Learn About Automated Teller Machines (ATM)

In this episode of the I Can't Sleep Podcast, fall asleep learning about Automated Teller Machines (ATM). I'm always fascinated by learning how things work or came into being. And I know I learned something about this topic, but the only thing I remember is the article mentions an ATM high up in the mountains of Pakistan. Happy sleeping!

Transcript

Welcome to the I Can't Sleep podcast,

Where I read random articles from across the web to bore you to sleep with my soothing voice.

I'm your host,

Benjamin Boster.

Today's episode is from a Wikipedia article titled,

Automated Teller Machine.

An automated teller machine,

ATM,

Is an electronic telecommunications device that enables customers of financial institutions to perform financial transactions,

Such as cash withdrawals,

Deposits,

Funds transfers,

Balance inquiries,

Or account information inquiries,

At any time and without the need for direct interaction with bank staff.

ATMs are known by a variety of names,

Including automatic teller machines in the United States,

Sometimes redundantly as ATM machine.

In Canada,

The term automated banking machine,

ABM,

Is also used,

Although ATM is also very commonly used in Canada,

With many Canadian organizations using ATM over ABM.

In British English,

The terms cash point,

Cash machine,

And hole in the wall are most widely used.

Other terms include anytime money,

Cash line,

Time machine,

Cash dispenser,

Cash corner,

Or bankomat.

ATMs that are not operated by a financial institution are known as white label ATMs.

Using an ATM,

Customers can access their bank deposit or credit accounts in order to make a variety of financial transactions,

Most notably cash withdrawals and balance checking,

As well as transferring credit to and from mobile phones.

ATMs can also be used to withdraw cash in a foreign country.

If the currency being withdrawn from the ATM is different from that in which the bank account is denominated,

The money will be converted at the financial institution's exchange rate.

Customers are typically identified by inserting a plastic ATM card or some other acceptable payment card into the ATM,

With authentication being by the customer entering a personal identification number,

PIN,

Which must match the PIN stored in the chip on the card,

If the card is so equipped,

Or in the issuing financial institution's database.

According to the ATM Industry Association,

ATMIA,

As of 2015,

There were close to 3.

5 million ATMs installed worldwide.

However,

The use of ATMs is gradually declining with the increase of cashless payment systems.

The idea of out-of-hours cash distribution was first put into practice in Japan and the United Kingdom and Sweden.

In 1960,

Luther Simjian invented an automated deposit machine,

Accepting coins,

Cash,

And checks,

Although it did not have cash dispensing features.

His U.

S.

Patent was first filed on 30 June 1960 and granted on 26 February 1963.

The rollout of this machine,

Called Bancograph,

Was delayed by a couple of years,

Due in part to Simjian's Reflectone Electronics Inc.

Being acquired by Universal Magic Corporation.

An experimental Bancograph was installed in New York City in 1961 by the City Bank of New York,

But removed after six months due to the lack of customer acceptance.

In 1962,

Adrian Ashfield invented the idea of a card system to securely identify a user and control and monitor the dispensing of goods or services.

This was granted UK patent 959713 in June 1964 and assigned to Kin's Developments Ltd.

A Japanese device called the computer loan machine supplied cash as a three-month loan at 5% P.

A.

After inserting a credit card.

The device was operational in 1966,

However,

Little is known about the device.

A cash machine was put into use by Barclays Bank and Field in the United Kingdom on 27 June 1967,

Which is recognized as the world's first ATM.

This machine was inaugurated by English actor Reg Varney.

This invention is credited to the engineering team led by John Shepard Barron of printing firm Delarue,

Who was awarded an OBE in the 2005 New Year Honours.

Transactions were initiated by inserting paper checks issued by a teller or cashier marked with carbon 14 for machine readability and security,

Which in a later model were matched with a four-digit personal identification number pin.

Shepard Barron stated,

It struck me there must be a way I could get my own money anywhere in the world or the UK.

I hit upon the idea of a chocolate bar dispenser,

But replacing chocolate with cash.

The Barclays Delarue machine,

Called Delarue Automatic Cash System or DACS,

Beat the Swedish saving banks and company called Meteor's machine,

A device called Bankomat by a mere nine days,

And British Westminster Bank's Smith Industries Chubb system,

Called Chubb MD2,

By a month.

The only version of the Swedish machine is listed in the UK,

And the only version of the Swedish machine is listed to have been operational on the 6th of May 1968,

While claiming to be the first online ATM in the world,

Ahead of similar claims by IBM and Lloyds Bank in 1971 and Oki in 1970.

The collaboration of a small startup called Spaytech and Midland Bank developed a fourth machine which was marketed after 1969 in Europe and the US.

By the Burroughs Company.

The patent for this device,

GB1329964,

Was filed in September 1969 and granted in 1973 by John David Edwards,

Leonard Perkins,

John Henry Donald,

Peter Lee Chappell,

Sean Benjamin Newcomb,

And Malcolm David Rowe.

Both the DACS and MD2 accepted only a single use token or voucher,

Which was retained by the machine,

While the Spaytech worked with a card with a magnetic stripe at the back.

They used principles including carbon-14 and low-coercivity magnetism in order to make fraud more difficult.

The idea of a pin stored on the card was developed by a group of engineers working at Smith's Group on the Chubb MD2 in 1965,

And which has been credited to James Goodfellow.

Patent GB1197183 filed on the 2nd of May 1966 with Anthony Davies.

The essence of this system was that it enabled the verification of the customer with the debited account without human intervention.

This patent is also the earliest instance of a complete currency dispenser system in the patent record.

This patent was filed on the 5th of March 1968 in the U.

S.

,

U.

S.

354-3904,

And granted on the 1st of December 1970.

It had a profound influence on the industry as a whole.

Not only did future entrants into the cash dispenser market such as NCR Corporation and IBM license Goodfellow's pin system,

But a number of later patents referenced this patent as prior art device.

Devices designed by British,

I.

E.

Chubb,

De La Rue,

And Swedish,

I.

E.

SAI Meteor,

Manufacturers quickly spread out.

For example,

Given its link with Barclays,

Bank of Scotland deployed a DACS in 1968 under the Scott Cash brand.

Customers were given personal code numbers to activate the machines,

Similar to the modern pin.

They were also supplied with the 10-pound vouchers.

These were fed into the machine and the corresponding amount debited from the customer's account.

A Chubb-made ATM appeared in Sydney in 1969.

This was the first ATM installed in Australia.

The machine only dispensed $25 at a time,

And the bank card itself would be mailed to the user after the bank had processed the withdrawal.

A SIA Meteor's Bancomat was the first ATM installed in Spain on the 9th of January 1969 in central Madrid and Bonesto.

This device dispensed 1,

000 peseta bills,

1 to 5 max.

Each user had to introduce a security personal key using a combination of the 10 numeric buttons.

In March of the same year,

An ad with the instructions to use the Bancomat was published in the same newspaper.

In West Germany,

The first ATM was installed in the 50,

000-people university city of Tübingen on May 27,

1968 by Christ-Parkas Tübingen.

It was built by Eiland-based safe builder Ostertag AG,

In cooperation with AEG Telefunken.

Each of the 1,

000 selected users were given a double-bit key to open the safe with Geldersegaba written on it,

A plastic identification card,

And 10 punched cards.

One punched card functioned as a withdrawal slip for a 100 DM bill.

The maximum limit for daily use was 400 DM.

After looking first-hand at the experiences in Europe,

In 1968 the ATM was pioneered in the U.

S.

By Donald Wetzel,

Who was a department head at a company called Docutel.

Docutel was a subsidiary of Recognition Equipment Inc.

Of Dallas,

Texas,

Which was producing optical scanning equipment and had instructed Docutel to explore automated baggage handling and automated On the 2nd of September 1969,

Chemical Bank installed a prototype ATM in the U.

S.

At its branch in Rockville Center,

New York.

The first ATMs were designed to dispense a fixed amount of cash when a user inserted a specially-coded card.

A Chemical Bank advertisement boasted,

Chemical's ATM,

Initially known as Docuteler,

Was designed by Donald Wetzel and his company,

Docutel.

Chemical executives were initially hesitant about the electronic banking transition given the high cost of the early machines.

Additionally,

Executives were concerned that the ATM would be too expensive to use,

And that it would be a waste of money.

In 1955,

The Smithsonian National Museum of American History recognized Docutel and Wetzel as the inventors of the networked ATM.

To show confidence in Docutel,

Chemical installed the first four production machines in a marketing test that proved they worked reliably.

Customers would use them and even pay a fee for usage.

Based on this,

Banks around the country began to experiment with ATM installations.

By 1974,

Docutel had acquired 70% of the U.

S.

Market,

But as a result of the early 1970s worldwide recession and its reliance on a single product line,

Docutel lost its independence and was forced to merge with the U.

S.

Subsidiary of Olivetti.

In 1973,

Wetzel was granted U.

S.

Patent number 3,

761,

682,

Archived 5 September 2017,

At the Wayback Machine.

The application had been filed in October 1971.

However,

The U.

S.

Patent record cites at least three previous applications from Docutel,

All relevant to the development of the ATM and where Wetzel does not figure,

Namely U.

S.

Patent number 3,

662,

343,

Archived 5 September 2017,

At the Wayback Machine,

U.

S.

Patent number 3,

651,

976,

Archived 5 September 2017,

At the Wayback Machine,

And U.

S.

Patent number 3,

685,

69,

Archived 5 September 2017,

At the Wayback Machine.

These patents are all credited to Kenneth S.

Goldstein,

M.

R.

Karecki,

T.

R.

Barnes,

G.

R.

Chastian,

And John D.

White.

In April 1971,

Boozicom began to manufacture ATMs based on the first commercial microprocessor,

The Intel 4004.

Boozicom manufactured these microprocessor-based automated teller machines for several buyers,

With NCR Corporation as the main customer.

Mohammed Atala invented the first hardware security module,

HSM,

Dubbed the AtalaBox,

A security system which encrypted PIN and ATM messages and protected offline devices with an unguessable PIN-generated key.

In March 1972,

Atala filed U.

S.

Patent 3938-091 for his PIN verification system,

Which included an encoded card reader and described a system that utilized encryption techniques to assure telephone link security while entering personal ID information that was transmitted to a remote location for verification.

He founded Atala Corporation,

Now Temeco Atala,

In 1972 and commercially launched the AtalaBox in 1973.

The product was released as the IdentiKey.

It was a card reader and customer identification system providing a terminal with plastic card and PIN capabilities.

The IdentiKey system consisted of a card reader console,

Two customer PIN pads,

Intelligent controller,

And built-in electronic interface package.

The device consisted of two keypads,

One for the customer and one for the teller.

It allowed the customer to type in a security code,

Which is transformed by the device using a microprocessor,

Into another code for the teller.

During the transaction,

The customer's account number was read by the card reader.

This process replaced manual entry and avoided possible keystroke errors.

It allowed users to replace traditional customer verification methods,

Such as signature verification and test questions with a secure PIN system.

The success of the AtalaBox led to the wide adoption of hardware security modules in ATMs.

Its PIN verification process was similar to the later IBM 3624.

Atala's HSM products protect 250 million card transactions every day as of 2013 and secure the majority of the world's ATM transactions as of 2014.

The IBM 2984 was a modern ATM and came into use at Lloyds Bank,

High Street,

Brentwood Essex,

The UK,

In December 1972.

The IBM 2984 was designed at the request of Lloyds Bank.

The 2984 cash-issuing terminal was a true ATM,

Similar in function to today's machines,

And named Cashpoint by Lloyds Bank.

Cashpoint is still a registered trademark of Lloyds Banking in the UK,

But is often used as a generic trademark to refer to ATMs of all UK banks.

All were online and issued a variable amount which was immediately deducted from the account.

A small number of 2984s were supplied to a US bank.

A couple of well-known historical models of ATMs include the Atala Box,

IBM 3614,

IBM 3624,

And 473X series,

Diebold 10xx,

And TABS 9000 series,

NCR 1780,

And earlier NCR 770 series.

The first switching system to enable shared automated teller machines between banks went into production operation on the 3rd of February 1979 in Denver,

Colorado,

In an effort by Colorado National Bank of Denver and Cransley & Co.

Of Cherry Hill,

New Jersey.

In 2012,

A new ATM at Royal Bank of Scotland allowed customers to withdraw cash up to £130 without a card by inputting a six-digit code requested through their smartphones.

ATMs can be placed at any location but are most often placed near or inside banks,

Shopping centers,

Airports,

Railway stations,

Metro stations,

Grocery stores,

Gas stations,

Restaurants,

And other locations.

ATMs are also found on cruise ships and on some US Navy ships where sailors can draw out their pay.

ATMs may be on and off-premises.

On-premises ATMs are typically more advanced,

Multi-function machines that complement a bank branch's capabilities and are thus more expensive.

Off-premises machines are deployed by financial institutions where there is a simple need for cash,

So they are generally cheaper single-function devices.

Independent ATM deployers unaffiliated with banks install and maintain white-label ATMs.

In the US,

Canada,

And some Gulf countries,

Banks may have drive-through lanes providing access to ATMs using an automobile.

In recent times,

Countries like India and some countries in Africa are installing solar-powered ATMs in rural areas.

The world's highest ATM is located at the Kundrab Pass in Pakistan.

Installed at an elevation of 4,

693 meters by the National Bank of Pakistan,

It is designed to work in temperatures as low as negative 40 degrees Celsius.

Most ATMs are connected to interbank networks,

Enabling people to withdraw and deposit money from machines not belonging to the bank where they have their accounts,

Or in the countries where their accounts are held,

Enabling cash withdrawals and local currency.

Some examples of interbank networks include NYCE,

Pulse,

Plus,

Cirrus,

AFFN,

Interac,

InterSwitch,

Star,

Link,

Megalink,

And BankNet.

ATMs rely on the authorization of a financial transaction by the card issuer or other authorizing institution on a communications network.

This is often performed through an ISO 8583 messaging system.

Many banks charge ATM usage fees.

In some cases,

These fees are charged solely to users who are not customers of the bank that operates the ATM.

In other cases,

They apply to all users.

In order to allow a more diverse range of devices to attach to their networks,

Some interbank networks have passed rules expanding the definition of an ATM to be a terminal that either has the vault within its footprint or utilizes the vault or cash drawer within the merchant establishment,

Which allows for the use of a script cash dispenser.

ATMs typically connect directly to their host or ATM controller on either ADSL or dial-up modem over a telephone line or directly on a leased line.

Leased lines are preferable to plain old telephone service POTS lines because they require less time to establish a connection.

Less-trafficked machines will usually rely on a dial-up modem on a POTS line rather than using a leased line since a leased line may be comparatively more expensive to operate compared to a POTS line.

That dilemma may be solved as high-speed internet VPN connections become more ubiquitous.

Common lower-level layer communication protocols used by ATMs to communicate bank-to-bank include SNA over SDLC,

A multi-drop protocol over Async,

X.

25,

And TCP IP over Ethernet.

In addition to methods employed for transaction security and secrecy,

All communications traffic between the ATM and the transaction processor may also be encrypted using methods such as SSL.

There are no hard international or government-compiled numbers totaling the complete number of ATMs in use worldwide.

Estimates as of 2015 developed by ATM-IAA placed the number of ATMs in use at 3 million units,

Or approximately 1 ATM per 3,

000 people in the world.

To simplify the analysis of ATM usage around the world,

Financial institutions and other institutions around the world,

Financial institutions generally divide the world into seven regions,

Based on the penetration rates,

Usage statistics,

And features deployed.

Four regions—USA,

Canada,

Europe,

And Japan—have high numbers of ATMs per million people.

Despite the large number of ATMs,

There is additional demand for machines in the Asia-Pacific area,

As well as in Latin America.

Macau may have the highest density of ATMs at 254 ATMs per 100,

000 adults.

With the uptake of cashless payment solutions in the late 2010s,

ATM numbers and usage started to decline.

This happened first in developed countries at a time when ATM numbers were still increasing in Asia and Africa.

As of 2021,

There had been a global decline in the number of ATMs in use,

With the average dropping to 39 per 100,

000 adults,

From a peak of 41 per 100,

000 adults in 2020.

An ATM is typically made up of the following devices—CPU,

To control the user interface and transaction devices.

Magnetic or chip card reader,

To identify the customer.

A pin pad,

For accepting and encrypting personal identification number,

EPP4,

Similar in layout to a touchtone or calculator keypad,

Manufactured as part of a secure enclosure.

Secure crypto processor,

Generally within a secure enclosure.

Display,

Used by the customer for performing the transaction.

Function key buttons,

Usually close to the display or a touchscreen,

Used to select the various aspects of the transaction.

Record printer,

To provide the customer with a record of the transaction.

Vault,

To store the parts of the machinery requiring restricted access.

Housing,

For aesthetics and to attach signage to.

Sensors and indicators.

Due to heavier computing demands and the falling price of personal computer-like architectures,

ATMs have moved away from customer hardware architectures,

Using microcontrollers or application-specific integrated circuits,

And have adopted the hardware architecture of a personal computer,

Such as USB connections for peripherals,

Ethernet and IP communications,

And use personal computer operating systems.

Business owners often lease ATMs from service providers.

However,

Based on the economies of scale,

The price of equipment has dropped to the point where many business owners are simply paying for ATMs using a credit card.

New ADA voice and text-to-speech guidelines imposed in 2010,

But required by March 2012,

Have forced many ATM owners to either upgrade non-compliant machines or dispose them if they are not upgradable,

And purchase new compliant equipment.

This has created an avenue for hackers and thieves to obtain ATM hardware at junkyards from improperly disposed decommissioned machines.

The vault of an ATM is within the footprint of the device itself and is where items of value are kept.

Script cash dispensers,

Which print a receipt or a script instead of cash,

Do not incorporate a vault.

Mechanisms found inside the vault may include dispensing mechanism to provide cash or other items of value,

Deposit mechanism including a check processing module and bulk note acceptor to allow the customer to make deposits,

Security sensors,

Magnetic thermal seismic gas,

Locks to control access to the contents of the vault,

Journaling systems,

Many are electronic,

A sealed flash memory device based on in-house standards,

Or a solid state device,

An actual printer,

Which accrues all records of activity including access timestamps,

Number of notes dispensed,

Etc.

This is considered sensitive data and is secured in similar fashion to the cash as it is a similar liability.

ATM vaults are supplied by manufacturers in several grades.

Factors influencing vault grade selection include cost,

Weight,

Regulatory requirements,

ATM type,

Operator risk avoidance practices,

And internal volume requirements.

Industry standard vault configurations include underwriters laboratories,

UL 291,

Business hours,

And level 1 safes,

RALTL-30 derivatives,

And CEN EN 1143-1-CEN3 and CEN4.

ATM manufacturers recommend that a vault be attached to the floor to prevent theft,

Though there is a record of a theft conducted by tunneling into an ATM floor.

With the migration to commodity personal computer hardware,

Standard commercial off-the-shelf operating systems and programming environments can be used inside of ATMs.

Typical platforms previously used in ATM development include RMX or OS2.

Today,

The vast majority of ATMs worldwide use Microsoft Windows.

In early 2014,

95% of ATMs were running Windows XP.

A small number of deployments may still be running older versions of the Windows OS,

Such as Windows NT,

Windows CE,

Or Windows 2000,

Even though Microsoft still supports only Windows 10 and Windows 11.

There is a computer industry security view that general public desktop operating systems have greater risks as operating systems for cash dispensing machines than other types of operating systems like secure real-time operating systems,

RTOS.

Risks Digest has many articles about ATM operating system vulnerabilities.

Linux is also finding some reception in the ATM market,

An example of this is Banrisol,

The largest bank in the south of Brazil,

Which has replaced the MS-DOS operating systems in its ATMs with Linux.

Banco do Brasil is also migrating ATMs to Linux.

Indian-based Vortex Engineering is manufacturing ATMs that operate only with Linux.

Common application layer transaction protocols,

Such as ATMs,

Dibold 91x,

911,

Or 912,

And NCR,

NDC,

Or NDC+,

Provide emulation of older generations of hardware on newer platforms,

With incremental extensions made over time to address new capabilities.

Although companies like NCR continuously improve these protocols,

Issuing newer versions,

E.

G.

NCR's AANDC v3.

X.

Y,

Where x.

Y are subversions.

Most major ATM manufacturers provide software packages that implement these protocols.

Newer protocols,

Such as IFX,

Have yet to find wide acceptance by transaction processors.

With the move to a more standardized software base,

Financial institutions have been increasingly interested in the ability to pick and choose the application programs that drive their equipment.

WOSA-XFS,

Now known as CEN-XFS or simply XFS,

Provides a common API for accessing and manipulating the various devices of an ATM.

J-XFS is a Java implementation of the CEN-XFS API.

While the perceived benefit of XFS is similar to the Java's write-once-run-anywhere mantra,

Often different ATM hardware vendors have different interpretations of the XFS standard.

The result of these differences in interpretation means that ATM applications The result of these differences in interpretation means that ATM applications typically use a middleware to even out the differences among various platforms.

With the onset of Windows operating systems and XFS on ATMs,

The software applications have the ability to become more intelligent.

This has created a new breed of ATM applications,

Commonly referred to as programmable applications.

These types of applications allow for an entirely new host of applications,

In which the ATM terminal can do more than only communicate with the ATM switch.

It is now empowered and connected to other content servers and video banking systems.

Notable ATM software that operates on XFS platforms include Triton Prism,

Diebold Agilis Empower,

NCR Aptra Edge,

Absolute Systems Absolute Interact,

KAL Calignite Software Platform,

Phoenix Interactive VistaATM,

WinCore Nixdorf ProTopus,

Euronet EFTs,

And InterTek InterATM.

With the move of ATMs to industry-standard computing environments,

Concern has risen about the integrity of the ATM's software stack.

Reviews

Now that was boring! (And I work for a bank). 😂😂🥰