How does ATM works?

Hello Friends 

I think rarely there is someone who doesn’t know about ATM machines. It is a magic machine from which one can withdraw money if it has money in its account.

Do you even think that how does this machine works? Yes it is another case that if it is not working then we cannot withdraw money from this machine. I am not going to tell you how to repair or maintain this machine, but I can tell you how do this machine works.

Let’s start


Friends ATM stand for Automatic Teller Machine. It is a machine which provides basic banking facilities to anyone anywhere anytime. These machines are installed at different places around the world for services like withdrawing amount, deposit cheque or money to any account etc. But what mechanism does it contain inside it due to which it can perform such multiple tasks.


Whenever a card is inserted into the machine, first of all card will be read by machine scanner/reader and it tries to find that whether the card is real or fake using authentication code. If the card is real then the account number stored in the card is searched. How account number is stored in a card? The black strip behind the card which is technically called magnetic strip and this is the place where all the data is stored for a user. How this strip does stores data? For understanding you can imagine that strip is divided into small parts/divisions called tracks and each track is uniquely charged in form of binary language which is basically data.  When reader of machine reads the data it verifies the information using an authentication code. If somehow the machine is not able to read data i.e. strip get damaged or there are linings/scratches on strip which obstructs reader to read data, the machine simply displays a message to re-insert card or some errors. If that information on your card get read by the reader then it asks for your 4-digit PIN number called personal identification number. As soon as you enter the PIN number all the information are sent to your bank server. Here the card you will be use may be internationally or locally. I want to tell you that all ATM machines are globally linked to each other through a central network which permits you to use different card on different machine. Here lease line or broad band may be used or even in some case satellite network which certifies that user is authenticated. Once your bank server authenticates you and your bank server tell the machine which facilities/options you are using in your bank account. I.e. your transaction limits, withdrawing or transfer limits etc. once the information received by the machine you can easily navigate through your profile/account to perform action expected by you. You can perform any of action which is available on machine.

Now if you are thinking how currency notes are arranged in machine and how they coming out of machine, for this purpose bins/trays are installed into the machine into which different denominations are sorted and placed, there is system which decides counts of notes upon command executed and there is also a scanner which scan the required number of notes given to you along with its serial number so that amount cannot be varied. Scanner basically scan number and thickness of each notes this is because the thickness of a standard notes is always same if somehow thickness varies the notes get rejected and get stored in rejected bins by this way you get fresh and a valid note in your hand. In case you are depositing money the procedure is same. After all this work status is being checked and machine updates all information to your bank via server after which you get a detailed receipt. All is done.
Never Reveal your Card Number

What are ATM skimmers?

These are devices which are used by fraud people to steal your data of the card you are using. Two important information that are stored by your ATM card are account number authentication code and PIN number. Once information is leaked means your card is in public. The work of skimmer is to record your card details beside these fraudulent also used small cameras to notice PIN numbers and more advance they put another keypad to record your key strokes.
Some frauds are so smart that they take ATM machines with them. This is total waste of time because ATM trays/bins are equipped with special type of inks which bursts upon illegal opening of machine and all money present in machine get wasted. It is total waste of time and each machine is equipped with GPS which continuously tracks the location of machine.

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