ATM Automated Teller Machine

orAutomatic Teller Machine

(ATM, American, Australian, Singaporean, Indian and Hiberno-English), also known as an

• Automated Banking Machine (ABM, Canadian English)

• Cash Machine

• Cash Point

• Cash Line, or colloquially 

• Hole in the Wall ( Australian, British, South African and Sri Lankan English),

is an electronic telecommunications device that enables the customers of a Financial institution to perform Financial Transactions without the need for a Human Cashier, Clerk or Bank Teller.

On most modern ATMs, the customer is identified by inserting a plastic ATM card with a Magnetic Stripe or a Plastic Smart Card with a Chip that contains a unique card number and some security information such as an expiration date or CVVC (CVV).

Authentication is provided by the customer entering a Personal Identification Number (PIN).

Using an ATM, customers can access their bank deposit or credit accounts in order to make a variety of transactions such as Cash Withdrawals, Check Balances or Credit Mobile Phones.

ATMs often provide the best possible exchange rates for foreign travelers, and are widely used for this purpose.

Many ATMs have a sign above them, indicating the name of the bank or organization owning the ATM .

Software Used in ATM : Microsoft Windows

TYPES

There are two types of ATM installations:

• ON - PREMISE

On-premise ATMs are typically more advanced, multi-function machines that complement a bank branch's capabilities, and are thus more expensive.

• OFF - PREMISE

Off-premise machines are deployed by financial institutions and Independent Sales Organizations (ISOs) where there is a simple need for cash, so they are generally cheaper single function devices.

In Canada, ATMs (also known there as ABMs) not operated by a financial institution are known as “WHITE – LABEL ABMS”.

FINANCIAL NETWORKS

Most ATMs are connected to Interbank Networks, enabling people to withdraw and deposit money from machines not belonging to the bank where they have their accounts or in the countries where their accounts are held.

Many banks charge ATM Usage Fees.

In some cases, these fees are charged solely to users who are not customers of the bank where the ATM is installed.

GLOBAL USE

Estimates developed by ATMIA place the number of ATMs in use currently at over 2.2 million, or approximately 1 ATM per 3000 people in the world.

Four regions (USA, Canada, Europe, and Japan) have high numbers of ATMs per million people.

SECURITY

Security, as it relates to ATMs, has several dimensions.

ATMs also provide a practical demonstration of a number of security systems and concepts operating together.

• Physical (Common Method: Simply robbing the staff filling the machine with money)

• Transactional Secrecy & Integrity (Secure Crypto – Processors, MAC - Message Authentication Code)

• Customer Identity & Integrity (Finger Patterns, Facial Recognitions)

• Device Operation Integrity (Mechanical Shutters, Alarm Sensors)

• Customer Security (Multiple Security Cameras, Security Guards)

USES

Although ATMs were originally developed as just cash dispensers, they have evolved to include many other bank-related functions:

• Printing Bank Statements.

• Updating Passbooks.

• Cash Advances.

• Cheque Processing Module.

• Paying (in full or partially) the credit balance on a card linked to a specific current account.

• Transferring Money between Linked Accounts (such as transferring between checking and savings accounts).

• Deposit Currency Recognition, Acceptance and Recycling.

• Paying Routine Bills, Fees and Taxes (utilities, phone bills, social security, legal fees, taxes, etc.)

RELIABILITY

Before an ATM is placed in a public place, it typically has undergone extensive testing with both test money and the backend computer systems that allow it to perform transactions.

Banking customers also have come to expect high reliability in their ATMs, which provides incentives to ATM providers to minimize machine and network failures.

Financial consequences of incorrect machine operation also provide high degrees of incentive to minimize malfunctions.

If ATM networks do go out of service, customers could be left without the ability to make transactions until the beginning of their bank's next time of opening hours.

Not all Errors are to the Detriment of Customers

There have been cases of machines giving out money without debiting the account, or giving out higher value notes as a result of incorrect denomination of banknote being loaded in the money cassettes.

The result of receiving too much money may be influenced by the card holder agreement in place between the customer and the bank.

Errors that can occur may be :

• Mechanical  (Such as card transport mechanisms, keypads, hard disk failures, envelope deposit mechanisms) 

• Software (such as operating system, device driver, application)

• Communications / Operator Error

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:

• Fake ATM (Stealing cards information’s and replicating it )

• Hacking (Obtaining Administrative Passwords)

For a low-tech form of fraud, the easiest is to simply steal a customer's card along with its PIN.

A later variant of this approach is to trap the card inside of the ATM's card reader with a device often referred to as a Lebanese Loop.

When the customer gets frustrated by not getting the card back and walks away from the machine, the criminal is able to remove the card and withdraw cash from the customer's account, using the card and it’s PIN.

Another simple form of fraud involves attempting to get the customer's bank to issue a new card and its PIN and stealing them from their mail.

In an attempt to stop these practices, counter - measures against card cloning have been developed by the banking industry, in particular by the use of Smart Cards which cannot easily be copied or spoofed by unauthenticated devices, and by attempting to make the outside of their ATMs tamper evident.

The most actively developed form of smart card security in the industry today is known as EMV 2000 or EMV 4.x (Widely Used in UK).

ECSElectronic Clearing Services

Electronic Clearing Service (ECS) is mode of electronic funds transfer from one bank account to another bank account using the services of a CLEARING HOUSE.

This is normally for bulk transfers from one account to many accounts or vice-versa.

A Clearing House is a financial institution that provides clearing and settlement services for financial and commodities derivates and securities transactions.

These transactions may be executed on a future exchange or securities exchange. A clearing house stands between 2 clearing firms also known as the member firms or clearing participants and its purpose is to reduce the risk of one clearing firm failing to honor its trade settlement obligations.

A Clearing House reduces the Settlement Risks.

TYPES

There are two types of ECS called the

• ECS (Credit) i.e. used for affording credit to the large number of beneficiaries by raising a single debit to an account, such as dividend, interest or salary payment. • ECS (Debit) i.e. used for raising debits to a number of accounts of consumers/ account holders for crediting a particular institution.

ECS - Credit System

Working Steps Include, Initiation of an ECS (credit) Transaction

ECS payments can be initiated by any institution (called ECS user) that have to make bulk or repetitive payments to a number of beneficiaries.

They can initiate the transactions after registering themselves with an approved clearing house.

ECS users have also to obtain the consent as also the account particulars of the beneficiary for participating in the ECS clearings.

The ECS user’s bank is called as the Sponsor Bank under the scheme and the ECS beneficiary account holder is called the Destination Account Holder.

The Destination Account Holder’s Bank or the Beneficiary’s Bank is called the Destination Bank.

The Clearing House would debit the account of the ECS user through the account of the sponsor bank on the appointed day and credit the accounts of the recipient banks, for affording onward credit to the accounts of the ultimate beneficiaries.

This is how the ECS credit system work.

Beneficiary Participation in ECS (Credit) Scheme

• The beneficiary has to furnish a mandate giving his consent to avail of the ECS facility.

• He should also communicate to the ECS user the details of his bank branch and account particulars.

• Such Authorization form is called a Mandate. Advantages to the Ultimate Beneficiary

• The end beneficiary need not make frequent visits to his bank for depositing the Physical Paper Instruments.

• He need not apprehend Loss of Instrument and Fraudulent Encashment.

• The delay in realization of proceeds after receipt of paper instruments.

The Scheme Benefit the ECS User - Like Corporate Bodies / Institutions by:

• The ECS user saves on administrative machinery for printing, dispatch and reconciliation.

• Avoids chances of Loss of Instruments in Postal Transit. • Avoid chances of Frauds due to fraudulent access to the Paper Instruments and Encashment. • Ability to make payment and ensure that the Beneficiaries Account gets Credited on a Designated Date. 

Advantages to the Banks:

• Banks handling ECS get Freed of Paper Handling.

• In ECS, Banks simply get the payment particulars relating to their customers. • Wherever the details do not match, they have to return it back, as per the procedure.

Banks have been advised to ensure that the Pass – Books / Statements given to the customers reflect the particulars of the transaction provided by the ECS users.

Customers can match these entries with the advice received by them from the payment institution.

There is NO limit on the amount of individual transaction prescribed under this scheme.

And YES it is necessary for the corporate / institutions to collect mandate from the investors.

ECS - Debit System

ECS Debit Scheme is a scheme under which an account holder with a bank can authorize an ECS user to recover an amount at a prescribed frequency by raising a debit in his account.

The ECS User has to collect an authorization which is called ECS mandate for raising such debits.

These mandates have to be endorsed by the bank branch maintaining the account.

Working Scheme

Any ECS user desirous of participating in the scheme has to register with an approved Clearing House.

He should also collect the mandate forms from the participating Destination Account Holders, with Banks Acknowledgement.

A Copy of the Mandate should be available with the Drawee Bank.

The ECS user has to submit the data in specified form through the Sponsor Bank to the Clearing House.

The Clearing House would pass on the debit to the Destination Account Holder through the clearing system and credit the sponsor banks account for onward crediting the ECS user.

All the unprocessed debits have to be returned to the sponsor bank within the time frame specified.

Banks will treat the electronic instructions received through the clearing system on par with the physical cheques.

Advantages to the Ultimate Beneficiary

• Trouble Free – Eliminates the need to go to the collection centre’s / banks by the customers and no need to stand in long ‘Q’s for payment.

• Peace of Mind – Customers also need not track down payments by last dates.

• The debits would be monitored by the ECS users.

Advantages to the Banks:

• Banks handling ECS get Freed of Paper Handling.

• In ECS, Banks simply get the mandate particulars relating to their customers.

• Wherever the details do not match, they have to return it back, as per the procedure.

The Scheme Benefit the ECS User - Like Corporate Bodies / Institutions by:

• The ECS User saves on Administrative Machinery for collecting the Cheques, Monitoring their Realization and Reconciliation.

• Better Cash Management.

• Avoid chances of Frauds due to fraudulent access to the Paper Instruments and Encashment.

• Realise the payments on a single date instead of fractured receipt of payments.

Institutions Eligible to Participate in the ECS Debit Scheme:

Utility Service providers such as

• Telephone Companies

• Electricity Supplying Companies

• Electricity Boards

• Credit Card Collections

• Collection of Loan Installments by Banks and Financial Institutions

• Investment Scheme of Mutual Funds etc.

YES, the Mandate once given can be withdrawn as it is on par with the cheque issued by a customer.

YES, it is left to the choice of the Individual Customer to stipulate any maximum debit, purpose or validity period for the mandate.

There is NO limit on the amount of individual transaction prescribed under this scheme.

ELECTRONIC CLEARING SERVICES

Username and Password Protection are there. 1 Sharing them will put the User at RISK.

Maintain various accounts as per the organizations requirement.

2 Too many accounts will become bothersome.

For secure transactions, sites must follow strict security policy.

3 Proceeding without complete knowledge.

Reduces Paper Works. 4 Not all classes of people get adapted to this.

Banks Secure the Personal Information. 5 Hackers at large.The Banks (Large Network) is risk free from Virus.

6Personal desktop may be effected from Virus, So Anti-Virus and Firewall must be always on during transaction.

Smart Cards (easy to carry, is applicable almost everywhere). No need to carry cash, Smart Card does the trick.

7Falling of this in wrong hands is danger to the entire expenditure of the bank balance. There are counter measure but time plays the key factor.

Electronic Cash is based on Cryptographic Systems. The transactions are encoded by means of the Numeric Keys. Transaction details travel across net.

8Electronic Payments are resistant to forgery, the Numeric Keys are Vulnerable to attack.

ADVANTAGES DIS - ADVANTAGES

 

While we are moving towards a Paper – Free Environment, We must encourage the ECS and overcome the Disadvantages.

THANK YOU ALL