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An automatic teller machine (ATM) is an electronic device which allows a bank's customers to make cash withdrawals and check their account balances at any time without the need for a human teller. Many ATMs also allow people to deposit cash or cheques, transfer money between their bank accounts or even buy postage stamps.
ATMs are known by a wide variety of names, some of which are more common in certain countries than others. Examples include:
The world's first ATM was installed in Enfield Town in the London Borough of Enfield, London on June 27, 1967 by Barclays Bank. This instance of the invention is credited to John Shepherd-Barron, although George Simjian registered patents in New York, USA in the 1930s and Don Wetzel and two other engineers from Docutel registered a patent on June 4, 1973.
In modern ATMs, customers authenticate themselves by using a plastic card with a magnetic stripe, which encodes the customer's account number, and by entering a numeric passcode called a PIN (personal identification number), which in some cases may be changed using the machine. Typically, if the number is entered incorrectly several times in a row, most ATMs will retain the card as a security precaution to prevent an unauthorised user from working out the PIN by pure guesswork. Earliest versions accepted a single-use token or voucher, and the latest ATMs read and store customer data on a smartcard.
Most ATMs are connected to authorization of a transaction by the card issuer or other authorizing institution via the communications network.
Many banks in the United States charge fees for the use of their ATMs. In some cases, these fees are assessed solely for non-bank members, in other cases they apply to all users. Many oppose these fees because they are actually saving money for the banks; ATMs are, though more convenient than withdrawls from human tellers, less costly for the banks.
When the ATM surcharges emerged in the 1990s, they usually were on the order of $0.25, a number fairly representing the cost of the transaction. Quickly, however, they climbed. ATM fees now commonly reach $1.50, and can be as high as $5.00, especially around bars and casinos. In cases where fees are paid both to the bank and the ATM owner, this means that withdrawal fees could potentially reach $10.
ATMs are placed not only near banks, but also in locations such as malls, grocery stores, and restaurants. Sometimes, ATMs are advertised for their fees.
In many states, one can circumvent ATM fees by using debit cards at grocery stores. Many stores allow a debit-card user to receive "cash back" with an order; that is, one could make a $63 debit on a $13 order and receive $50 in change.
In the United Kingdom, public reaction to proposed ATM fees was so strong that fees were not instated.
ATMs contain secure cryptoprocessors, generally within an IBM PC compatible host computer in a secure enclosure. The security of the machine relies mostly on the integrity of the secure cryptoprocessor: the host software often runs on a commodity operating system.
In-store ATMs typically connect directly to their ATM Transaction Processor via a modem over a dedicated telephone line, although the move towards Internet connections is under way. In addition, ATMs are moving away from custom circuit boards (most of which are based on Intel 8086 architecture) and into full-fledged PCs with commodity operating systems such as Windows 2000 and Linux. An example of this is Banrisul, the largest bank in the South of Brazil, which has replaced the MS-DOS operating systems in its automatic teller machines with Linux. Other platforms include RMX 86, OS/2 and Windows 98 bundled with Java. The newest ATMs use Windows XP or Windows XP embedded.
ATMs are generally reliable, but if they do go wrong customers will be left without cash until the following morning or whenever they can get to the bank during opening hours. Of course, not all errors are to the detriment of customers; there have been cases of machines giving out money without debiting the account, or giving out higher value notes as a result of incorrect denomination of banknote being loaded in the money cassettes. Errors that can occur may be mechanical (such as card transport mechanisms; keypads; hard disk failures); software (such as operating system; device driver; application); communications; or purely down to operator error.
Early ATM security focused on making the ATMs invulnerable to physical attack; they were effectively safes with dispenser mechanisms. A number of attacks on ATMs resulted, with thieves attempting to steal entire ATMs by ram-raiding.
Modern ATM physical security concentrates on denying the use of the money inside the machine to a thief, by means of techniques such as dye markers and smoke canisters. This change in emphasis has meant that ATMs are now frequently found free-standing in places like shops, rather than mounted into walls.
Another trend in ATM security leverages the existing security of a retail establishment. In this scenario, the fortified cash dispenser is replaced with nothing more than a paper-tape printer. The customer requests a withdrawal from the machine, which dispenses no money, but merely prints a receipt. The customer then takes this receipt to a nearby sales clerk, who then exchanges it for cash from the till.
ATM transactions are usually encrypted with DES but most transaction processors will require the use of the more secure Triple DES by 2005.
There are also many "phantom withdrawals" from ATMs, which banks often claim are the result of fraud by customers. Many experts ascribe phantom withdrawals to the criminal activity of dishonest insiders. Ross Anderson, a leading cryptography researcher, has been involved in investigating many cases of phantom withdrawals, and has been responsible for exposing several errors in bank security.
There have also been a number of incidents of fraud where criminals have used fake machines or have attached fake keypads or card readers to existing machines. These have then been used to record customers' PINs and bank account details in order to gain unauthorised access to their accounts.
A bank is always liable when a customer's money is stolen from an ATM, but there have been complaints that banks have made it difficult to recover money lost in this way.
In some cases, bank fraud occurs at ATMs whereby the bank accidentally stocks the ATM with bills in the wrong denomination, therefore giving the customer more money than should be dispensed. Individuals who unknowingly use such ATMs are probably never tried, but those who withdraw a second time are usually prosecuted.
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