Tega is excited to follow her mum around town. On one of those outings, they both visit an ATM stand and she watches her mum take some money out of a machine. Tega knows that this is not the bank. She wants to know more about this money-issuing machine and looks around for helpful content.
Know any Tegas? Perhaps you do, and this would be the right article for them.
What is an Automated Teller Machine (ATM)?
An Automated Teller Machine or ATM, is a vault-like system that holds and dispenses cash to banking customers.
The ATM is installed and managed by banks to facilitate the delivery of their services.
It appears like a big metallic box stuck halfway into a concrete wall. The machine extends from the ground up to waist level after which is a keypad section immediately followed by a screen.
A couple of years ago, ATMs only provided withdrawal services. Today, that has changed a lot. People now use ATMs to purchase airtime, transfer funds and even make cash deposits as they would do inside a bank hall.
How an ATM Withdrawal Works
Here’s a quick overview of how an ATM works.
1. You Insert your ATM Card
The very first step in using an ATM is inserting your bank card. The system automatically senses the card and reads the chip on it.
2. The Display Provides Options for User Transaction
ATMs usually have a touch display. This screen becomes active immediately after your card is recognized and accepted by the machine.
The ATM screen serves as an interface for the user to make selections. At the same time, the physical keypad serves as a means for taking user input.
A series of prompts pop up after your card has been read. It often starts with you selecting your preferred language and inputting your card PIN. What comes after is a transaction menu from where you choose the type of transaction you intend to make.
You will see options for withdrawal, airtime purchase, funds transfer, account balance check, and so on. You simply have to click the screen and follow the instructions to access any of these options.
If you intend to withdraw, clicking the appropriate option will take you to the next screen. This prompts you to choose between withdrawing from a savings or current account.
Next, you’ll have to select the amount you would like to withdraw. You can either choose this from the options on the screen or input your specific amount by using the “…” button.
At this point, only two steps remain before you’re given access to your funds. The first is to choose whether you require a printed receipt for the withdrawal you’re about to make, and the second involves inputting your PIN.
3. Funds are Released
Inputting your pin a second time confirms your willingness to proceed with the withdrawal. This kickstarts the final phase, which involves a lot of automation.
It begins with the teller machine processing every menu option you select.
For example, the machine will check if you selected a savings or current account. Next, it will check if such an account is linked to the card. Another processing that occurs is a confirmation of your account balance against the amount you want to withdraw.
Once sorted, the machine begins a complex process of counting bills. There are two ways this could happen:
- Simple Selection: Each naira denomination available for withdrawal may be sitting in a dedicated dispenser inside the cash counter. 500 naira notes will be in one dispenser and 1000 naira notes will be in another dispenser. This way, the counter simply picks the number of bills it needs from any of the two dispensers. It counts the total amount, confirming that it corresponds to the customer’s request, and then issues it through the cash slot. To illustrate, let us say that you’re making a withdrawal of 1000 naira from the ATM. In this instance, the machine would either pick a single bill from the dispenser holding 1000 naira notes or pick two bills from the dispenser holding 500 naira notes.
- Complex Selection: Some ATMs are designed to apply a complex process when dispensing cash. This involves the use of a laser and then a counter. The laser accurately identifies the value of each bill within the dispenser. It can tell 200 naira notes, 500 naira notes, and 1000 naira notes apart. This laser is used to point out bills required to fulfil a user’s request. Next, the counter confirms the number of such bills - adding the total value up as it processes. The bills are arranged and issued through the card slot to the user.
4. Your Card is Debited
Completion of the cash dispensing process will automatically create a debit on your account. This happens through the interaction of the teller machine with the smart chip on your card. Details such as the withdrawal amount, transaction location, and bank or specific machine used are pushed onto the banking network for record purposes.
5. Your Card is Ejected
The user session comes to an end the moment their cash is dispensed and their account is debited. Every ATM recognizes this moment and responds with a prompt. This questions the user if they want to make another transaction. If a user responds in the negative, their user card is automatically ejected.
Different Types of ATM Transactions
Besides withdrawals, there are at least five other types of transactions you can perform using an ATM. Here’s a brief on each of them:
Balance Check
Balance check transactions provide account balance details to a user. These transactions can be conducted directly through a mobile banking app or on a bank website. However, they can also be performed on an ATM.
This feature is really important. You want to know how much funds are available in your account before you run a transfer or withdraw funds.
Withdrawal
The basic purpose of an ATM is to enable withdrawal transactions. This function is maintained on any automated teller machine whether others are available or not.
Deposit
Some special ATMs allow users to make deposits - in addition to withdrawals. ATMs that have this feature work by using a cash deposit slot.
To make a deposit, you will have to insert your naira notes into the slot one after the other. You must be careful that you are not forcing bills into the wrong slot. Of course, these machines have two slots, one for withdrawals and the other for deposits.
Funds Transfer
It is possible to make a funds transfer using an ATM if your mobile phone or a POS service is inaccessible. This funds transfer feature is quick and easy. It lets you select the receiver’s bank, input their account number, and input the transfer amount.
Your card PIN serves as an authorisation for this transfer. Once you input this code, your account is immediately debited and the receiver quickly receives the funds.
Airtime Purchase
ATMs also facilitate airtime purchases or top-ups as they are otherwise called. This very simple process involves inputting your phone number, airtime amount, and PIN. The system automatically detects the service provider associated with the phone number and makes an airtime credit.
Account Creation:
Remember we said that ATMs these days do a lot more than process withdrawals. Well, it is possible to create a bank account using an ATM.
The entire account registration process happens at the ATM. And in case you’re in doubt, the account you create is valid and recognized.
An account number is generated within hours of registration. This is sent alongside other important details to the phone contact you input while registering. In many cases of creating a new account using an ATM, you will be required to make further registration.
ATM Security
One might tend to wonder if making use of an ATM is in any way secure. This question alone drives many people to choose over-the-counter withdrawals, completely avoiding ATM services.
To douse any doubt, we will explain the security features that make ATMs reliable.
CCTV Camera: ATM stands are often fitted with one or more security cameras.
Categorized as “Closed Circuit Television” cameras, these devices provide video monitoring of the ATM and surrounding areas. And they are not randomly placed.
The safety of ATM users is highly important. Being so, banks ensure that cameras are installed in a way that captures important details about ATM users - such as their face, dress, etc. In addition to this, ATM CCTV cameras may also cover nearby parking lots.
This monitors the movement of cars and drivers and proves helpful in identifying car plate numbers in the event of an investigation.
Fingerprint Scanners:
Banks have been able to incorporate cardless services into their ATMs. One of the ways they accomplish this is through the use of fingerprint scanners.
A fingerprint scanner allows users to identify themselves by their fingerprints. It gives them access to their account - without needing to use their ATM cards.
This is a more secure form of access since each person’s fingerprint is unique. Moreover, it is difficult to anyone successfully steal and apply another person’s fingerprints. By implementing this facility, ATMs effectively guide against impersonation and the use of stolen cards.
ATM Doors and Lighting:
The way an ATM stand is built oftentimes contributes to the security of the entire structure.
For instance, banks may incorporate brilliant lighting and smart doors in addition to existing tech. This is effective for controlling movement in and out of the ATM stand. In addition, proper lighting ensures that the CCTV cameras deliver good-quality recordings.
ATM Adoption in Nigeria
TechCabal reports that the introduction of new ATMs across the country grew between 3 to 4% annually. However, it states that the case has been different within the last two years. During this time, there has been less than 1% growth in ATM deployments.
Furthermore, the same article reveals that “Seventy-six per cent of the total ATMs in Nigeria are deployed by eight banks.” Each of these eight banks owns a total of 17,200 ATMs. Access Bank has the highest number of 4,000 teller machines and Union Bank has the lowest number of 1,200.
The other major players are First Bank, UBA, Zenith Bank, GTBank, FCMB, Polaris, and Union Bank.
Conclusion
ATMs are advancing in the range of services they deliver and the speed at which they do so.