Automated Teller Machines (ATM)

Automated Teller Machines (ATM): What They Are and How They Work

What are automated teller machines?

Automated Teller Machines (ATMs) are electronic banking kiosks that allow customers to perform basic banking transactions without the need for interaction with a bank representative or teller. ATM services are usually available 24/7 across multiple locations in cities worldwide. 

What can ATMs do?

ATMs are a convenient form of self-service banking for people who need to perform quick banking transactions, like withdrawing money, checking their account balance, paying bills, and making deposits. Banks don’t usually charge their own customers a fee to use their ATM, however, ATMs located in public spaces, like the mall or a gas station,  usually charge a fee for withdrawals. These charges also apply when withdrawing money from a different bank’s ATM or an international ATM. 

How do ATMs work?

ATMs are connected to your bank account through the Internet or by phone. ATMs have card-reading slots where you insert your credit, debit, or ATM card. The ATM screen displays your bank information and instructions can even be voiced. 

To use the ATM you punch in your card’s PIN number using the keypad, enter the amount you want to withdraw, and then wait for the machine to dispense the requested amount. The ATM will usually ask you to remove your card before dispensing the money (so it doesn’t get forgotten) and flash a message asking if you want a receipt for the transaction. It will print out the receipt if you opt for it. 

What else you need to know about ATMs

The most common places to find ATMs are: attached to the bank you have your account in, public places like malls, grocery stores, restaurants, bars, and busy streets with several businesses. Independent ATMs can belong to any bank, including the one you have your account in. You can withdraw cash from any bank ATM, but if you make a transaction through your own bank ATM, you will not be charged a fee. 

ATMs have a daily or per-transaction withdrawal limit ranging anywhere from $300-$5,000. Once you hit that limit it will not dispense more cash. If you reach your single transaction withdrawal limit, you have to make a separate transaction. But, if you reach your daily limit, you can only withdraw again the next day. 

Banks usually do this to prevent the ATM from running out of cash. This rule also protects your account from unauthorized cash withdrawals. 

There are also cardless and contactless ATMs that allow you to withdraw cash without touching the ATM surfaces or inserting your card into the card readers.

Using an ATM safely

Usually, surveillance cameras are installed at ATMs. However, you can never be too careful when it comes to protecting your hard-earned money.

Here are a few tips to protect yourself at an ATM:

  • Always use an ATM in a public place that is busy and well-lit. Convenience or grocery stores are great options. If you are using the ATM at night, make sure to survey your surroundings. 
  • After withdrawing the money, don’t count the cash out in the open where people can see it. 
  • Password hacking is one of the most common forms of identity theft. Make sure you are using a password that is not easy to guess, and that you are shielding the keypad when you enter your password before withdrawing cash. 
  • Beware of card skimmers – devices that steal card numbers when the card is inserted into the card reader. It may be difficult to identify at first, but a few indicators to look out for are the color of the card reader compared to the color of the ATM, loose or hard-to-type keypad buttons, and even loose card slots.

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StellarFinance, Inc. does not necessarily constitute or imply its endorsement, recommendation or favoring, sponsorship, or representation in reference to any specific company, products, processes, or services by trade name, trademark, manufacturer, or otherwise in this article. StellarFinance, Inc. and its affiliates do not provide financial, tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own financial, tax, legal and accounting advisors before engaging in any transaction.