The technology behind Bank ATMs

In this era of technological advancements, financial institutions are out to simplify work for busier people who seldom find time to wait in the long queues of banking halls.

In this era of technological advancements, financial institutions are out to simplify work for busier people who seldom find time to wait in the long queues of banking halls.

A number of banks have engaged in Automated Teller Machines (ATMs) that are used to transact monetary business.

How do these machines operate? Is what we discovered.

An ATM is a computerized telecommunications device that provides the customer of a financial institution with access to financial transactions in the absence of a banking officer.

At a modern ATM outlet, the customer is identified by inserting an ATM card that bears a magnetic stripe.

Some cards are plastic with a chip that contains a unique card number and security information, such as the customer’s names and an expiration date.

The security of the card is provided by the customer’s Personal Identification Number (PIN), which one must memorize to remember at any time the person may wish to make a monetary transaction.

With an ATM, customers can access their bank accounts in order to make cash withdrawals (or credit card cash advances) and check their account balances.

Many ATMs also allow people to deposit cash or cheques, transfer money between their bank accounts, pay bills, or purchase goods and services.

Automated Teller Machines are known by various names like Cash Machine, Hole-in-the-wall and Cash Point among others.

They are mostly placed near or inside bank premises, shopping centres/malls, Airports, grocery stores, petrol/gas stations, restaurants and in busy centres around towns.

How it works

Birasa Hercule is the ATM operator for the Commercial Bank of Rwanda (BCR) - Novetel branch.

He explains the procedures one goes through to acquire an ATM card and how the BCR ATM operates:

• There is a form one fills in to apply for the ATM card which is given after one month. The card number corresponds with the personal account number.

• This card has a PIN code which is found inside a sealed envelope given to each client. With this code which must be kept as a secret number, one can access the account.

• The machine display screen is always on with words of welcome to Rwanda.

• When you insert the card in the machine, you select the language you understand best and the machine will ask for a PIN code.

• The card bears four digital numbers for the PIN code; failure to press the right numbers leads to retraction of the card from the machine.

• Inserting the correct code, the machine will ask whether you want to withdraw or check for the balance. The machine has different slots for the various denominations.

• For withdrawals, you will be required to choose the appropriate amount ranging from Frw5000 – Frw100000 or others that may not appear on display.

• One can withdraw a minimum of Frw1000 and a maximum of Frw200000 in a single operation of the ATM.

• Whatever the amount chosen and the corresponding denominations, the machine will help you to withdraw with ease.

• Finally, a receipt will be issued for you to ensure the amount drawn and the balance.

Whether an ATM is inside the banking hall, at a bank drive-through, in the wall of your shopping mall, or standing out in the middle of a trading centre, the process is pretty simple and the same.

In the event of low credit, such a reading “We’re sorry, but you do not have sufficient funds on your account to complete this transaction” will occur on the screen.

However, the operation of ATMs may differ from one country to another.

Some ATMs will withdraw the card before the cash, while others may retain the card until the cash is withdrawn.

Some banks offer a deposit facility through the ATM.

The process of depositing may also differ depending on the technology employed by a given bank.

For some ATMs, upon inserting the card the customer has to select the withdraw or deposit icon on the screen.

A question may appear whether one requires an envelope or not.

A slip indicating the amount to be deposited together with the amount are sealed inside the envelope and deposited into the machine.

Once the banking officer gets the envelopes from the machine, they are counted and cross-checked to tally the figures after which the cash is fed onto one’s bank account.

Though this may not work in some countries, it is still internationally recognised as a safer way to deposit cash.

If one tried to rip off the bank by not really depositing any funds, at the end of the day, the bank’s computed system alerts the banking officers.

Country networking

Most ATMs are connected to country and world inter-bank networks.

This enables people to withdraw and deposit money from ATMs not belonging to the bank where they have their accounts or in the country where their accounts are held.

It also enables one to withdraw cash in the local currency.

Some ATMs around the world have a provision for International travellers with Visa International Service Association (VISA) cards.

These too can access their accounts of particular banks from any part of the world.

Some examples of inter-bank networks in Rwanda include ECOBANK the former Bank of Commerce Development and Industry (BCDI) and the Commercial bank of Rwanda (BCR). These have compatible ATM cards.

Financial institutions have special software designed to support a computerized banking network for both in-hall banking and ATMs; this is shared by a consortium of banks.

Each bank though, provides customised computerised systems to maintain its own accounts and process transactions.

Cashier stations are owned by individual banks and communicate directly with their own banking systems.

Automatic Teller Machines communicate with a central computer system that clears transactions with the appropriate banks. 

An ATM accepts a cash card, interacts with the user and communicates with the central system to carry out the transaction, dispense cash and print receipt slips.

The system requires appropriate record keeping and security provisions; also handles concurrent access to the same account correctly.

The cost of the shared system is apportioned to the banks according to the number of customers with cash cards.

With such technological advancements in banking, the world may see more by devising means of not touching paper money at all from the little village grocery to transportation service providers.