How ATM Works?

1) Leased-line ATM

2) Dial-up ATM machines

A data terminal with two inputs and four output devices is required by an ATM machine. For this, a host processor should always be present. The host processor helps the ATM to connect to the customer that is requesting the cash.

Here, the role of ISP or Internet Service Provider is to act as the link between the intermediate networks and also the bank computer.

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A leased-line ATM machine has a 4-wire, point to point dedicated telephone line which helps in connecting it with the host processor. These are preferred in places where the number of daily transactions is a lot. They are considered high end and the operating costs of this type of a machine is very high as well.

The dial-up ATM machines only have a basic phone line with a modem and a toll-free number. As these are normal connections their initial installation cost is very less and their operating costs only become a fraction of that of a leased-line ATM.

The host is usually owned by the bank. It can also be owned by an Internet Service Provider. If the host is owned by the bank only machines that work for that particular bank will be supported.

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When a transaction is made, the details are put in by the cardholder. These details are pushed forward to the host processor. The host processor, in turn, checks these details with the respective bank. If the details match, the amount is procured with the help of an electronic fund from the customer’s bank account to the host processor’s account. When this gets done, the processor sends an approval code to the ATM machine so that the cash can be produced.

 Hope You Guys Now know How an ATM Works. 🙂

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