An ATM is actually a data terminal. It acts as an intermediary between you and your bank account. It communicates with your bank via Internet by means of wireless broadband or phone lines.
The ATM basically consists of an input terminal and four output terminal to carry out various financial transactions. On inserting your debit or credit card, it reads the information contained on the magnetic strip.The magnetic strip is the hard copy of your account info. You are instructed to enter your PIN. Once the PIN is verified, The ATM communicates with your bank to access your account information. Depending on your transaction request, the ATM forwards the transaction request to the hist processor which in turn routes the request to cardholder's account. If the account balance request is placed, the host processor returns a printed receipt of the account info. If cash is requested, the machine goes through the same initial steps of communicating with the host processor. Host processor then creates an electronic funds transfer from the cardholder's account. After the creation of funds transfer the host processor sends approval code to the ATM to dispense cash. The cash dispensing system has an electronic eye that "counts" each note as it exits the dispenser. There is also a sensor that checks the thickness of the notes being dispensed. If two notes are stuck together, they are diverted to reject bin . Even the soiled or mutilated notes are also diverted to reject bin . A record is maintained for all the notes which is called journal .
This is the basic technology employed in the ATM. The actual functioning depends on individual merchant and the machine. It also is dependent on the software programme.
Setting up ATM for a financial institute is normally done by the professional firms involved in this business. An approximate cost of setting up an ATM would be between Rs. 5 to 6 lakhs.
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