How Does ATM Work (inside & outside)

How Does ATM Work (inside & outside)

ATMs or Automated Teller Machines are the saviours that prevent us from bearing the inconvenience of standing in the long queues and enable us to carry out various hassle-free monetary or financial transactions in just a few seconds. The credit for the smooth working of the ATMs goes to various easy to carry steps (each for a different purpose) that surround them. But, have you ever wondered how does an ATM work or function so effectively and efficiently? Hold on! The article is going to put an end to all your queries regarding the internal as well as the external working of the ATMs. But before we move further, let’s acknowledge some common yet interesting facts about an ATM.


ATMs have become an integral part of the human regime as they assist us with quick and easy to carry monetary transactions, without wasting much of our time. But, not many of us are aware of some common facts about the ATMs. In this part, we are going to define these facts.


In the year 1965, Scotland’s citizen, John Shepherd Barron, went to a bank to withdraw money but he found the bank closed because he reached the bank late by one minute. Later, the thought why not create a machine that delivers 24/7 money withdrawal facility struck his mind. And, within 2 years (1967), the first-ever Barclays ATM was invented by him.


Initially, Mr John desired to keep a six-digit pin for the ATM but his wife found it difficult to remember those six digits. Hence, that’s how he came up with the concept of the four-digit pin.


Just like a person is known by different nicknames, an ATM is also known by different names in different countries. For example – In New Zealand and the UK, it is recognized as Cash Machine or Cash Point whereas, in Australia and Canada, it’s recognised as Money Machine.



To get the best output for the transaction made through the ATM, it is important to put in the required input correctly and thoroughly. Now, there are six main inside or input devices that provide guidance to the cardholders in getting themselves embraced with the desired output and are linked with the easy and fast functioning of the ATMs across the globe. These six devices are – a card reader, speaker, keypad, display screen, cash dispenser and receipt printer.


You all might be knowing about the magnetic stripe on the back of your ATM card and this stripe carries an indispensable data that gets interpreted by an input device “card reader”, on inserting the card inside the card reader slot by the cardholder and is further progressed to the servers. This data is been used by the servers to direct the cardholder’s transaction to the affiliated bank. Once the data has been interpreted, the cardholder will be asked to move further to complete the transaction.


The moment you put your card inside the card reader slot for verification, the speaker will ask you to wait until the complete process gets over. And at the end of your transaction, the same speaker will ask you to collect your card.


Just like the other keypads, the basic function of the keypad of the ATM is to input the necessary information towards the success of the transaction made by the cardholder. When the ATM verifies the card, it asks the cardholder to enter the four-digit personal identification number or the PIN. On entering the correct PIN, the cardholder will be asked to choose the further options (cash withdrawal, bank inquiry or transfer and payments), depending upon his/her requirement. The cancellation or corrections in the transaction can also be made with the aid of the keypad.


The display screen showcases the list of available alternatives from which the cardholder has to choose the desired alternative, that will guide them towards the attainment of the transaction. Most ATMs are made using CRT or LCD screen.


The cash dispenser in that part of an ATM whereby you extract the cash on choosing for “cash withdrawal”.


The ATM doesn’t disappoint all those cardholders, who desire to receive a written record for the transaction being carried out by them. Not many users, choose for the printing of the receipt as it is generally not required. Since cash or check deposit, carry some potential risks with them, it is advisable to collect the receipt.


Having gone through the above section, this section of the blog will lay emphasis on the effortless working of an ATM with the involvement of just a few easy to carry steps by the cardholders to serve their purpose, using the various input devices. So, let’s begin.

1. Insert the Card and Wait for the Speaker’s Feedback


The first step is to insert the card. As soon as the cardholders insert their ATM card inside the card reader slot to let the ATM detect the authenticity of the card, the speaker comes up with the audio feedback to wait until the insertion of the card gets success. In case of the failure, you’ll be asked to insert the card again correctly.

2. Choose the Desired Transaction on the Display Screen


Most of the cardholders know that an ATM is used to withdraw money easily and quickly by entering the 4-digit pin in the final step of the transaction but eventually there are other functions as well, that an ATM serves. Let’s acknowledge these options.

Deposits – Depositing cash or checks has become extremely uncomplicated via the ATMs in case your bank is in partnership with the ATM card you hold. But, there are certain risks or chances of errors associated with ATM deposits. So, avoid depositing big amounts through the ATMs as there’s no record of the deposits and the money may disappear after entering the machine.

Balance Inquiry – The cardholders can check the remaining balance in their account by going for this transaction option. When you select “balance inquiry”, the available amount in your current account gets displayed on the screen.

Transfer and Payments – You can get access to “transfer and payments” also, depending on the bank your card is registered with. The option grants you with the transfer of money to another account by filling the asked details.

So, choosing the desired transaction becomes the second step.

3. Get the Receipt for the Transaction Made


Having made the transaction through the ATM, the receipt printer may give you the written record of your transaction on demanding but in the majority of the cases, these receipts are needless. But in case you’ve deposited a check, keeping the receipt is a good decision to make until the money appears in your account.

4. You are Done!


To end your session, don’t forget to take out the ATM card at the end of your transaction. The in-built speaker inside the ATM will signal you to take your card out once the transaction has been done successfully. And select “clear” to avoid the next person in the queue to go through your transactional information.


The ATM cards are the necessity of today’s world where everyone is extensively occupied with their professional lives. In such a situation, no one would want to waste their time spending in the long bank queues. Now, as you got aware of the complete functioning of the ATMs, we hope you’ll be able to grab more benefits that come along with them, in case you were incognizant to them till yet.

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