How an ATM works

What lies behind the screen that you see when you use an ATM? Understanding how it works

It's a process that we're all familiar with: find an ATM, insert your card, enter your PIN, decide how much money you want, and in just a few seconds you have cash in hand. But how does an ATM actually work?

What may seem simple at first is actually a complex process, based upon a combination of computers, technology, and years of research. The most direct ancestors of our modern-day ATMs can be found as far back as the 1970s. And although the first ATMs did not include a “computer” in the way we think of that term today, it did not take long before new computer technologies designed specifically for ATMs began to be applied, just as they continue to evolve in new ways today.

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Nowadays, all ATMs are fitted with a computer that has software to regulate the mechanism in the device and control queries and transactions. That is because an ATM is not just a tool to make cash withdrawals and to pay in cash, but also to view transactions and perform other activities.

How an ATM operates in just a few steps

As soon as you start to use an ATM, you set off a sort of technological chain reaction. Inserting your card into the proper slot is the first step. As soon as you do this, the card will be read by a special device and a connection with the bank will be automatically established. Once the customer enters their PIN, they can access various options.

Let's say that the customer wants to make a cash withdrawal.
This is of course the main purpose for which ATMs are used, as well as the one that primarily justifies their existence. Above all, banks are well connected, which enables you to withdraw cash from the ATMs of other banks (for which you sometimes might have to pay a fee).

When the customer chooses a cash withdrawal from a credit or debit account using their card, the ATM asks them to choose an exact amount, to count and issue the money quickly. This process works thanks to a precise combination of more than 400 components that, in a perfect seven-stage process, completes the process to issue the bank notes:

  • Customers use the keypad to enter the amount of cash they want (and in some cases they can even select the denominations and combinations of bills they would like to receive).
  • Next, the ATM checks the customer's balance and then authorizes the withdrawal transaction as long as there are sufficient funds available in the account.
  • Inside the ATM, cash is stored in a series of trays, which allow the bills to be made available to the dispensing mechanism.
  • A complex gear system allows the bills to be taken from the appropriate tray one at a time.
  • An optical sensor then checks the amount while also confirming that none of the bills are counterfeit.
  • A small slot or door then opens and the cash requested is delivered to the customer.
  • Next, the ATM asks whether or not the customer wants a printed receipt for the transaction, then after responding appropriately based upon the customer's response, it closes the process and disconnects the session.

Even though all of this is expected to occur over the course of just a few seconds, banks that operate ATMs must also ensure that enough time is taken to comply with the highest standards of quality. The various trays inside the ATM can hold up to 3,000 bills of various denominations, which means that a special emphasis must be placed on both precision and security.

Is an ATM safe? For the bank, it's very secure. While transactions are being carried out, full security is guaranteed by the use of a large safe and software that has been extensively tested (always under supervision). However, there are also situations where criminals have learned how to manipulate or alter an ATM in order to steal personal banking data. This means that if you notice anything out-of-the-ordinary when attempting to use an ATM, it is best to proceed with caution.

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Procedures that can be carried out using a BBVA Automatic Teller Machine

When you use one of your own bank's ATMs, you will be presented with a wide variety of options on the welcome screen. In the specific case of our bank, a BBVA customer who goes to a BBVA ATM can make various inquiries (balance, recent transactions, request statements) or transactions (cash withdrawals and pay-ins, transfers, pay bills or tax, send money abroad or mobile phone top-ups, and more).

In summary, an ATM is a machine that can now respond to many of a customer's banking needs in an immediate manner, serving as a tool for automatic movement of funds and management of bank accounts. At the same time, banks like BBVA are now competing to remain on the cutting edge in terms of new technological innovations. Head to our website to discover our BBVA ATM locator, and to see all the things you can use them for.

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