PROJECT ON:

AUTOMATED TELLER MACHINE

(ATM)
IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR
THE AWARDED AT
BACHELOR OF COMMERCE BANKING & INSURANCE
SEMESTER V
SUBMITTED TO
UNIVERSITY OF MUMBAI
FOR ACADEMIC YEAR 2013-2014
SUBMITTED BY
KAPIL CHOUDHARY
ROLL NO: 14
VIVA COLLEGE OF ARTS, COMMERCE, AND SCIENCE
VIRAR (WEST)
401303

DECLARATION:

I hereby declare that the project titled AUTOMATED TELLER MACHINE is an

original work prepared by me and is being submitted to university of Mumbai in
partial fulfillment of B.com (banking & insurance) degree for the academic year
2013-2014.
To the best of my knowledge this report has not been submitted earlier to the
University of Mumbai or any other affiliated college for the fulfillment of B.com
(banking & insurance)
Degree.

Date:

Name: Kapil choudhary

Place:

sign:

ACKNOWLEDGEMENT
I am Kapil choudhary the student of Viva College pursuing my B.COM
(BANKING & INSURANCE), would like to pay the credits, for all those who helped
in the making of this project.
The first in accomplishment of this project is our principal Dr. R.D. Bhagat, viceprincipal prof. prajakta paranjape, course co-ordinator prof. roshani nagar and guide
prof. prajakta paranjape, & teaching & non- teaching staff of Viva College.
I would also like to thank all my college friends those who influenced my project in
order to achieve the desired result correctly.

SUMMARY
One of the important services provided by the banks today is of ATM
To briefly summarize the process, an automatic teller machine or ATM allows a bank
customer to conduct their banking transactions from almost every other ATM machine
in the world. In the introductory stages, of the ATM, Don Wetzel invented the first
successful and modern ATM in the USA. However he was not the first inventor to
create an ATM. In 1939, Luther George Simjian started patenting an earlier and not so
successful version of an ATM. The concept of the modern ATM first began in 1968, a
working prototype came about in 1969 and Docutel was installed a patent in 1973.
The first working ATM was installed in a New York based chemical bank

Sr. No

CONTENTS

Pg. No

INTRODUCTION TO ATM

HISTORY OF ATM

INVENTION OF ATM

10

INTRODUCTION TO ATM CARDS

13

FUNCTIONS OF ATM CARDS

14

TYPES OF ATM CARD

15

WORKING OF ATM

16

PARTS OF ATM

17

HOW TO USE AN ATM

20

10

USES OF ATM

22

11

FRAUD PREVENTION(FOR CONSUMERS)

25

12

ADVANTAGES AND DISTADVANTAGES

28

13

ATM CARD V/S DEBIT CARD

29

14

SCOPE OF ATM IN INDIA

30

15

ANALYSIS OF BANKS

31

16

RECOMMENDATIONS

37

17

CONCLUSION

38

18

BIBLIOGRAPHY

39

1. INTRODUCTION
Viewed from a purely technical perspective, an ATM is simply a safe with an
electro-mechanical input and output system which is itself controlled by a fully
electronic user interface.
Organization that manufacture ATMs include Fujitsu, IBM NCR and SiemensNixdorf expended great effort on the user interface itself; taking into considerable
care to maximize the speed of the entire customer interaction and keeping the
language the used for the interaction process a clear and straightforward as feasible.
Most ATMs nowadays use a cathode-ray tube (CRT) for the visual interface, although
some ATMs of an older design make use of a system where by the different interface
pages are scrolled mechanically behind a glass screen. Incidentally, one reason why
colors ATM screens have not taken off is because no one has yet developed a reliable
color screens which is easily visible in exterior daylight.
It is important that a ATMs user interface should not only be easy to use and
clearly understandable but should be designed so as to minimize the likelihood of the
customer leaving without taking from the machine all the things he needs to take.
These are the cash, paper receipt and above all, the card. There is no doubt that the
card is the most likely items to be forgotten by a customer, who sees the purpose of
the interactive process being to obtain cash. Consequently, ATMs usually have some
kind of sound alarm, which only ceases when the customer has removed his card from
the slot. Some machines also provide visual message to remind the customer to
retrieve the card, especially if the functions is one where the customer is not going to
lingering by the machine until the cash has been dispensed.
In order to prevent security problem if the customer nevertheless forgets to
retrieve the card, the machine will swallow the card after a short period normally
about 30 seconds. The customer will then usually need to apply centrally to get the
card returned, although if ATM is situated in the lobby or through the wall of a branch
where he is known, he can sometimes get the card back from the ATM by asking for
the branch to extract it.
The machines currently in use allow user to draw any sum of up to a limited
account, view the current position of their accounts and order a new chequebook. To

obtain money from the unit the customer need special ATM card and is notified of
personal identification number, which is not shown on the face of the card. The card
must to be inserted into machine and the personal number typed in. the machine will
validate the code number and if correct will allow access the banks computer to
check the account balance and if there are sufficient funds, to withdraw cash.
Features of ATM
The following are the features available on Banks ATMs, which can be accessed from
anywhere at any time.
Cash Withdrawals: A customer can withdraw upto Rs. 15000/- on a single day
on his account. In this, the Fast Cash option shows prefixed amounts, which a
customer can choose from, and Ultra-Fast Cash option to withdraw Rs.3000/- at
one time.
Balance enquiry: Customer can know the ledger balance and available balance
with his account.
Mini statement: Customer gets a receipt printout of his last 8 transactions and the
balance.
Deposit cash/ cheques: Available in all full function ATMs, customer can deposit
both cash and cheques in the ATM. Cash deposited in ATMs will be credited to the
account on the same day and cheques sent for clearing on the next working day.
Funds transfer: Customer can transfer funds from one account to the linked
account in the same branch.
Cheque book request: Request for a cheque book from ATMs and their
concerned branch will dispatch its such that it reaches the customer within 10
working days.
PIN Change: The customer change the Personal Identification Number (PIN) of
the ATM or debit card.
Payments: This is the latest feature on banks ATMs, its functionality can be used
for payment of bills, donating to temples/ trusts or making airtime recharges for
prepaid mobile phones.

2. HISTORY OF ATM

ATM can be traced back to the 1960s, when the first ATM machine was
invented by Scot John Shepherd-Barron and used by Barclays Bank in 1967.
However, while Shepherd-Barron has the major claim to fame, there have been many
other individuals who have also invented some version of the ATM. The machine
itself has evolved over the years, with the earlier versions restricted to only one or few
banking functions. There has been much debate, however, on who invented the first
early versions of Automated Teller Machine. But the history of ATM can be visibly
traced back to the year of 1967.
In 1939, a rudimentary cash dispenser was invented by Luther George Simijian and
established by the City Bank of New York. However, the machine did not work much
and had to be removed within six months of putting up the machine. The early
versions of the ATM were restricted to cash withdrawal only. In the 1967 model,
patented by Shepherd-Barron, the plastic cards did not exist and instead a voucher
with a strip of radioactive substance was used for withdrawing cash. Consequently,
the vouchers were matched with a particular personal pin code used by the bank to
identify the customer. The ATM was inaugurated by renowned British actor, Reg
Varney. The personal identification number was initially a six numbered password,
and was later changed to a four numbered password. However, this automated teller
machine was very different from the modern day teller machines, which is based on
an electronic system between the different branches of the bank. Thus, the history of
ATM has seen many changes over the span of 25 years since 1939.
Another co-patent to the invention of the ATM was Don Wetzel, the Vice
President of Product Planning at Docutel. While the conceptualization began in 1968,
the patent was issued only in 1973. This cash dispenser was first used by the New
York based bank, namely, the Chemical Bank. As was the case with the ATMs of
during those years, they were hardly a multi-functional unit. Moreover, they were not
based on any electronic system. Hence, the debit cards, distinct from credit cards,
were given to only select clients with good track records. The first ATM cards, with
magnetic strips were developed by three individuals, namely Don Wetzel, Tom Barnes
and George Chastain. While there were many developments in the history of ATM,
the service itself took a stronghold only in the 1970s. Today, the ATM service has
become indispensable to our modern day lives.

3. INVENTION OF ATM

Many people have claimed to be the inventor of the ATM. Some believe that Luther
George Simjian did it. Some believe that it was Don Wetzel. Still others say the
inventor is John Shepherd-Barron. John D. White has contacted ATMmachine.com
and gave very convincing evidence that he is the inventor of ATM and not Don
Wetzel. James Goodfellow of Scotland also contacted ATMmachine.com and gave us
convincing evidence of inventing ATM. Since the patent on an ATM as we know it
was never applied until years after Simjian, confusion on inventor till exists. One
reason for confusion is that John Shepherd-Barron lived in the United Kingdom,
James Goodfellow in Scotland, while others lived in USA. We present all the
evidence, as we know it on this page.
The ATM Inventors and the facts:
Luther George Simjian:
In the late 1930's, Luther George Simjian started building an earlier and not-sosuccessful version of an ATM, but he did register related patents. He initially came up
with the idea of creating a hole-in-the-wall machine that would allow customers to
make financial transactions; the idea was met with a great deal of doubt. Starting in
1939, Simjian registered 20 patents related to the device and persuaded what is now
Citicorp to give it a trial. After six months, the bank reported that there was little
demand. Today, as you know, there is a huge demand!
John Shepherd-Barron:
John Shepherd-Barron had an idea in the 1960's for a 24/7 cash dispenser. At the time,
he was managing director of De La Rue Instruments. De La Rue today manufactures
cash dispensers. In fact, there is a De La Rue cash dispenser in 1 out of every 5 ATM
machines built. If you want to believe that Shepherd-Barron invented the ATM, then
the world's first ATM was installed outside a north London branch of Barclays Bank
in 1967. Later In 1967, Shepherd-Barron presented his idea to a conference of 2,000
US bankers in Miami, after the first ATMs had been installed in England. He spoke to
the conference about the new self-service banking device he developed. On December
31, 2004, John Shepherd-Barron was named an Officer of the Order of the British
Empire, or OBE, by the Queen of England for services to banking. "It was a bit late,

10

but better late than never," said Shepherd-Barron. Press releases stated that ShepherdBarron was the "Inventor of the ATM." But, was he?
James Good fellow:
As a Development engineer with Smiths Industries Ltd, James Goodfellow was given
the project of developing an automatic cash dispenser in 1965. Chubb Lock & Safe
Co. was to provide the secure physical housing and the mechanical dispenser
mechanism. Eventually Mr. Goodfellow designed a system which accepted a machine
readable encrypted card, to which he added a numerical keypad. UK Patent No.1,
197,183 with a priority date of May 2 1966, covers this invention, and it is also
covered by US Patent No.3, 905,461 and Patents granted by many other countries.
These Patents list James Goodfellow as inventor, along with the late A.I.O.Davies, the
company General Manager. This US Patent still describes the basic ATM function
almost 40 years later. These Machines were marketed by Chubb LTD and installed
nationwide in the UK during the late 60s and early 70s. You can read ATM inventor
James Goodfellow's story here on ATMmachine.com. Thanks go out to Mr.
Goodfellow for giving us his permission. (Update: In 2006, James Goodfellow was
selected by the Queen to be awarded an OBE for services to Banking as patentee of
the Personal Identification Number (PIN), and his service to banking.

Don Wetzel:
In 1968, according to a NMAH interview, Don Wetzel, says he was the Vice President
of Product Planning at Docutel, the company that developed automated baggagehandling equipment. He applied for a patent on an ATM machine. He said there were
two other inventors listed on the patent. They were Tom Barnes, a mechanical
engineer and George Chastain, an electrical engineer. It took five million dollars to
develop their ATM according to Mr. Wetzel. If you want to believe that Wetzel and
company invented the ATM, then you might want to read the next paragraph.

John D. White:

11

John D. White told ATMmachine.com that his work started in 1968. He told us that he
installed the first ATM at Rockville Center, LI for the then Chemical Bank in August
1973. His design was patented on May 9, 1973 for the Docutel Corporation and was
filed on July 29, 1970. The machine was called a "Credit Card Automatic Currency
Dispenser". Mr. White provided copies of his patent to ATMmachine.com for our
review. Indeed it states the inventor of the machine was John D. White and Kenneth
Goldstein, and the assignee on the patent was the Docutel Corporation. It does seem
to us that this is very convincing evidence that it was White and not Wetzel who
received the patent. There is also a statement in the patent that supports the idea of the
modern ATM. "Both the original code and the updated code are scrambled in
accordance with a changing key", which is basically what happens today. ATMs are
programmed with security keys and the code changes and are scrambled to prevent
fraudulent access to credit card and ATM numbers between the machine, the bank,
and the network processor. We would like to thank Mr. White for contacting us. The
patent drawings he gave us look very much like the free standing ATM that is sold on
ATMmachine.com today.
Jairus Larson:
Jairus Larson told ATMmachine.com that although he did not invent the ATM, as far
as he is aware; he did develop the very first 'on-line' ATM (Diebold's "550"). The first
ATM's were all 'off-line' versions (sometimes referred to as 'stand-alone') meaning
they did not have any means to communicate with the bank. Today's ATMs are 'online' meaning they communicate with the bank's computer system. Mr. Larson was
kind enough to give us his account of how this happened in the early 1970's. You can
read about Mr. Larson's ATM development here.

12

4. INTRODUCTION TO ATM CARD

If you have a bank account there is a good chance that you have an ATM card,
which stands for Automated Teller Machine. This card gives you the ability to go to
an ATM and perform transactions. An ATM is a machine or computerized terminal
that gives bank customers the ability to access their funds without the need of a teller
or bank employee. Every customer has a four-digit pin code, as a matter of security
that must be keyed in before transactions can be performed. Customers have access to
their funds 24 hours per day, seven days per week.

5. THE FUNCTION OF ATM CARD

13

The beginning getting cash at ATMS: The first ATM cards gave consumers access
to their checking, savings, and share draft accounts only at teller machines owned by
their bank, credit union, or savings and loan. People commonly call this kind of card
an ATM card, cash card, or banking card, or they use the name that their bank, credit
union, or regional network has given to the card. When regional ATM networks
were created, they linked together the ATMs of different institutions and offered
consumers access to their money in other neighborhoods and nearby cities, towns, and
states. (A list of many ATM networks names and where they operate appears near the
end of this brochure.) At the same time, two national networks -Cirrus and plus emerged, expanding ATM card access to cash, first nationwide, then around the world.
Currently, these are the only two brands that offer a full range of ATM services
worldwide. ATM cards provide a convenient way of getting cash, making deposits
and transfers, and verifying account balances. It is also easy to tell where you can use
the card by simply matching the logos on your ATM card with those displayed on the
ATM itself.
The next step paying with ATM cards: More recently, many ATM cards have been
enhanced so that you can shop with the cards at merchants that sign up with the same
networks that give the cards wide access to ATMs. (A list of many of these shopping
networks also appears near the end of this brochure.) Currently there is only one
international service, called Maestro*, that lets card work at participating merchants
both in the United States and in more than 50 countries. Grocery stores and gas
stations were among the first retailers in the United States to install the small number
pads, also called PIN pads that you may have noticed at the checkout counter or on
the gas pump. It is these devices that make shopping with many ATM cards possible.
The latest news shopping wherever some major card brands are accepted:
Another ATM card service makes ATM cards more useful by greatly expanding the
number of retail locations that accept the cards for payment. ATM cards with the logo
of one of two of the major card brands MasterCard or Visa- can be used to make
purchases anywhere these cards are accepted. Today, these kinds of cards are accepted
at some 3 minion places in the United States and 9 million more worldwide.
Currently, these are the only two major card brands that offer this service.

6. TYPES OF ATM CARDS

14

More people use plastic to pay for items than cash. There are many different types
of cards used to make purchases or withdraw money and many people don't think
about the differences. There are significant differences between ATM, debit and credit
cards. There are several different types of cards that fall under the category of an ATM
card.
Basic ATM Card:
Your basic ATM card only has a few uses. It can be used at any ATM machine
for the bank that issued it and sometimes at other banks for a fee. You can use your
ATM card to withdraw and deposit money, check your account balance and transfer
funds. Some ATM cards also have a few more uses like paying loans and getting cash
advances, however ATM cards cannot be used to make purchases
Debit ATM Card:
An ATM debit card has all the features of a regular ATM card with the added
features of a debit card. This card can be used to make purchases at any store or
online. Typically they will have a credit card logo on them, although they do not work
the same way as credit cards. Every time and ATM debit card is used; money is taken
out of the checking account it is linked to.
ATM Credit Cards:
A new type of debit card is available at some banks. This type of card has all
the features of the ATM debit card plus the features of a credit card. This card is not
only attached to a checking account, but also to a line of credit. This means that if the
person overdrafts on their account they will not incur any fees and will instead have
money taken out of their credit line to be paid back with interest when funds are made
available.

7. WORKING OF ATM

15

There are mainly two types of ATMs which differ according to the way they operate.
They can be called as

Leased-line ATM
Dial-up ATM machines

Any ATM machine needs a data terminal with two inputs and four output
devices. Of course, for this to happen there should also be the availability of a host
processor. The host processor is necessary so that the ATM can connect and also
communicate with the person requesting the cash. The Internet Service Provider (ISP)
also plays an important role in this action. They act as the gateway to the intermediate
networks and also the bank computer.
A leased-line ATM machine has a 4-wire, point to point dedicated telephone
line which helps in connecting it with the host processor. These types of machines are
preferred in places where the user volume is high. They are considered high end and
the operating costs of this type of a machine is very high.
The dial-up ATM machines only has a normal phone line with a modem and a
toll free number. As these are normal connections their initial installation cost is very
less and their operating costs only become a fraction of that of a leased-line ATM.
The host is mainly owned by the bank. It can also be owned by an ISP. If the
host is owned by the bank only machines that work for that particular bank will be
supported.

8. PARTS OF ATM
16

As told earlier, there are mainly two input devices and four output devices for
an ATM. The input devices are:
Card Reader
This is a part of the identification of your particular account number. For this the
magnetic stripe on the back of the ATM card is either swiped or pressed on the card
reader so that it captures your account information. To understand the account
information of the user, the data from the card is passed on to the host processor. The
host processor thus uses this data to get the information from the card holders bank.
Keypad
After the card is recognized, the machine asks further details like the type of
withdrawal you prefer, your balance enquiry, and your personal identification number
(PIN) and so on. Since each card has a unique PIN number, there is very little chance
for someone else to withdraw money from your account. There are also separate laws
to protect the PIN code while sending it to the host processor. So, the PIN number is
mostly sent in encrypted form.

If your pin number is correct the ATM makes the necessary transactions for the
required amount.

17

For this transaction, there are mainly four outputs. They are:
Speaker
When a particular key is pressed, the speaker provides the feedback as audio.
Display Screen
The questions asked by the ATM machine regarding the transaction and the input
from the user are all displayed on the display screen. Each step of withdrawal is
shown by the display screen. A CRT screen or even an LCD screen is commonly used
as an LCD screen.
Receipt printer
All the details regarding your withdrawal like the date and time and the amount
withdrawn and also the balance amount in the bank is also shown in the receipt. Thus
a paper receipt of the current transaction is obtained by the user.
Cash dispenser
This is the central system of the ATM machine. This is from where the required
money is obtained. From this portion the person can collect the money.
Functions of the Cash Dispenser:
As the whole mechanism is regarding the withdrawal of cash, the cash
dispenser should be highly efficient. These are the main functions that are to be
carried out by the cash dispenser.
It is the duty of the cash dispenser to count each bill and give the required
amount. If there are cases where the bills are stuck together they should be rejected
and instead new notes should be taken. If the money is worn, or even folded, they will
be moved to another section called the reject bin. All these actions are carried out by
high-precision sensors.
There may be cases where the sensors may go wrong. To know this, the person
responsible for the machine checks the number of rejected notes at a certain interval.
18

If the numbers of notes are a lot than expected, then it would indicate that either the
quality of the bills is not good or there is a problem with the cash dispenser.
A complete record of each transaction made by a particular ATM machine is
recorded each day and is kept as a journal. This journal is later collected and then
printed out at times. This information regarding the transaction is kept by the
authorities for a period of 2 years. As there may be cases regarding a particular
transaction going wrong, the account owner or also the bank officers have a right to
see the transaction. With this printout the account holder can contact the host
processor.
ATM Networking:
When a transaction is made, the details are inputted by the card holder. This
information is passed on to the host processor by the ATM machine. The host
processor checks these details with the authorized bank. If the details are correct, the
requested cash by the card holder is taken with the help of an electronic fund from the
customers bank account to the host processors account. After this function is carried
out, the processor sends an approval code to the ATM machine so that the cash can be
transferred.

9. HOW TO USE AN ATM

19

ATMs, standing for "Automatic Teller Machines", are an easy, convenient way
to access your account from almost anywhere. If you're new to them, don't worry. It's
easy. The instructions are right there, on the machine.

Steps involved in Depositing Money:1. Be alert:As you approach the ATM, look around for other people. If it is night time, pick
an ATM in a well-lit location. If using a drive-up ATM, pull up close to it so no
one can see you enter your PIN (Personal Identification Number). If you are
uncomfortable with the area or the people around the machine, find a different
machine or use the machine some other time
2. Fill out a deposit slip, if needed:Take an envelope and prepare any deposits you will make ahead of time.
Fill out a deposit slip, if your bank requires one, and include it in the envelope. Write
the amounts of money you are depositing in the space provided.
Write the total of all your cash on the first line.
3. Endorse your check.
To deposit a check, sign the back of the check (called "endorsing" the check) with
your name as it is written on the front. Depending on the rules of your bank, you
may also write "for deposit only" and include your account number, as shown.
Write the amount of each check on a line of the deposit slip. Beside it, write the
"fraction". This number appears on the face of the check, often in the upper right
corner near the check number. It tells your bank where the check came from. Add
up the amounts you are depositing and write the number down where you can see
it after you seal the envelope. Then, seal the envelope.
4. Insert your ATM Card into the machine.
5. Select a language.

20

Note that this option often only comes up where your card is registered as being
from another country, unless you live in a country or region with languages other
than English are in major use.
6. Enter your PIN (Personal Identification Number),
Then press Enter.
7. Select a transaction.
8. Deposit money.
If you want to deposit (put in) money:
Enter the amount you will deposit. Confirm the amount.
Insert the envelope into the deposit slot when the machine opens it. Note that
some ATMs will not allow you to deposit money. In this case, you need to find
one at a branch.
Steps involved in Withdrawing Money:
1. Insert your ATM Card into the machine
2. Select a language.
3. Enter your PIN (Personal Identification Number), and then press

Enter.

4. Withdraw money.
If you want to withdraw (take out) money, select or enter the amount to withdraw.
Most machines dispense money in fixed amounts. You may be given a choice
between common amounts or you may be asked to enter a number that is a
multiple of 20 (20, 40, 60, 80, etc.).
Take the cash when the door opens. Put it directly into your wallet.
4. Choose whether to do an additional transaction:Select Yes or No.
5. Choose whether you want a receipt,
Select Yes or No. Take the receipt if you requested it.
7. Wait while the system processes your transaction(s).
When the machine beeps at you, take your card, cash, and receipt (if applicable).
Always make sure that you have both your cash and your card.
8. Use the receipt to record the transaction in your check register or passbook

10. USES OF ATM

21

Cash Withdrawal and Balance Enquiry:

In spite of a number of innovative services being made available at many ATMs, cash
withdrawal stills remains the most accessed service at ATMs. However, the migration
of routine bank transactions like cash withdrawals and balance enquiries from teller
counters to ATMs significantly raises the potential for savings in employee costs and
greater employee focus on value-added revenue-enhancing activities such as selling
other financial products and advisory services to customers.
Cash /Cheque Deposit:
Again, due to the strong cash culture in India, cash deposits are most likely higher
than in other markets, especially cash deposits made by commercial customers such
as retail shopkeepers and those whose work involves substantial traveling. A high
cash withdrawal rate results in higher ATM servicing costs due to frequent cash
replenishment requirements. Recent developments in ATM technology have made it
possible to recycle cash in ATMs.
Currency notes received as cash deposits are counted; soiled notes separated
and deposited cash dispensed to fulfill withdrawal transactions. However, regulatory
concerns relating to identification of counterfeit notes and its depositors need to be
addresses first.
ATM with Cheque deposit facility is not picking up in India, like other countries.
One of the reasons is the delay in collection of the cheque deposited in ATMs. Cheque
deposited in ATMs is to be collected and deposited in the designated branch for
collection. Another reason is the introduction of cheque deposit Kiosks by various
Banks especially Private sector ones. These are kept at each some important
locations/branches where customers can deposit there cheques which are collected at
intervals which may be difficult in ATMs.
Bill Payments:
Most utilities have inadequate infrastructure for receiving bill

payments resulting

in long queues at collection centres. Hence, bill payment at ATMs has achieved
noticeable acceptance by bank customers. Most banks provide this service through bilateral arrangements with bill-payment service providers. ATM users register their

22

water, electricity and telephone utility accounts with banks, check their dues at ATMs,
approve bill payments that are debited to their bank accounts and receive printed
receipts for the transactions. This service has the effect of improving customer
satisfaction for both the bank as well as the bill-payment service providers. Some
Banks ATMs even accept charitable contributions to Temples.
Sale of Paper sled Products:
ATMs are ideally suited to sell paper-based products and services such as tickets,
wireless phone recharge cards, financial products, etc. The screen interface allows
browsing and customization, access to bank accounts facilitate payments and printing
capabilities produce the actual product/service. A number of banks including ICICI
Bank, SBI and PNB have ATMs at Mumbais local railway stations to dispense season
tickets to commuters. Own-bank customers pay no extra charge while other bank
customers pay a fee of Rs. 50 for this extremely useful service of anytime ticket
purchase. Railway season tickets represent a high-volume mass-appeal product. As
technical standards get established and product/service sellers become aware of the
ATM sales channel, niche-appeal high-margin products like entertainment tickets will
join the fray.
Kiosks:
Information Kiosks has been introduced by many Banks and also

by PSUs like

Railways, Tourist centers etc. While the revenue-producing capacity of nonemergency type of information at ATMs as a stand-alone product is doubtful, many
customers may be willing to pay a nominal fee for information having impulsive
demand such as cricket scores while they wait for their transactions to be processed.
To be sure, providing information, whether priced or free, will appeal to
some

customers

and

increase

customer

satisfaction.

Union Bank has used technology to establish Village Knowledge Centers

(VKCs), which have proved to be a success in the 198 centers, where they have been
set up. VKCs empower the local rural population by giving them information on
various vital inputs such as weather, fertilizers, prices of crops, etc. The bank is also
operating financial education centers offering counseling at 51 of these VKCs.

23

Third Party Advertising:

In India, ATM advertising for third-party products is currently not allowed by
Regulatory authorities. However, the wait time at ATMs can be effectively used by
banks to promote their own brands, product and services. Furthermore, banks can
tailor advertising messages based on customer information easily available in their
accounting and CRM databases. Customer wait-time at ATMs while transactions get
processed, typically between 10 to 25 seconds, has been profitably used by many
banks for their own advertising.
Money Transfers:
Indians, who have migrated abroad or to cities, regularly use money orders and wire
transfers to send money to their families back home. ATM growth, especially in rural
India, will capture substantial business from the expensive wire transfer agents
network and the customer-service lacking postal network. In line with international
trends, ATMs can be made capable to dispense printed money orders or initiate wire
transfers against a charge on customers bank accounts. After addressing regulatory
hurdles, these services can even be made available to non-account holders through
cash payments using the currency acceptors built into ATMs. ATMs can also facilitate
the encashment of wire transfer amounts by allowing even non-account holders to
withdraw cash based on Pins or previously mailed special-purpose ATM cards.
Recharge Mobiles via ATMs:
ATMs are also used to recharge mobile phones. Initiated in 2004 by ICICI
Bank, now most ATM/Debit Cardholders are able to recharge their pre-paid
subscriptions of most mobile service providers from anywhere in the country using
their

banks

ATMs

or

by

sending

SMS.

The amount for recharging the mobile phone would be debited from the
subscribers Bank account and the subscription would be directly recharged
accordingly. The mobile top-up facility provides convenience on ATMs and through
mobile phones using SMS.

11. FRAUD PREVENTION (FOR CONSUMERS)

24

Most ATM frauds happen due to the negligence of customers in using, and more
importantly, negligence of banks in educating their customers about the matters that
should be taken care of while at an ATM.
The number of ATM frauds in India is more in regard to negligence of the
Personal Identification Number (PIN), than by sophisticated crimes like skimming.
Banks need to develop a fraud policy the policy should be written and distributed to
all employees, borrowers and depositors.
The most important aspect for reducing ATM related fraud is to educate the
customer. Here is a compiled list of guidelines to help your customer from being an
ATM fraud victim:
Look for suspicious attachments:
Criminals often capture information through ATM skimming using devices
that steal magnetic strip information. At a glance, the skimmer looks just like a regular
ATM slot, but its an attachment that captures ATM card numbers. To spot one, the
attachment slightly protrudes from the machine and may not be parallel with the
inherent grooves. Sometimes, the equipment will even cut off the printed labels on the
ATM. The skimmer will not obtain PIN numbers, however. To get that, fraudsters
place hidden cameras facing the ATM screen. Theres also the helpful bystander (the
criminal) who may be standing by to kindly inform you the machine has had problems
and offer to help. If you do not feel safe at any time, press the ATM cancel button,
remove your card and leave the area immediately.
Minimize your time at the ATM:
The more time you spend at the ATM, the more vulnerable you are. If you
need to update your records after a transaction, one is advised do it at home or office,
but not while at the ATM. Even when depositing a cheque at the ATM, on should not
make/sign the cheque at the ATM. After the transaction, if you think you are being
followed, go to an area with a lot of people and call the police.

25

Make smart deposits:

Some ATMs allow you to directly deposit checks and cash into your accounts
without stuffing envelopes. As for the envelope-based deposits, make sure they go
through if it gets jammed and it doesnt fully go into the machine, the next person
can walk up and take it out. After having made the ATM deposit, compare your
records with the account statements or online banking records.
Avoid using ATMs at night:
While robberies are less prevalent than fraud at ATMs, theres still risk,
especially at night. And if you have to use an ATM late at night, use one at a bank
itself. Financial institutions have to follow certain guidelines and regulations as far as
lighting is concerned. They also have cameras on all the ATMs.
Be aware of your surroundings:
Before you slide your card into the machine, look around if the area appears
safe or if there is anybody who can see the PIN pad. Having the card ready before
entering is ATM premises is better than searching for it though the purse at the
machine. While you are fumbling with a wallet or purse, you are easy prey for a thief.
A good rule of thumb is to always shield your card, no matter how comfortable you
are with the place. If your card is stuck inside an ATM, be suspicious of anyone
offering

help.

Immediately

report

the

incident

to

the

bank

Keep your receipts and card before leaving the place:

Before you leave the machine, make sure you have your card. Also, do not
leave your receipt behind at the ATM. Keep copies of your receipts and compare them
with your monthly statement. As much as 83 percent of all ATM and debit fraud
results from stolen cards and discarded receipts bearing card/account numbers.

Memorize your PIN:

26

Many cardholders walk up to an ATM and pull out a piece of paper containing
four numbers. If you are not sure, make it a point that you dont keep the PIN and
ATM card together in your wallet If someone comes up and hits you over the head,
theyre going to have all your information right there. But ideally, one should never
write down the PIN number it should be memorized.
Never disclose your PIN to anyone:
Even bank officials do not require an ATM PIN neither to process an issue
involving ATMs, nor to remove a card stuck in the machine. Always change the PIN
as soon as you receive it. Preferably, change it every quarter. This habit will also help
remind you of changing the PIN if you find a suspicious activity.
Never provide information via e-mail:
About 3.5 percent of ATM and point-of-sale debit fraud originates from
phasing e-mails. Phi hers attempt to obtain information about your bank account by
asking for your PIN, account number and personal information. Much like ATM
skimming equipment, these e-mails appear legitimate. If you click on a link, you will
be sent to a Web site that looks exactly like the one the phi hers are imitating.
Reputable companies do not ask for information through e-mail. If you receive one of
these e-mails, inform the organization. And if you believe your accounts have been
compromised, inform your financial institution and cancel the account.

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12. ADVANTAGES AND DISADVANTAGES

ATM Advantages:

Ability to draw cash outside normal banking hours.

Cheaper where bank charges are incurred and often quicker than using normal
cashier services.

Does not just operate as a medium for obtaining cash.

Amount up to a set limit per day is available.

All customers can apply for the joint accounts two separate cards can be issued.

Although ATMs are primarily located on bank premises, some are available
elsewhere.

Where an incorrect PIN is used several times in succession (say where a thief has
stolen the card), the ATM will retain the card.

ATM service is available for 24 hours a day, 7 days in a week.

It helps to check the balance in an account.

It is easy, saves time of customers.

ATM disadvantages:

If person who does not have sufficient money in

its account, then

In this case the ATM may not recognize his card.

May be ATMs may not be situated near by

when it is urgently
Required.

If some one watches or hacks ATM machine

then details of
Customers can be misused.

Banks have maintained a limit of Rs 10,000/-

per transaction. This

Information is displayed on the ATM. The maximum limit is
Rs.25000/- per day. No one can withdraw money beyond this limit.
28

13. ATM CARD V/S DEBIT CARD

Although both these cards serve the same purposes, most of the banks favour
in the issue of credit cards. When you purchase something with a debit card, the
money is automatically deducted from your savings account. This is different from the
way a credit card works. For a credit card, you get a monthly bill for the amount you
have spent. You can take money directly with the help of an ATM card. But, with a
debit card, you can only purchase things. You can use ATM cards for some direct
purchase as well, but it is limited.
Debit cards can be used in different fields like grocery stores, hotels, booking
tickets, pharmacies and so on.
As credit cards are easier to use, some hotels and rental services often do not accept
debit cards. Credit cards also bring in lesser risk and are also cheaper.
There is a difference when using a credit card and a debit card when checking
into a hotel. In the case of a credit card, the original amount will be billed in your
account. When a debit card is used, a certain amount of money which includes the
cost/rent of the room and an additional amount which may be a percentage of the total
fee will be kept as an on hold bill in your bank account. The additional money is
kept as a precaution as a damage money. When you check out of the hotel, you will be
billed the original amount of your stay. But the difference between the on hold
money and your actual money will be released back to your account.
The next difference comes in the way you bill the amount. If it is a debit card,
you will have to enter your unique pin number. If it is a credit card, you will have to
sign a slip. Some banks even put a fee for your debit card.
There is also a difference in appearance between an ATM card and a debit
card. A debit card has the users name, the companys logo, the banks logo and also
written Check card in front of it. An ATM card, on the other hand has the user
name, account number and also the bank logo. Both the cards have a common strip on
the back of the card, so that the user can sign on it.
29

14. SCOPE OF ATM IN INDIA

Automated Teller Machines (ATMs) have gained prominence as a delivery
channel for banking transactions in India. Banks have been deploying ATMs to
increase their reach. As at the end of December 2007, the number of ATMs deployed
in India was 32,342.
From first day of April 2009, entire ATM network is now available to
customers from any bank for transactions for no fee at all, irrespective of the banks in
which they have their accounts, Now Customers will not be levied any fee on cash
withdrawals using ATM and debit cards issued by other banks. This will in turn
increase usage of ATMs in India
More people are now moving towards using the automated teller machines (ATM)
for their banking needs. According to a survey by Bank net India, 95% people now
prefer this modern channel to traditional mode of banking. Almost 60% people use an
ATM at least once a week
Increased ATM usage is also helped by the fact that customers have now the
flexibility of using ATMs of other banks, as most of the banks are part of major
interbank networks like National Financial Switch (NFS), Mitr, BANCS, Cash tree
and Cash net. The interbank networks have brought together ATMs of several banks
so that consumers would gain access to any of the participating banks ATMs. Banks
find it cheaper to pay membership fees to these networks as against setting up
additional units in expensive-to-deploy areas.
ATMs are now seen to be more than mere cash dispensing machines.
Customers use ATMs to recharge their mobile phone pre-paid connections, pay their
utility bills, even mutual fund transactions making them at par with flexibility given

30

in internet banking only more secure. Of the value-added services provided at

ATMs, bill-payment is the most used service, followed by prepaid mobile talk-time
recharges. However, still about one third of the respondents do not use any value
added services at ATMs.
The ATM market in India is not yet saturated. Though the concentration of ATMs
is greater in metros, the demand is increasing for other cities and even rural areas.
ATM's per million people approximately is 33 units are very low. Experts forecast that
the growth rate is expected to grow 18 percent up by 2013. Banks going into a self
service model can have huge saving potential for banks and may also increase the
convenience for the customers.
Many ATM vendors have devised specialized machines, embedded with biometric
devices for authentication. Catering to the rural population, these machines have
enabled them to interact with the machine in their local language and on a graphical
user interface. The rural customer has seemed to accept this new medium. This has
the potential to further widen the scope of ATM usage in the interior parts of the
country. There is also interest towards white-label ATMs. Many companies are
interested in this model, where the ownership of the ATM will not be with the banks
but with third parties who deploy them and make money on fees charged on every
transaction. The concept is prevalent in the American continent Wide acceptance of
ATMs by consumers, introduction of biometric ATMs, and increasing scope of valueadded ATM services will maintain growth in the industry.

31

15. ANALYSIS OF BANKS

HDFC BANK
With over

4,393 ATMs present across India, you can withdraw cash and do

much more at HDFC Bank ATM. The sophisticated, computerised network gives you
the flexibility of accessing your account.
Features & Benefits:

24-hour access to Cash.

Personalised Cash Withdrawals.

View Account Balances & Mini-statements.

Change ATM PIN.

Order a Cheque Book / Account Statement.

HDFC Bank Credit Card Payment.

Deposit Cash or Cheques.

Transfer Funds between accounts - Transfer

money between your

Accounts. Both accounts must be linked to your ATM / Debit Card.

Maximum of 16 A/cs (Savings / Current)

can be linked to a card.

Refill your Prepaid Mobile.

Pay your Utility Bills.

Cheque Status Enquiry.

NetBanking Password Request.

Difference between ATM and Credit card:

An ATM Card is different from a Credit Card. using your ATM Card; you can
access your account and carry out most of your banking transactions, round the clock.
But

you

cannot

shop

with

your

ATM

Card.

Also, unlike a Credit Card; your ATM Card prevents you from over-extending
yourself by permitting you to withdraw cash only as long as there is money in your

32

account. Finally, if you withdraw cash using a Credit Card, you will be charged a
service fee, whereas using an ATM Card does not attract any charges.
Necessary to maintain minimum balance:
It is necessary to maintain any minimum balance in the account for using the
card. One can only withdraw to the extent of the balance in the account.
Fund transfer option at the ATM:
In order to use the Funds Transfer option, you must have more than one
Savings (single, either or survivor) or sole proprietorship Current Account with the
bank. You need to make a request at any of our branches or on PhoneBanking to link
your accounts to your Card. Once the accounts are linked to your ATM Card, you can
use the Funds Transfer option.
Charge on ATM transaction:
HDFC Bank does not charge on its customers who maintain the required AQB
or on other Bank customers for using their ATM. For customers of HDFC Bank who
have not maintained the required AQB in the previous quarter, all inter-city cash
transactions will be levied Rs 1.50 per Rs 1000, minimum Rs 25.
Cards that can be used at HDFC ATM:
1. American Express: Charge/Credit Cards.
2. Cirrus: MasterCard Credit Cards - Domestic/International (of domestic, currently
only Citibank, Standard Chartered and ANZ MasterCard Credit Cards can be used at
our ATMs).
Cirrus ATM Cards - Domestic/International
Maestro Debit Cards - Domestic/International (of domestic Cirrus/Maestro Cards,
currently only Citibank Maestro/Cirrus Cards can be used at our ATMs).
3. Plus: VISA Credit Cards - Domestic/International (of domestic, currently only
Citibank, Standard Chartered, HSBC and ANZ can be used at our ATMs)
Plus ATM Cards - Domestic/International
VISA Electron Debit Cards - Domestic/International
Note: All cards which can be used at HDFC ATM need to have a Personal
Identification Number (confidential code) for ATM access. This is issued by the
Bank issuing the Card. Limits and parameters are set by the Card issuing Banks
regarding amount of cash withdrawal, withdrawal limit, number of PIN log-in
attempts, transaction set allowed and declines.

33

HDFC Bank ATM Card can only be used at our ATMs.

Cash advance / Cash withdrawal limit:
HDFC Bank customers can withdraw up to Rs.10, 000/- per day. For nonHDFC Bank customers, the limit is as decided by the bank issuing the Card.

Liability in case an ATM / Debit card is lost or stolen:

For doing an ATM transaction, two things are required; an ATM / Debit card
and PIN, which is known only to the customer. In case youre ATM /Debit card is
lost/stolen, any transactions taking place using the card on an ATM is the result of you
compromising your PIN which should have been known only to you and no other
person. Thus in such a scenario you are liable for the loss incurred due to the
transaction happening on the ATM. However, there is 'Zero Liability' applicable for
Debit cards only on fraudulent Point of Sale Transactions and not ATM transactions.
Card lost or stolen:
In case card is lost / stolen, as first step you need to block your card in order to
avoid any fraudulent transaction happening from your account.
For blocking card you need to either:

Call up your local HDFC Bank Phone Banking

No.

Log onto HDFC Bank NetBanking and block

the card using the

Option of 'Hotlisting' under 'Debit Cards'.

Visit your nearest HDFC Bank Branch.

If ATM card get stuck inside the HDFC Bank ATM:

Log a complain with the local HDFC Bank

PhoneBanking Number

Visit your nearest HDFC Bank Branch. You can

request for card to

Be delivered either at the mailing address which you have
Given to the Bank or at the nearest branch where you will have to
Collect the same in person.
IF ATM card get stuck inside any other bank ATM:

34

In case HDFC Bank card gets captured inside any other Bank's ATM machine
you are requested to block your card immediately by either Calling up the local
HDFC Bank.
In case ATM pin is forgotten by card holder:
One can place the request for regeneration of ATM PIN either
Calling up the local HDFC Bank PhoneBanking Number
Charge incurred for regenerating ATM PIN:
One will be charged Rs.25/-(exclusive of taxes) towards regeneration of the
ATM PIN.

IDBI Bank
Meaning of ATM:
Automated Teller Machine is a computerized machine that provides the
customers of banks the facility of accessing their accounts for dispensing cash and to
carry out other financial transactions without the need of actually visiting a bank
branch.
Types of card used:
The ATM cards/debit cards, credit cards and prepaid cards (that permit cash
withdrawal) can be used at ATMs for various transactions.
Transaction at ATM:
For transacting at an ATM, the customer insert (swipe) their card in the ATM
and enter their Personal Identification Number (PIN).
Services and Facilities:
In addition to cash dispensing ATMs may have many services/facilities such as:

Account information

Cash Deposit

Regular bills payment

Purchase of Re-load Vouchers for Mobiles

Mini/Short Statement

However, if the card is used at an ATM of any

other bank, the

Customer would be able to do only cash withdrawal and balance
Enquiry transactions.
35

Uses of ATM card at any bank of country:

The cards issued by banks in India should be enabled for use at any bank
ATM within India.
Personal Identification Number (PIN):
PIN is the numeric password for use at the ATM. The PIN is separately
mailed/handed over to the customer by the bank while issuing the card. This PIN has
to be reset to a new PIN by the customer. Most banks force the customers to change
the PIN on the first use.
In case one has forget his Pin or card is sucked by the ATM:
The customer may contact the card issuing bank branch and apply for issuance
of a new card. This procedure is applicable even if the card is sucked in at another
bank's ATM.
Card lost or stolen:
The customer may contact the card issuing bank immediately on noticing the
loss so as to enable the bank to block such cards.
Minimum and Maximum cash withdrawal limit per day:
Banks set limit for cash withdrawal by customers.
The cash withdrawal limit for use at the ATM of the issuing bank is set by the bank
during

the

issuance

of

the

card.

For cash withdrawals at other bank ATMs, banks have decided to maintain a limit of
Rs 10,000/- per transaction. This information is displayed on the ATM. The maximum
limit is Rs.25000/- per day.
Service fees charged for use of other bank ATM:
No charges are payable for using other bank's ATM for cash withdrawal and
balance enquiry, as RBI has made it free under its "Free ATM access policy" since
April 01, 2009. But banks can restrict the number of such free transactions to a
maximum of five per month. For transactions beyond this minimum number of
transaction, banks charge maximum of Rs 20/- per transaction.
In case, during the cash withdrawal process cash is not disbursed but the account
gets debited for the amount:
The customer may lodge a complaint with the card-issuing bank. This process
is applicable even if the transaction was carried out at another bank's ATM.
Days required by the bank to re-credit the account for such wrong debits:

36

As per the RBI instructions, banks may re-credit such wrongly debited
amounts within a maximum period of 12 working days from the date of receipt of the
customer's complaint.
Customers eligible for compensation for delays beyond 12 working days:
Effective from July 17, 2009, banks shall have to pay customers Rs 100/- per
day for delays beyond 12 working days. This shall have to be credited to the account
of the customer without any claim being made by the customer.
In case of compensation is not credited as mandated:
For all such issues, customer may lodge a complaint with the bank and if the
bank does not respond, the customer may approach the local Banking Ombudsman

16.RECOMMENDATIONS
The findings and the conclusions reveal that there is a lot of changes which can be
brought about to improve the perception and satisfaction of the customers towards
banks ATM centers.
I recommend that,
Bank should increase the number of ATM centers and at strategic positions.
Software used by the bank should be updated and fast so that people are not made to
wait in the queue.
Bank can bring all its services on the ATM machines.
Facilities like cash deposit should also start at the ATM centers.
To increase the customer base and the customer satisfaction the ATM facility should
be made as secured and safe as possible. HDFC ATM is one of the safest but still there
is scope for improvement.

37

17. CONCLUSION
In this era of growing competition among the banks, ATMs have played a
vital role in helping the bank to sustain in the market. The ATMs have gained
worldwide popularity within a few years. ATM machines are easy to operate and
hence, attract more and more customers. There are quite of innovations, which are
being taken place in the ATM machine. The locations of ATMs are the key location of
any particular area. ATMs is a form of easy banking. The aim of banks of setting of
ATMs is to cater to the needs of the customers. The flexibility of the ATMs has
increased so much that now-a-days, have been reached the doorsteps of the customers.
The customers using the ATM machine are satisfied with the service and have very
less complaints about the machines.
Thus the ATMs i.e. any time money machine has fulfilled the customers needs
to its greatest extent. In the near future the banks have also promised to come up with
new innovations in the ATMs.

38

18. BIBLIOGRAPHY
Books:New concepts of banking
By S.S. Kaptan
Virtual banking revolution
By James Essinger
Banking law and practices
By P.N. Varshney

Websites:www.idbi.com
www.hdfc.com
www.google.com

39