How ATM Machines Work

The Basics

Person holding bank card
Man using ATM machine
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Female inserts a plastic card in the ATM
Woman using ATM
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With use of ATMs soaring and replacing the need to ever step foot inside a bank, it's easy to forget what complex machines they are. The processes that ATMs use to make your banking easy are intricate, but not difficult to understand. By understanding the connection between an ATM and your bank account, you'll be on your way to understanding how they work.

Hardware and Software

ATM Machine
Woman using ATM
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An ATM is really just a computer inside a fancy case. ATMs don't use operating systems like the ones you are used to on a computer, and are instead equipped with embedded code that performs only one function: running an ATM.

The debit-card readers, cash dispensers, and other mechanical peripherals used by an ATM aren't substantially different from a printer connected to your PC. When you insert your debit card into or press buttons on the ATM, information is sent to the ATM to be interpreted as data. Once your transaction has been authorized, the computer communicates with the cash dispenser to count the right amount of cash and dispense it. With the ATM as the nerve-center of the transaction and the peripherals as hands, the only thing that an ATM is missing by itself is a brain, which comes in the form of a network connection.

Keeping You Safe

Female's Hand Typing Security Code
Woman entering passcode
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In order to reduce the amount of infrastructure needed to install a new ATM, almost all ATMs communicate using normal computer network standards. If this makes you nervous that others might snoop on your banking transactions, don't worry. All communications with the bank are obfuscated with a strong encryption algorithm, so that not even the government can tell just what the ATM is requesting. This connection is used to get all information necessary to complete the transaction.

Connecting to the Bank

businessman hand pushing solution diagram on a touch screen inte
Man illustrating ATM bank connections
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Every ATM is connected directly to the bank that it comes from. This link allows the ATM to authenticate your ATM card, check on your balances, and withdraw cash from your account. Even if you come from a bank other than the one that owns the ATM, the bank's central database knows how to communicate with those other systems and get the necessary information. Since this database is shared among all computers in the bank, it's updated instantly with all information about your account, so the cash you deposit at one ATM can be withdrawn from another one.

Maintenance and Cash Handling

Getting money
Woman getting cash our of ATM
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Since the ATM can handle transactions without having to consult a person, the only time that a human is required is for maintenance and regular cash handling. Every day, all deposits are removed from the ATM for processing and the cash supplies are restocked. To ensure that the ATM doesn't malfunction or break down, it is maintenanced regularly to prevent excessive wear and tear on its peripherals.