As the banks became popular in India because of their attractive schemes, safety and guarantee of the government, their customers increased along with their work burden. In the banks, the longest queues were the ones for cash withdrawal and deposition. The banks across the globe found ATMs as a low-cost solution for automated banking that requires no human intervention and performs at a marginal cost.
What is ATM?
ATM is an Automated Teller Machine which performs various banking operations as per the instructions of the users. Earlier ATMs were only able to dispense cash but modern versions are equipped with a variety of other banking facilities such as funds transfer, deposit money, stamps purchase, bank statements, account balance inquiry, changing ATM PIN, linking Adhaar to the bank account, etc.
History of ATM
Japan has always been ahead of rest of the world in terms of innovation and technology and ATMs are no exception. Japan developed a machine called CLM (Computer Loan Machine) that was supposed to grant loans to people at the rate of 5% per annum using a credit card. The machine became operational in 1966.
The United States tried its best to develop a cash dispensing machine but they were only able to develop a cash, coins, and envelope depositing machine called Bankograph in 1963. However, this time Britain outplayed everyone and deployed world’s first cash dispensing machine in London in 1967. The machine was put in use by Barclays Bank in Enfield Town, North London. The whole credit for this job goes to John Shepherd-Barron and the firm De La Rue. This effort laid the foundation for modern banking and a world full of ATMs.
The first modern ATM was developed by IBM and deployed by Lloyd Bank, UK in 1972. The machine was named Cashpoint which is still a registered trademark of Lloyd Bank. Now ATMs are a part of a large worldwide digital network which allows people around the world to perform banking operations seamlessly.
History of ATM in India
The concept of ATM in the country was brought in the late 70s but it could not thrive due to low viability. The metro cities of the country had only a handful of ATMs. The machines were re-introduced in India in the 1990s by foreign banks. As we opened up the country to privatisation and globalisation, many foreign banks entered the Indian banking sector. However, most of these overseas banks suffered from a serious handicap, viz., the lack of a strong banking network. The only purpose for using ATMs at that time was to reach out to the customers with lower initial costs and trouble-free services. This also gave foreign banks a chance to demonstrate the quality of their services.
Public sector banks were not interested in setting up ATMs across the country at that time. However, dissatisfied customers due to long queues for cash deposit and withdrawal and customer preferring foreign banks pushed the Indian players to improve their services and set up a network of ATMs across the country.
Now, ATMs from most banks have a biometric identity feature which enables rural population of India to easily perform simple banking operations.
How ATM Works
In modern banking, ATM cards, debit cards or credit cards are issued by banks to their customers and the machines are used for various purposes. ATMs accept all these types of cards for dispensing cash. These cards have a magnetic strip that contains the bank account information of the users. As soon as the user inserts the card in the machine, it reads that information and shows options according to the available facilities in the account. ATM cards and debit cards have a PIN (Personal Identification Number) which acts as a safety feature in case of theft or a loss of card. The user cannot withdraw money without entering the correct PIN in the ATM.
Type of ATMs
ATMs can be differentiated on the basis of their operational capability and various other factors.
On the Basis of Operational Capability: There are two types of ATMs, viz. Basic ATMs and Complex ATMs.
- Basic ATM: Basic ATMs are the ones that perform simple operations of cash dispensing. They do not have extended list of options and have a relatively simple users interface.
- Complex ATM: These ATMs allow users to access a range of complex operations such as fund transfer, cash deposit, account information reports, facilitating line of credit payments, etc. To access the complete range of options in these ATMs, the user has to be the account holder of the respective bank. As a new initiative, complex ATMs are equipped with more features such as mobile/DTH recharge, ticketing and bill payment. Such diverse features of these ATMs ease up the workload for businesses and other establishments. There is now no need for sales or customer interaction offices and to staff them with the right people. This helps save considerable amount of money for businesses / establishments and yet helps them in doing more business.
According to the Banks, Sponsorship and Outsourcing: ATMs can be differentiated into three categories as per the below criteria.
- Bank ATM: These ATMs are purchased, deployed and managed by the banks on their own. These ATMs usually have a bank logo and offer all the facilities provided by the bank.
- White Label ATM: White label ATMs are owned and operated by non-bank entities and do not have an outsourcing contract with any bank. These ATMs have a logo of the parent company and their cash is provided by the sponsor company. The parent company of these ATMs is mandatorily required to open a few ATMs in designated areas. In addition, RBI is directly involved with such companies as they have to obtain permissions and licenses to deploy an ATM.
- Brown Label ATM: These ATMs and their operations are outsourced by the banks from a third party. The private company that owns the ATM maintains the machine, pays the rent and negotiates with the proprietor of the place where the machine is housed. The outsourcing bank provides the cash for the ATM. These machines usually have the logo of the sponsor bank. Unlike white label ATMs, brown label ATMs do not have a compulsion to open a certain number of ATMs in designated areas. With brown label ATMs, there is no direct involvement of the RBI as the private company is in contract with the sponsor banks.
The ATM cards and debit cards provided by the banks are usually free of cost but banks charge some fee for allowing people to use the ATMs. Most banks offer a few free transactions for their own ATMs or for those of other banks. However, transactions performed after these limits are charged at Rs. 10 to Rs. 25 per transaction. Each bank has its own policy and charges.
ATM usage charges for some popular banks are given here.
|Bank||Free Transactions (per month)||Charges After free Transactions|
|SBI||5 transactions at SBI ATMs and 3 at Other ATMs||Rs. 25 per transaction|
|ICICI||Free transaction and balance inquiry at all ICICI ATMs||Rs. 25 per transaction for transaction and balance inquiry at all non-ICICI ATMs|
|HDFC Bank||4 transactions|
Rs. 150 per transaction
Features of a Modern ATM
Modern ATMs are sophisticated and equipped with a number of features that allow people from different sections of the society to take full advantage of them.
- Diverse in Nature: ATMs are diverse in nature as these are not merely cash dispensers in today’s day and age. Modern ATMs are sophisticated and equipped with every possible aspect of technological connectivity. Apart from providing cash, today’s ATMs can deposit cash/cheques, recharge your mobile phone/DTH, confirm tickets, link your Aadhaar to bank account, generate mini-statements, pay utility bills, and transfer funds among others. And this is not even the full operational capacity of modern ATMs as there are several other areas to cover.
- Operable by Specially-Abled Individuals: Modern ATMs are designed for easy access to anyone. These machines have biometric identification scanners for illiterate individuals and are able to provide verbal instructions for the blind as well.
- Multi-lingual: In a country where languages, dialects and accents change in every 100 km, the ATMs are required to have a multi-lingual support. This is because not too many people in our country are familiar with the English language and deploying ATMs that talk in their native language is a good way to connect the population with banking channels. ATMs located across the country have their user interface in 18 languages such as Hindi, Gujarati, Marathi, Udiya, etc.
Benefits of Using ATMs
An ATM has multiple significant benefits to offer that can make your life easy and hassle-free.
- ATMs are Fast and Easy to Use: ATMs are fast mediums of cash withdrawal and various other banking and non-banking operations. These are easy to use. Any person who is literate and is able to read the text on the screen can use it. You just have to move your fingers and the job is done within minutes.
- Self-Service: Apart from giving instructions, ATM requires no human intervention. You do not have to be a computer expert to operate an ATM. If you a have a bank account and an ATM or debit card you can use it comfortably. This also develops a feeling of self-compliance. After all, it is your hard-earned money and only you should possess the right to access it.
- 24/7 Service: ATMs are active 24/7 and 365 days of the year. Banks are usually closed on weekends and public holidays but not ATMs. This is a major benefit as in the event of an emergency where you need immediate cash, you do not have to wait for the bank to open. You can swipe your card and withdraw money as per your daily withdrawal limit.
- Less Workload on bank Staff: More ATMs means less workload on bank staff. Banks used to have long waiting queues for cash withdrawal and deposits but with a strong network of readily available ATMs, you are free to withdraw or deposit cash from whichever ATM you want. This increases the productivity of the bank staff and gives them time to attend important financial operations that require strict human intervention.
- No Margin of Error: ATMs do not make mistakes. While you are withdrawing cash from a bank, you may write wrong account number or amount in the withdrawal slip. However, you do not have to enter such details in ATMs. All you have to do is to swipe your card and enter your PIN. The right PIN confirms your transactions and a wrong PIN fails your transactions. This significantly eliminates the margin of errors while using ATMs.
- Privacy and Safety: Unlike banks, ATMs offer you privacy. In a bank, anyone who is watching you while filling up the withdrawal/deposit slip knows how much cash you are carrying. On the other hand, only one person at a time is allowed in the ATM. This means that only you know how much money you are carrying at the time. In addition, ATMs are equipped with CCTV surveillance and security guards who are there to aid you in any emergency. In the case of a malfunctioning ATM, you can complain to the respective bank for the matter.
- Boon for Travellers: ATM is a boon for travellers, as they do not have to carry too much cash at one point of time. They can withdraw cash from any place in any city or region. Whether they are travelling nationally or internationally, using ATMs is always better as they provide better exchange rates as well.
Frequently Asked Questions (FAQs)
Some frequently asked questions by the users are answered here.
Are there any monthly charges or hidden charges for ATM?
No, banks do not charge for using ATM on a monthly basis. Banks levy the charges for using ATM on each transaction. As soon as you surpass your free transaction limit, you have to pay for each transaction. And there are no hidden charges for ATMs as well.
What is the daily cash withdrawal limit through ATM?
The daily cash withdrawal limit through ATM is different for each bank. This limit is determined by the bank’s ATM policies and it can only be exceeded by the respective bank. The customer does not have any authority over this limit.
Are ATMs safe from robbery?
ATMs that are located outdoors such as markets, events and party spots are usually armoured and they are designed with various anti-theft features. On the other hand, indoor ATMs such as ATMs placed at malls, movie theatres, restaurants and clubs are non-armoured ones but these are closed when the employee is not there. There can be no full proof safety for anything but modern ATMs come with significant safety features that make them quite safe for most everyday situations and even against attempts at theft from the machines.