Talking about the old days when services were not adequately developed, people used to stand in long queues to carry out their transactions. However, with the growth in technology, banking services are also growing. So to make their services better, banks launched automated teller machines or cash machines. An automated teller machine (ATM) is a telecommunication device or a cash machine that is specialised in making banking services better and fast, thereby making it convenient for account holders to make transactions without visiting the banks. 

History of Automated Teller Machine

This convenient idea came into existence in the 1960s. New machines were developed by people to avoid the rush and long queues in banks, so a cash dispenser came into existence for the first time in the mid-1960s in Japan. The new era with the new generation ATM began with Barclays bank in London in 1967, and the feature of PIN was developed in 1970. The popularity of automated teller machines grew significantly with this feature. 

Types of ATMs

ATMs have been categorised in following:

1. Onsite ATM: Automated teller machines are installed near the bank so that the account holders can enjoy the benefits of bank services and ATMs. 
2. Offsite ATM: Banks rent places where they do not have operative branches to make it easy for customers to enjoy the banking services. Banks install their own ATMs, and these are known as cashpoints.
3. Mobile ATM: These came into existence during COVID 19 to avoid long queues and rush.
4. Yellow Label: These were used to make e-commerce easy for you, i.e., ATMs that can be used for online purchases are categorised as Yellow labels.
5. Green Label: ATMs used for making agricultural transactions are categorised into Green Label.
6. Dial-up ATMs: They are connected to the host processor using a modem. These require a stable connection and their installation cost is also significantly less.
7. Cash Dispenser: These are the machines that are used only for cash withdrawals and balance checks.
8. Pink Label ATM: These are the ATMs made especially for women to make them avoid long queues outside ATMs.
9. White Label ATM: These are the ATMs in the non-banking domain.

Principle of Automated Teller Machine

Automated teller machines are called cash machines for a reason, because of their easy-to-use features. The principle on which the automated teller machine works is quite simple. To begin with, this telecommunication device is a data terminal that has two inputs and four outputs: 

Inputs: Card reader & Keypad

Outputs: Screen or display, cash dispenser, printer, and speaker.

All these are interfaced (connected) with the processor. All the cash points are connected to the host processor through the ISP (internet service providers). When a person with an ATM card performs a transaction, they provide all their necessary data to the machine. All this information in the form of data is transferred from the automated teller machine’s server to the host processor. The host processor enters the transaction request to the cardholder’s bank. Once the bank confirms the cardholder’s personnel, a pin or code is sent to the machine from the host processor as a green signal. This is how the transaction is performed. This centralisation of the system makes your life easier.

Parts Of Automated Teller Machine

Here is a list of a few parts that you can see in every automated teller machine:

1. The Card Reader: This is the part of the automated teller machine where you insert your ATM or Debit card. The side where the chip is embedded must be inserted into the slot. The card reader reads your data and allows you to make transactions.
2. Screen: Everything you see is displayed on the screen.
3. Keypad: You can enter your pin or amount using the keypad.
4. Cash window/ cash dispenser: This is part of the automated teller machine from where you get your cash.
5. Printer: This part of the machine lets you get your account balance details in printed form.

Modern ATM

These ATMs of telecommunication devices come with more features like withdrawing and depositing cash in the same machine. It also provides the feature to withdraw cash without inserting your card by just entering your account number and registered mobile number.

Conclusion

ATM stands for Automated Teller Machine. It is a telecommunication device, the idea for which came into existence in 1960. The first ATM was launched in 1967. There are various types of automated teller machines. All the automated teller machines are connected to the banks, and this system is centralised to facilitate accessible services.