ATM and its basic function. How ATM card enables account transaction?

Do you know, the global ATM market value as on 2021 was around 23 billion US dollar? The figure is as per Statista, the Research and Information Design Agency, Germany. 

In the year 2018, it’s market value was just 18.4 billion dollar. It is expected to surpass  the 44 billion dollar mark by the year 2047. 

Lately it has seen the use of ATM has been increased exponentially in a much higher pace. The banks are trying to expand the reach of financial services even to the remotest part of the country. 

In India, there are approximately 255000 numbers of ATM inclusive of all the banks and non financial institutes. State Bank of India alone contribute around 50000+ numbers of ATM spread across the country. 

It has been proved beyond doubt that installation of an ATM machine is the best way to reach out to the unbank areas where establishment of bank branches would be tougher. 

What is an ATM? Full form and definition of ATM. 

ATM stands for Automated Teller Machine also known as Automated Bank Machine or Cash Machine. It’s an electronic banking outlet or terminal which allows customer to do basic financial transactions. 


It allows to withdraw and deposit money. Other than these, you may find many other facilities such as

  • Balance enquiry. 
  • Account mini statement print out. 
  • Change of ATM PIN. 
  • Cheque deposit. 
  • Fund transfer. 
  • Mobile number registration etc. 

At present, it has been seen that most of the bank are implementing a new way of doing transactions on ATM. Specially on cash withdrawal. 

Whether you have an ATM card or not. If you have an account with an active internet banking, you may withdraw cash without ATM

Bank such as State Bank of India, has cash withdrawal with QR code functionality and SBI YONO cash which literally let’s you withdraw cash with the authentication of either QR code or PIN numbers. 

These cardless transaction is totally great. Try it out if you are having State Bank savings account with INB. You would love the way Bank offer the service. 

QR code based cash withdrawal can be done only for ₹ 2000 and ₹ 4000 whereas YONO cash is capped upto ₹ 20000 daily limit. 

History of ATM

Late 1960s leading countries such as Japan, Sweden, USA and United Kingdom had started investing toward alternet channel of banking industries. 

  • Invention of ATM was one of it and in the year 1966 Japan had successfully produced one such machine which was not exactly the automated teller machine for withdrawal cash but it was for loan purpose. 
  • They name it computer loan machine which let the customers to avail loan by inserting a credit card. The said loan was given at 5 % interest. 
  • The history of ATM begin when Barcleys Bank installed world first ATM in the year 1967 at Einfield town in North London. It was invented by John Shepherd Barron. The machine had allowed customers to withdraw a maximum of 10 GBP at a time. 
  • In 1969, US got it’s first ATM installed by Chemical bank in New York City
  • The concept of PIN- Personal Identification Number was introduced in the year 1970. It was proposed by british engineer, James Goodfellow and it was meant for automated ID verification of end users. 
  • After that there were significant increased in its popularity and it really changed the way people bank. By 1984, there were around 100000 numbers of ATM across the globe. 
  • Which increased furthermore till it hit the record of 3 millions ATMs operated all around the world. 
  • In India, ATM came quite late. It was HSBC bank that introduced an ATM to India. It was installed in 1987 at Mumbai. India had installed another 1500 ATMs in the next 12 months. 
  • In India, as per Statista, the total number of ATM under NFS (National Financial Switch) as on January 2022 is at 255000 in which State Bank of India contribute around 62617. 

Types of ATM

Banks normally classify two types of ATM. Onsite and offsite

Onsite ATM are those which are installed in Bank premises or nearby where it’s operation is look after by that particular link branch. 

Offsite ATM are those type of ATM where it’s installed far away from banks. It may be in shopping mall, airport, railway station or in any other places where Bank may not be able to give operational service. 

Operation of these offsite ATM are undertaken by third party vendors. These licensed vendor will do all the necessary requirements to keep the ATM up and running throughout the days. 

Cash loading, repair of system failure both hardware and software, all are done by the vendor without the intervention of Bank official. 

Bank has a nodal officer to keep tap on these ATM services to make sure all of them are properly functional. 

Note: So, if you have any issues related to ATM transaction and you have no idea which Bank branch it links to. You may approach the nodal officer or channel manager of the particular Bank. Normally they are attached to respective regional offices. It’s advisable to reach out for online support before meeting nodal officer. As some issues usually solve within minutes of transaction. For further clarification seek help from Bank official website. 

In the beginning the ATM was meant for only cash withdrawal. But with times, many softwares and hardwares were upgraded till we see the multifunctional ATMs of present day. 

Basically, there are ATM which only gives the basic financial functions that includes cash withdrawal, ATM PIN generation, ATM PIN change, balance enquiry, card to card/card to account fund transfer etc. These ATMs are known to us as the basic type of ATM. 

The other somewhat complex ATM will allow you to do more transactions. In addition to the functionality of basic ATM, you may get the options of cash deposit, cheque deposit, biometric authenticator with biometric eye scanner, fingerprints scanner or even voice recognition inputs. 

Classification of ATM base on lebel
Green ATM An ATM used for agricultural purposes. 
Yellow lebel ATM An ATM used for e-commerce transactions. 
Orange lebel ATM It is used for share transactions. 
Pink lebel ATM An ATM specially meant for female customers. 
White lebel ATM An ATM operated by non bank entity. It was introduced by TATA group and the name was given as Indicash
Brown lebel ATM An ATM operated by third party other than bank. 

Features of ATM

An ATM has a number of useful features. Since the begining, it’s uses has been increased many folds and Banks keep on adding additional features. 

The following are some of the basic features of an ATM. 

  • Cash withdrawal. 
  • Cash deposit. 
  • Cheque deposit. 
  • Balance enquiry. 
  • Mini statement. 
  • PIN change and generation. 
  • Fund transfer. 
  • Mobile number registration. 
  • Utility bill payment. 
  • Insurance premium payment. 
  • Apply loan. 
  • Mobile bill payment or recharge. 
  • Tax payment. 
  • Apply credit card. 
  • Donations. 
  • Cheque book request. 
  • Internet banking activation. 
  • ATM card limit setting. 
  • Cheque stop payment request. 

How does it operate? 

How it operates is quite basic and simple. It involves transfer fo data from your ATM card to Bank server which let’s you access your account. 

The ATM is connected with the bank’s main server. It’s a secured connection which only meant for ATM data transfer. With your card you may access your account. 

When you insert the ATM card in card reader panel, the machine reads your card details and prompt services you required accordingly. 

Whatever transaction you would want to do, will display in the touchscreen panel. Select accordingly and proceed. 

Once you authenticate with the PIN, the ATM will ping to the main server for required transaction and get the confirmation transaction within seconds. 

If it’s cash withdrawal that you do, money will dispense through cash dispenser. 

How to use ATM?

It’s quite simple to understand the process. Though it has been notice that senior people have issues while operating due to lack of technical knowledge. Not all but few senior users has the fear of doing transaction over ATM. Maybe they are old fashion or just love to visit the Bank to have a human touch. 

With proper guidance, it can be dealt with. So, few basic steps to follow are mentioned below. 

Steps Process to follow
Swipe or insert the card
Authenticate with PIN. It’s personal identification number which authenticate to access your saving Bank account. 
Select the service you want to get. It may be cash withdrawal, fund transfer, balance enquiry or any other. 
Confirm it. 
Your transaction will be completed with the print out. 

1 thought on “ATM and its basic function. How ATM card enables account transaction?”

Leave a Comment