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ATM Full Form – Concept, History, Types, Advantages & Disadvantages of ATM | Management of Technology

ATM Full Form

ATM stands for Automated Teller Machine which makes managing money easy for bank account holders because it is a specialized computer. This allows them to check their balances, withdraw or deposit money, transfer money from one account to another, print a statement of account transactions, and even buy stamps. By inserting a debit or ATM card in the machine and entering a Personal Identification Number (PIN), one can access the services above 24 hours a day, 7 days a week.

The first ATM was installed in June 1967 on a street in Enfield, London at a branch of Barclays Bank, credited to a British inventor named John Shepherd-Barron. Different social contexts played an important role in furthering the cause of ATMs across different countries in the 1960s and 1970s. As a result of their arrival, the banking industry was radically transformed, as were the relationships between banks and their customers.

The automated teller machine (ATM) can also be known as an Automatic Banking Machine (ABM) which allows the users to complete basic transactions without any help from bank representatives. Basically, there are two types of automated teller machines (ATMs). The basic account allows the users to only draw cash and receive a report of their account balance. Then there is a more complex machine that accepts deposits, processes payments through credit cards, and reports account information.

History of Automated Teller Machine (ATM)

History of ATM

As early as the 1960s, several teams around the world were investigating ways to withdraw cash from a bank after hours without committing a crime. The Bankograph was invented in 1960 by an American named Luther Simjian, which would allow customers to deposit cash and checks. In June 1967, the first ATM was installed at a branch of the Barclays bank in Enfield, London. It was invented by a British inventor named John Shepherd-Barron. A maximum of £10 could be withdrawn at one time from the machine. A Dallas-based engineer, Donald Wetzel, pioneered the deployment of ATMs in the U.S. In September 1969, the Chemical Bank branch in Rockville Center in New York installed the first ATM with the slogan, “On September 2, our banks will open at 9 am and never close again.”. As early as 1970, a British engineer named James Goodfellow proposed the concept of a personal identification number (PIN), which allowed customers to automate the process of verifying their identity.


This was a significant turning point in the development of self-service banking. Citibank announced that it would spend more than $100 million to install ATMs throughout New York in 1977, resulting in a major increase in ATM numbers. When all the banks in the city closed for days due to a blizzard, ATM use increased by 20%. National Cash Register, a software and technology company in the United States, launched the NCR Model 770 in 1977, an easy-to-operate ATM that allowed banks to operate 24/7. In the early 1980s, a new model (5070 ATM) was launched that proved to be more reliable, flexible, and customer friendly. Globally, there were 100,000 ATMs installed by 1984. The number of ATMs operating throughout the world exceeded three million in 2018. The retail banking industry is expected to grow to four million by 2021, according to Retail Banking Research. As the first decade of the 21st century dawned, more ATM frauds were committed using sophisticated malware and technology, such as skimming devices.

In order to stay ahead of the game, banks developed software that detects anomalies in transactional data that may indicate illegal activity. In most parts of the world, cash is still preferred for transactions even though digital payment services are becoming increasingly popular. The ATM, bank branches, mobile banking, and internet banking are likely to be complementary in the near future.

Features of Automated Teller Machine (ATM)

Features of ATM

Some of the features of Automated Teller Machine (ATM) are:

i. Funds can be transferred from linked accounts.
ii. Account balance can be received.
iii. Payments of bill can be done.
iv. Performs a range of features in different language.
v. Cash can be deposited.
vi. Users pin can be changed in ATM.
vii. Recent transactions list can be printed.
viii. Cash can be withdrawn.

Types of Automated Teller Machine (ATM)

Types of ATM

Basically, there are two types of automated teller machine (ATM). They are Basic units and Advanced units.

i. Basic Units: The ATMs in this category offer their customers only cash withdrawals and receipts that show the updated balance of their bank accounts.
ii. Advanced Units: Advanced ATMs are more complicated and allow transactions like cash deposits, facilitating one-line credit payments, and accessing account information. In order to use all the services offered by an advanced ATM unit, you must have an account with the bank that operates it.

Ways to use Automated Teller Machine (ATM)

Ways to use ATM

The steps to operate Automated Teller Machine (ATM) are as follows:

i. At first, find the ATM center and place your ATM card within the machine.
ii. Select your preferred language which appears on the ATM monitor
iii. After that select your transaction type from different transactions. Transactions includes like money transfer, withdrawal, deposit, etc.
iv. After that choose the account type like savings or current.
v. Then enter the 4-digit ATM pin number and the amount you wish to withdraw.
vi. Take your ATM card.
vii. Gather the cash.
viii. Collect the printed receipt.

Advantages of Automated Teller Machines (ATM)

Advantages of ATM

Some of the advantages of Automated Teller Machine (ATM) are as follows:

i. Automated teller machines can be found in various areas so that customer should not visit the bank for the transaction.
ii. It helps to withdraw the money in a minute so that time can be saved.
iii. It reduces the workload banks staff
iv. It is proved to be beneficial for travelers.
v. It provides services without any error.
vi. ATM machines provide the transaction details to know the balance of the account holder
vii. It provides service with security through the ATM password.
viii. It provides 24 hours service
ix. The ATM provides privacy in banking communications.


Disadvantages of Automated Teller Machine (ATM)

Disadvantages of ATM

Some of the disadvantages of Automated Teller Machine (ATM) are as follows:

i. Certain amount of fee is charged by the bank for ATM service.
ii. There is chance of ATM pin to be hacked by criminals by operating an ATM.
iii. If ATM card damages then cash withdrawn will not be possible.
iv. There is possibility of cash robbery from ATMs.
v. There is high risk of being theft while going to ATMs.

Elements of ATM Design

The elements of ATM design are as follows:

i. Card reader: The chip on the front of the card or the magnetic stripe on the back of the card is read by card reader.
ii. Keypad: The keypad is used to input different types of information, such as the customer’s personal identification number (PIN), the type of transaction, and the amount.
iii. Cash dispenser: At the bottom of the machine, there is a safe that holds the bills dispensed through the slot.
iv. Printer: Consumers can request receipts to be printed here if needed. Receipts indicate the type of transaction, the amount, and the balance of the account.
v. Screen: Consumers are guided through the transaction process by prompts issued by the ATM. There is also the transmission of information on the screen, such as account information and balances.

ATM Software

An ATM (Automated Teller Machine) is a combination of hardware and software. The hardware on the machine is used for depositing cash, withdrawing cash, processing credit card payments, and reporting account information. ATMs use software to control their transactions and channels on a central database.

ATM software that operates on the XFS platform includes Diebold Agilis EmPower, Triton PRISM, NCR APTRA Edge, AbsoluteINTERACT, KAL Kalignite Software Platform, Wincor Nixdorf ProTopas, Phoenix Interactive VISTAatm, Intertech inter-ATM & Euronet EFTS. Since ATM machines are shifted to industry standards, software concerns have increased.

How ATM works?

How ATM works?

Automated teller machines are nothing but data terminals that have two input and four output devices attached. This terminal interfaces with a processor. It is this processor that drives the automated teller machine. There is a centralized database system used by all ATMs around the world. ATMs need to be connected to the host processor (server).
A host processor communicates with an internet service provider (ISP). Basically, it is the gateway to all ATM networks in which the cardholder has access. An ATM transaction takes place when a cardholder enters necessary information through a reader and keypad. The information is forwarded to the host processor by the ATM. The host processor submits the transaction request to the cardholder’s bank.

The host processor withdraws the cash from the cardholder’s account if the cardholder requests cash. When the funds are transferred from the customer account to the host processor bank account, the host processor sends the approval code to the ATM and the authorized machine to dispense the cash. That’s how the money is withdrawn from the ATM. This simplifies cash management and improves security.


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