
customer .The access to accounts information as well as channels of service
delivery to a banking customer .The access to accounts information as well as
transaction is offered through the world –wide network of computers on the
internet .Every bank has special firewalls and its own security measure to
protect the accounts from non-authentic use from unauthorized users .each
accountholders is provided a PIN similar to that of the ATM. The access to the
account is allowed upon a match of the account details and PIN entered on the
computer system .A higher level of security may be reached by an electronic
fingerprint. Account querying as well as transaction are possible on the Internet
banking platform .The accounting is instantaneous and funds transfer can be
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effected immediately .Financial services companies are using the Internet as the
new distribution channel .
Data Mining for intelligence:
Banks have to deal with proper analysis of financial data to identify business
potential .This help the bank identify cross-sell and up-sell potential .A bank
can easily streamline its delivery channels if it has an operational customer
relationship management .A data warehouse unable the bank get a single view
across disparate system .
The common format provides a single repository from which one can view or
use information when required.
With the help data available in data warehouse, one may not be able to make
sense out of it. It requires data mining for the purpose .data mining can help
recognize pattern in available data.
ATM :(AUTOMATED TELLER MACHINE )
One of the channels of banking service delivery is vide the Automated Teller
Machine (ATM) whose traditional and primary use is to dispense cash upon
insertion of a plastic card and its unique personal identification NUMBER
(PIN). ATM card is a plastic card with magnetic strip with the account number
of the individual. The bank issues ATM
cards to its current and savings accountholders. A typical transaction would be
that of cash withdrawal. The bank generally restrict the maximum amount and
the frequency with which one can withdraw cash .The amount withdrawn is
immediately debited to the concerned account through accounting entries pre-
programmed on the ATM. cash or cheques can be deposited through the ATM –
for the credit to an account. ATMs can be accessed any time .No employee
interface is necessary. ATM offers a cost effective solution alternative to labour
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costs. The scope of frauds, robberies and misappropriation are reduced
considerably if the PIN is maintained diligently.
Tele Banking :
Tele- banking is a banking service provided by banks to enable customers to
access their accounts for information or transactions .A telephone PIN(T-PIN)
is provided to each accountholders .The customer can call the exclusive tele-
banking numbers and provide the details to identify himself to the automated
voice .upon the respective numbers matching the computerized systems ,the
customer is given access to his account to query or transact on his account .cash
withdrawal and deposit are not enabled through this service but many banks
offer a cash delivery or collection service to certain classes of customers.
Electronic Funds Transfer (EFT) :
The Reserve Bank of India has introduced Centralized Funds Management
Systems(CFMS) comprising the Centralized Funds Enquiry System (CFES) and
the Centralized Funds management Systems. This paves the way for banks to
manage their funds with the RBI in a much more efficient manner. It also
provides the Treasury/Fund Departments of banks with latest information on
their balances with the various Deposit Account Department Offices on the
Reserve bank of India. EFT system was started in 1996. The scheme is
available for transfer of funds across 8500 branches of banks at 15 centers in the
country. The facility is available for transfer of funds for individual transaction
up to Rs. 2 corers per transaction with effect from 1st October, 2001. For a flat
fee of Rs. 25 a maximum of Rs.10000 can be transferred.
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Electronic Clearing Services (ECS) :
ECS is a new method of payment whereby the institutions having to make a
large number of payments can directly deposit the amount into the bank
accounts of the customers/investors without having to issue paper instruments
such as cheques, bulk and repetitive payments like interest/dividend are mostly
paper based involving printing of warrants or cheques. Thus, electronic
clearing service is aimed at affecting electronically, repetitive credits or debits
for a large population of customers spread across a large number of branches of
banks. The RBI has also introduced the Electronic Clearing Service(Debit)
scheme to provide a faster method of affecting periodic and repetitive payments
by ‘direct debit to customers’ accounts, thereby minimizing paper transactions
and increasing customer satisfaction. Electronic clearing service envisages a
large number of debits and one credit in the case of collection of electricity
bills, telephone bills, loan installments, insurance premiums and club fees by the
utility service providers.
Real Time Gross Settlement (RTGS):
The Real Time Gross Settlement System is the key critical element and provides
the missing link in the process of the setting up the integrated payment and
settlement system in the country. The world over, the RTGS is now the
preferred mode of the settlement of large-value interbank payments with more
and more countries moving towards it. As a settlement process RTGS ,
minimizes settlement risks by setting individual payment in real time in the
books of account, held at the central bank. The RTGS , practically instant
settlement ensures fast secure, final and irrevocable settlement of payment
transactions. The RTGS System is designed to provide large value funds
transfer and settlement in an on-line real time environment to the banking
industry with settlement on a gross basis.
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A large value of funds transfer system, whereby financial intermediaries can
settle interbank transfers for their own account as well as for their customers,
the RTGS system effects final settlement of interbank funds transfer on a
continuous, transaction by transaction basis throughout the processing day. The
RTGS eliminates settlement risks in the case of interbank and high value
transactions. The banks can use balances maintained under the Cash Reserve
Ratio instead of the Intra-Day liquidity (IDL) to be supplied by the Central
Bank for meeting any eventually arising out of the RTGS. The RBI has fixed
the IDL limit for the banks to three times their Net Owned Funds (NOF). The
IDL is charged at Rs.25 per transaction entered into by the bank on the RTGS
platform.
RTGS is the ultimate in the payment and settlement architecture in any country
primarily for online, real time interbank payment and settlement of large value
funds. RTGS payment system can also be called as one in which payment
instructions between banks are processed and settled individually and
continuously throughout the day.
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CHAPTER 2
MEANING OF ATM
AUTOMATED TELLER MACHINE (ATM)
An automatic teller machine or ATM allows bank customers to conduct their
banking transactions from almost every other ATM machine in the world. On
most modern ATMs, the customers is identified by inserting a plastic ATM card
with a magnetic stripe or a plastic smart card with a chip, that contain a unique
card number and some security information such as an expiration date or CVVC
(CVV). Authentication is provided by the customer can access their bank
account as in order to make cash withdraw, credit card cash advances, and
check their account balances as well as purchase prepaid cell phone credit.
ATMs are electronic machines, which are operated by a customer himself to
deposit or to withdraw cash from bank. For using an ATMs card is a plastic
card, which is obtain or to withdraw cash from bank. The ATMs card is a
plastic card, which is magnetically coded. It can be easily read by the machine.
To operate an ATM word (number). If the authentication or pass word (number)
is correct, the ATM permits customers to make entries for withdrawal or for
deposit. On completion of the transaction, the customer is ejected from the
ATM.
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DEFINITION
Definition of 'Automated Teller Machine - ATM'
“An electronic banking outlet, which allows customers to complete basic
transactions without the aid of a branch representative or teller.
There are two primary types of automated teller machines, or ATMs. The basic
units allow the customer to only withdraw cash and receive a report of
the account's balance. The more complex machines will accept deposits,
facilitate credit card payments and report account information. To access the
advanced features of the complex units, you will usually need to be a member
of the bank that operates the machine. “
ATMs are scattered throughout cities, allowing customers easier access to their
accounts. Anyone with a debit or credit card will be able to access most ATMs.
Using a machine operated by your bank is usually free, but accessing funds
through a unit owned by a competing bank will usually incur a small fee.
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CHAPTER 3
HISTORY of ATM
The history of ATM can be traced back to the 1960s, when the first ATM
machine was invented by Scot John Shepherd-Barron and used by Barclays
Bank in 1967. However, while Shepherd-Barron has the major claim to fame,
there have been many other individuals who have also invented some version of
the ATM. The machine itself has evolved over the years, with the earlier
versions restricted to only one or few banking functions. There has been much
debate, however, on who invented the first early versions of Automated Teller
Machine. But the history of ATM can be visibly traced back to the year of 1967.
In 1939, a rudimentary cash dispenser was invented by Luther George Simijian
and established by the City Bank of New York. However, the machine did not
work much and had to be removed within six months of putting up the machine.
The early versions of the ATM were restricted to cash withdrawal only. In the
1967 model, patented by Shepherd-Barron, the plastic cards did not exist and
instead a voucher with a strip of radioactive substance was used for
withdrawing cash. Consequently, the vouchers were matched with a particular
personal pin code used by the bank to identify the customer. The ATM was
inaugurated by renowned British actor, Reg Varney. The personal identification
number was initially a six numbered password, and was later changed to a four
numbered password. However, this automated teller machine was very different
from the modern day teller machines, which is based on an electronic system
between the different branches of the bank. Thus, the history of ATM has seen
many changes over the span of 25 years since 1939.
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Another co-patent to the invention of the ATM was Don Wetzel, the Vice
President of Product Planning at Docutel. While the conceptualization began in
1968, the patent was issued only in 1973. This cash dispenser was first used by
the New York based bank, namely, the Chemical Bank. As was the case with
the ATMs of during those years, they were hardly a multi-functional unit.
Moreover, they were not based on any electronic system. Hence, the debit cards,
distinct from credit cards, were given to only select clients with good track
records. The first ATM cards, with magnetic strips were developed by three
individuals, namely Don Wetzel, Tom Barnes and George Chastain. While there
were many developments in the history of ATM, the service itself took a
stronghold only in the 1970s. Today, the ATM service has become
indispensable to our modern day lives.
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CHAPTER 4
ADVANTAGES AND DISADVANTAGES OF ATM
ADVANTAGES OF ATM
Almost all banks have ATMs or automated teller machines at their branches.
The primary purpose of an ATM is to provide a customer with a quick method
of withdrawing cash from and checking the balance of their bank account
without having to wait for a teller. The machines also provide access to cash
outside of the bank's business hours. Many banks will not charge their
customers a fee for using the bank's ATM, however if you use your debit card at
an ATM that is not owned and operated by your bank, you may be assessed
additional fees, both by the ATM owner and your bank and sometimes totaling
more than $5 combined.
Convenience
Many banks have automated teller machines located inside or outside of their
locations. Some banks even have ATMs as a part of one of their drive-thru lanes
so that you can remain in your vehicle while using them. An advantage of
automated teller machines is that you can access your money for free if you use
an ATM at a bank where you have a checking and/or savings account. Many
banks also allow you to withdraw money from credit cards that are not issued
by their institution for a small fee. Some banks also have ATMs in other
locations such as retail and grocery stores and some businesses provide ATMs
for their customers and charge a small processing fee.
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Deposits
Another advantage of an automated teller machine is that you can make deposits
into your bank account through them as well. You can make cash and check
deposits, and some banks do not require submitting a deposit slip with your
transaction. Some ATMs allow you to get the total remaining balance of your
account on the screen or printed on your transaction receipt. ATMs at banks
sometimes provide customers with the ability to transfer funds between
accounts by using the touch-screen system, or you can withdraw money from
one card and then deposit the money into a second account using another card.
24-Hour, 365-Day Access to Your Bank Accounts
An ATM card allows you to access all of your bank accounts 24 hours a day,
365 days per year via any ATM. This means you do not need to walk into a
branch, with its restrictive weekly hours and line-ups, to take care of your
banking needs. Services that you can complete at an ATM include many of the
same services that you would use if you walked into a bank branch, such as
withdrawing cash, transferring funds, paying bills, ordering checks or
depositing funds.
International Access to Funds
If your ATM card is attached with the "Plus" or "Cirrus" names, you will be
able easily to withdraw the local currency at any associated ATM around the
world. Withdrawing local currency from an international ATM can be a more
cost effective way to do a currency exchange abroad compared to exchanging
money at a foreign exchange bureau, which charges high servicing fees. You
may need to pay a nominal fee to use another financial institution's ATM abroad
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although financial institutions in certain countries do not charge extra ATM
fees, such as Canada.
Fraud Protection
Your ATM card is protected with the PIN you have chosen for it. Also, any
fraud activity on your ATM card, should it be lost or stolen, is easily traceable
via the ATM network. Not only can your bank or financial institution quickly
look up the location where any funds may be taken out by someone other than
yourself but every ATM vestibule is equipped with a security camera. Anyone
using your card fraudulently can be traced and identified.
Wider Network of Banking Facilities
You can use the ATM card at any machine within your bank's ATM network
around the country or you can also access your accounts (and use selective
banking services such as withdrawing funds) via domestic ATMs operated by
other banks or credit unions, for a fee. Automated teller machines are not only
located at financial institutions but you can also find stand-alone ATMs at select
stores, malls and airports. This means you are never very far away from a
location where you can access the funds in your bank accounts, rather than
having to locate your closest bank branch.
Extended Hours
While your bank may keep normal business hours, the ATM is available to
process transactions 24 hours a day, 365 days per year. This is very convenient
if you need to make a withdrawal or deposit (available at some ATMs) outside
of business hours, or on the weekend. ATMs ensure that you will always have
access to your funds, night and day, although there may be a withdrawal limit
set by your bank. To increase or remove this limit, contact your bank's customer
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service center using the telephone number on the back of your ATM or debit
card.
Quick Transaction
ATMs allow customers to avoid long lines inside of the bank. Because banks
typically have multiple ATM machines and most transactions conducted at the
ATM machine are simple withdrawals, you can avoid long lines by using one.
No Paperwork
When making a withdrawal from inside of the bank, you must fill out a
withdrawal slip. Often times you will also need to show proof of ID, such as a
driver's license or passport. When using the ATM, all you need is your ATM
card and PIN number to verify your identity and access your account.
Increased Privacy
While not anonymous, you can avoid speaking with or allowing a teller to view
the balance of your account. An overdrawn account can be an embarrassing
scenario, especially if you need to check your balance. Virtually all ATM
machines will allow you to check your balance in private, without the assistance
of a teller.
Drive Through
Many bank's ATM machines are located at a drive-through lane for added
convenience. This is very helpful if you are in a hurry and need to withdraw
cash because not only do you not need go into the bank and wait for a teller to
assist you, you don't even exit your vehicle.
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Available Anywhere
You can access your account and withdraw cash from any ATM regardless if
your bank operates it. This is especially helpful if you are on a trip and are short
on cash. Simply insert your debit card and enter your PIN to make a withdrawal
or check your balance. However, you should always be aware of the fees
charged by the ATM and by your bank for using an ATM not operated by them,
as they can be expensive. ATM machines will typically display the fees
imposed prior to completing the transactions.
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DISADVANTAGES OF ATM
Automated teller machines, or ATMs, are a convenient way to access your
money without having to go into a bank and work with a bank teller. ATMs
give you the opportunity to withdraw and deposit money, as well as check your
balances at the touch of a button. Although ATMs are convenient, there are
disadvantages to using these machines.
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 general
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.
Security
Unlike bank tellers, ATMs do not require the person performing the transaction
to present a picture identification. Rather, the person must only insert a bank
card and enter a personal identification number. If the bank card is stolen and
the number ascertained, an unauthorized person can easily access the account.
Inability To Perform Complex Transactions
ATMs can only perform relatively basic transactions. This means that people
who need to complete these longer transactions will be forced to use the teller,
restricting use of the ATM for people who need to complete simple business. In
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this sense, the ATM Is rather like the express line in a supermarket--faster for
some, but unavailable to others.
Fees
With the advent of ATMs came ATM fees. Not only do banks of which you are
not a member charge fees for the use of their ATMs, but users are often charged
surreptitious fees by their own banks for using other banks' ATMs--meaning the
customer is docked twice for the same transaction.
Privacy
Unlike banks, in which security guards and tellers are present to ensure the
person performing a transaction receives privacy, there is no such guarantee
when using an ATM. People may try to spy on users as delicate information
appears on the screen, without the user being aware.
Difficulty of Use
The performance of business at an ATM is generally quicker than that at a
human teller. However, the ATM is incapable of providing personalized
instruction to the user in a way that a human teller can. This can result in longer
wait times if the user currently using the machine is struggling to complete a
transaction.
Eating a Card
Occasionally, ATMs will malfunction and swallow a user's ATM card. The
customer will then be directed to contact a service number or their bank and
wait for a repair technician to retrieve this card. While this happens only rarely,
if it occurs on a weekend or at night, the user may be left to wait for several
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days before they can again use their card, something that would not happen with
a human cashier.
Privacy
Privacy is not guaranteed because ATM transactions are completed using a
keypad or touch screen. The people standing nearby may be able to see your
personal identification number, or PIN, and account balance information,
making it easier to steal your identity. However, once you are inside a bank, the
account numbers and other personal information are maintained behind a desk
and the information is more secure.
ATM Card
Having a physical ATM card in your possession is a disadvantage. For one
thing, you have to protect the card. If it is lost or stolen, it can be used by the
finder, which can lead to potential losses for you. Another problem is the
machine taking your card. If you enter the wrong PIN or the machine
malfunctions, your card may disappear into the machine. Then you may have to
order a new card, or wait for the bank to open the next day.
Overspending
There is a risk of overspending because an ATM gives you access to your
money even after bank hours. If you are an impulse buyer, this is a major
disadvantage and it can cause problems with budgeting. If you do not have an
ATM card, you have to stop and think about the necessity of the purchase
before you make it. However, with the ATM card in hand and ATMs on almost
every corner, you can purchase without thinking, thus potentially leading to
overspending.
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Record Keeping Requirements
ATM cards make it possible to overdraft your bank account, so they require that
you keep careful record of your spending. With an ATM card, it is vital to know
what your checking account balance is at all times. The overdraft fees
associated with bank accounts are high enough that the consequences of over-
drafting, even by a small amount, are quite serious.
Hidden Fees
Hidden fees seem to be lurking around every corner of the financial world. If
you are not using an ATM that is affiliated with your bank or credit union, then
you will likely have to pay a fee. Although many banks strive to have
conveniently-located ATM machines, using any ATM machine not associated
with your bank can deplete your bank account balance.
Lost or Stolen Cards
Although there are protections out there for identity theft victims, when an
ATM card is lost or stolen, it can spell disaster for the card owner. ATM cards
can fall into the wrong hands, and be used to rob your account or make
purchases without your knowledge. A thief could use your ATM card as a credit
card by forging your signature, or for online purchases simply by knowing your
card number and expiration date. Banks do not offer the same protections on
ATM cards as credit cards so check your financial institution for its policy on
unauthorized transactions.
Ease of Overspending
While ATM cards make shopping simple by boiling the process down to the
simple swipe of a card, they also promote overspending. When you shop with
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cash, you know instantly where you stand financially and how much money
remains. With a debit or ATM card, it becomes difficult to monitor how much is
being spent and how much money is left until the dreaded card decline or you
are hit with an overdraft charge.
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 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.
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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 non-banking 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 BankBoston, 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 ATMs, but charge a fee between $2 and $5 for withdrawals
from machines outside the system.
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CHAPTER 5
USE OF ATMS
Cash Withdrawal and Balance Enquiry
In spite of a number of innovative services being made available at many
ATMs, cash withdrawal stills remains the most accessed service at ATMs.
However, the migration of routine bank transactions like cash withdrawals
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
Again, 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 shopkeepers and those whose work involves
substantial travelling. 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.
However, regulatory concerns relating to identification of counterfeit notes
and its depositors need to be addressed first.
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 cheque deposited
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in ATMs. Cheque deposited in ATMs is to be collected and deposited in the
designated branch for collection. Another reason is the introduction of cheque
deposit Kiosks by various Banks especially Private sector ones. These are
kept at each some important locations/branches where customers can deposit
there 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 queues at collection centres. Hence, bill payment at ATMs
has achieved noticeable acceptance by bank customers. Most banks provide
this service through bi-lateral 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 Banks’
ATMs even accept charitable contributions to Temples.
Sale of Paper Based 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
Mumbai’s local railway stations to dispense season tickets to commuters.
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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.
Railway season tickets represent a high-volume mass-appeal product. As
technical standards get established and product/service sellers become aware
of the ATM sales channel, niche-appeal high-margin products like
entertainment tickets will join the fray.
Kiosks
Information Kiosks has been introduced by many Banks and also by PSUs like
Railways, Tourist centers etc. While the revenue-producing capacity of non-
emergency type of information at ATMs as a stand-alone product is doubtful,
many customers may be willing to pay a nominal fee for information having
“impulsive” demand such as cricket scores while they wait for their transactions
to be processed. To be sure, providing information, whether priced or free, will
appeal to some customers and increase customer satisfaction.
Union Bank has used technology to establish Village Knowledge Centers
(VKCs), which have proved to be a success in the 198 centers, where they have
been set up. VKCs empower the local rural population by giving them
information on various vital inputs such as weather, fertilizers, prices of crops,
etc. The bank is also operating financial education centers offering counseling at
51 of these VKCs.
Third party advertising
In India, ATM advertising for third-party products is currently not allowed by
Regulatory authorities. However, the wait time at ATMs can be effectively used
by banks to promote their own brands, product and services. Furthermore, banks
can tailor advertising messages based on customer information easily available
in their accounting and CRM databases. Customer wait-time at ATMs while
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transactions get processed, typically between 10 to 25 seconds, has been
profitably used by many banks for their own advertising.
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 non-account 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 ATMs card.
Recharge mobile via ATMs
ATMs are also used to recharge mobile phones. Initiated in 2004 by ICICI
Bank, now most ATM/Debit Cardholders are able to recharge their pre-paid
subscriptions of most mobile service providers from anywhere in the country
using their bank‘s ATMs or by sending a SMS.
The amount for recharging the mobile phone would be debited from the
subscriber‘s Bank account and the subscription would be directly recharged
accordingly. The mobile top-up facility provides convenience on ATMs and
through mobiles phones through sms.
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CHAPTER 6
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 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
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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 unauthorized 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.
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FRAUD
As with any device containing objects of value, ATMs and the systems they
depend on to function are the targets of fraud. Fraud against ATMs and people's
attempts to use them takes several forms.
The first known instance of a fake ATM was installed at a shopping mall
in Manchester, Connecticut in 1993. By modifying the inner workings of
a Fujitsu model 7020 ATM, criminal gangs known as The Backlands Boys were
able to steal information from cards inserted into the machine by customers.
WAVY-TV reported an incident in Virginia Beach of September 2006 where a
hacker who had probably obtained a factory-default admin password for a gas
station's white label ATM caused the unit to assume it was loaded with $5 USD
bills instead of $20s, enabling himself—and many subsequent customers—to
walk away with four times the money they wanted to withdraw. This type of
scam was featured on the TV series The Real Hustle.
ATM behavior can change during what is called "stand-in" time, where the
bank's cash dispensing network is unable to access databases that contain
account information (possibly for database maintenance). In order to give
customers access to cash, customers may be allowed to withdraw cash up to a
certain amount that may be less than their usual daily withdrawal limit, but may
still exceed the amount of available money in their accounts, which could result
in fraud if the customers intentionally withdraw more money than what they had