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What Is an ATM and How Does It Work?

Photo: ATM Photo: ATM

An Automated Teller Machine (ATM): What Is It?

An automated teller machine (ATM) is a type of electronic banking facility where users may perform routine transactions without the assistance of a teller or branch personnel. Most ATMs in the US and other countries accept credit or debit cards as forms of payment for cash access.

ATMs are practical because they let users quickly do self-service tasks such as making deposits, withdrawing cash, paying bills, and transferring funds between accounts. The bank that keeps the history, the ATM operator, or both frequently charge cash withdrawal fees. By utilizing an ATM run by the bank network that owns the report directly, you can avoid some or all of these costs. Exchange rates and transaction fees might make using an ATM overseas more expensive than in the United States.

The ATM’s past

Although there are rumors of a cash dispenser in Japan in the middle of the 1960s, the first ATM debuted at a Barclays Bank location in London in 1967. In the 1970s, interbank communications networks were developed, enabling customers to use their cards at ATMs operated by different banks. ATMs quickly became a global fixture, with a presence in the world’s major nations. These days, they are even present in tiny island states like the Federated States of Micronesia and Kiribati. Cashpoints, cash machines, and automated bank machines (ABMs) are other names for ATMs.

Variety of ATMs

ATMs come in two primary varieties. You can only get updated account balances and cash withdrawals from basic units. The most sophisticated devices take deposits, enable payments and transfers on credit lines, and retrieve account data. You frequently need to have an account with the bank that runs the machine to utilize the advanced capabilities of the complicated devices.

ATM Design Features

ATMs vary in design; however, they all have the same fundamental components:

  • Card reader: This component scans your card’s magnetic stripe on the back or its chip on the front.
  • Keypad: You can enter data using the keypad, such as the needed kind of transaction, the amount of the transaction, and your personal identification number (PIN).
  • Cash dispenser: The machine has a slot through which bills are dispensed; this slot is connected to a safe at the machine’s base.
  • Printer: You can ask for receipts to be printed directly from the ATM if necessary. The current account balance, the transaction type, and the amount are all noted on the ticket.
  • Screen: The ATM displays instructions to help you through the transaction procedure. Additionally, account and balance information is displayed on the screen.
    Cash or paper checks can be deposited using slots found on full-service machines.

Tips for Using an ATM

Usually, to use an ATM, you input your bank card and follow the instructions to take cash through a slot. To execute a transaction at an ATM, you must have a plastic card—a credit card or a debit card from your bank. Before completing a transaction, a PIN is used to verify your identity.

A chip that transfers data from the card to the device is often included with the card. These function similarly to a bar code that a code reader scans. ATMs are located both outside and inside bank locations. Additional ATMs may be found in busy places like malls, supermarkets, convenience stores, airports, bus and train stations, petrol stations, eateries, etc. While off-site ATMs are often exclusively used for cash withdrawals, most ATMs at banks are multipurpose.

ATM Charges

The ATMs operated by their bank are often accessible for account users; however, ATMs managed by other banks frequently charge a fee. In 2022, the average total cost to withdraw cash from an ATM not part of a network was $4.55, according to Certain banks will pay the price back to their clients, particularly if the neighborhood doesn’t have a nearby ATM. For consumers who routinely make withdrawals, ATM fees can mount up. For instance, you would pay over $200 in ATM fees annually if you made weekly withdrawals at an ATM that wasn’t affiliated with your bank and charged $4.

An ATM’s use When traveling outside of the United States, ATMs make it simpler to access your savings or checking accounts from practically anywhere in the globe. Travel experts advise utilizing foreign ATMs instead of most currency exchange facilities when exchanging money overseas since they typically provide a better exchange rate. On the other hand, the accountholder’s bank might charge a transaction fee or a portion of the exchanged currency. The currency rate is frequently omitted from ATM receipts, which makes it hard to keep track of expenditures.

What’s the maximum amount you can take from an automated teller machine?

Your bank and the state of your account determine the daily, weekly, and monthly withdrawal limits from an automated teller machine (ATM). For instance, some banks have a daily cash withdrawal cap of $300. But depending on your account, most Citibank accounts allow up to $1,500. By contacting your bank to get authorization or by improving your banking standing with a larger deposit, you might be able to circumvent these limitations.

How Can an ATM Be Used to Make a Deposit?

You might be able to use one of the bank’s ATMs to deposit cash or checks if you are a client. You might only need to put the cash or checks straight into the machine. Before placing the money in specific devices, you might need to fill out a deposit form and put it in an envelope. To be secure, always sign checks and write “For Deposit Only” on the back.

Which bank set up the nation’s first ATM?

Two years after Barclays placed the first ATM in the United Kingdom, Chemical Bank erected the first ATM in the United States in 1969 in Rockville Center, Long Island, New York. Globally, there were over 1,000 ATMs in operation by the end of 1971.
Eleven. An automated teller machine, or ATM, allows you to withdraw money directly from your bank account without seeing a banker. While some ATMs are just essential cash dispensers, others may be used for other things, including bill payments, balance transfers, and check deposits. Make sure you are aware of the fees involved before making a withdrawal.


  • Automated teller machines, or ATMs, are places to get cash without physically visiting a bank facility.
  • While some ATMs may only be used to withdraw cash, others can deposit checks and transfer balances.
  • Initially introduced in the 1960s, there are over 2 million ATMs globally.
  • Modern ATMs may do several other banking functions in addition to taking deposits.
  • Try to use an ATM operated by your bank to avoid ATM fees.

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