PROJECT ON: AUTOMATED TELLER MACHINE (ATM) Bachelor of Commerce – Banking & Insurance Semester – V 2009 – 2010
Submitted: In partial fulfillment of the requirements for the awarded of the degree of Bachelor of Commerce – Banking & Insurance.
by Miss. Rupa .R. Nakman Roll No: 10737
P.T.V.A’s Mulund College of Commerce S.N. Road, Mulund West. Mumbai -400080 1
DECLARATION: I Rupa .R. Nakman (10737) student of B.Com Banking & Insurance Semester – V ( 2009 – 2010 ) hereby declare that I have completed the project on ATM. The information submitted is true and original to the best of my knowledge.
Rupa .R. Nakman (10737)
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ACKOWLEDGEMENT The successful completion of my project on “Automated Teller Machine” would have been impossible without the timely help of certain people. I am thankful to those who have helped me throughout my project work. I wish to express gratitude to my guide “Prof. Shailesh welenkar” who made me confident to choose this topic and helped me to get information and also to go ahead with the preparation of the project. I am grateful to our principle Dr. (Mrs.) S.M. Diwanji course Co-coordinator Prof. Mrs. Shilpa Thakur and librarian for there support. I would express my indebtedness to my family members and friends for their constant support and for infusing me with enthusiasm to achieve the task successfully.
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Sr . No
CONTENTS
Pg. No
1
DESIGN OF PROJECT
5
2
INTRODUCTION TO ATM
7
3
HISTORY OF ATM
9
4
INVENTION OF ATM
11
5
INTRODUCTION TO ATM CARDS
15
6
TYPES OF ATM CARD
16
7
WORKING OF ATM
18
8
PARTS OF ATM
19
9
HOW TO USE AN ATM
23
10
USES OF ATM
26
11
FRAUD PREVENTION(FOR CONSUMERS)
31
12
ADVANTAGES AND DISTADVANTAGES
35
13
ATM CARD V/S DEBIT CARD
37
14
SCOPE OF ATM IN INDIA
39
15
ANALYSIS OF BANKS
41
16
CONCLUSION
49
17
BIBLIOGRAPHY
50
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1. DESIGN OF PROJECT Objective of the project To make observation about
the concepts & functions of
Automated Teller Machine. To analyses & discuss the strategic issues present in Automated Teller Machine. To understand the nature & structure of Automated Teller Machine. To link theoretical knowledge with real life. Scope of the study
The contemporary study of Automated Teller Machine in this project based on the sample of the different sectors of the banks. HDFC Bank. IDBI Bank. These sample banks have been selected at random. Rather keeping the consideration of mouth publicity factor by the customer orientation repute has made the choice.
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Methodology The completion of the project involved acute scanning of the library and different text books. A lot of information has also gathered from the web. A visit to HDFC Bank and IDBI Bank also made to gather
information pertaining to the project. The information collected has been diluted and presented in very simple and lucid manner, which will help the reader to understand the topic.
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2. INTRODUCTION Viewed from a purely technical perspective, an ATM is simply a safe with an electro-mechanical input and output system which is itself controlled by a fully electronic user interface. Organization that manufacture ATMs –include Fujitsu, IBM NCR and Siemens-Nixdorf – expended great effort on the user interface itself; taking into considerable care to maximize the speed of the entire customer interaction and keeping the language the used for the interaction process a clear and straightforward as feasible. Most ATMs nowadays use a cathode-ray tube (CRT) for the visual interface, although some ATMs of an older design make use of a system where by the different interface pages are scrolled mechanically behind a glass screen. Incidentally, one reason why colors ATM screens have not taken off is because no one has yet developed a reliable color screens which is easily visible in exterior daylight. It is important that a ATMs user interface should not only be easy to use and clearly understandable but should be designed so as to minimize the likelihood of the customer leaving without taking from the machine all the things he needs to take. These are the cash, paper receipt and above all, the card. There is no doubt that the card is the most likely items to be forgotten by a customer, who sees the purpose of the interactive process being to obtain cash. Consequently, ATMs usually have some kind of sound alarm, which only ceases when the customer has removed his card from the slot. Some machines also provide visual message to remind the customer to retrieve the card, especially if the functions is one where the customer is not going to lingering by the machine until the cash has been dispensed.
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In order to prevent security problem if the customer nevertheless forgets to retrieve the card, the machine will “swallow” the card after a short period normally about 30 seconds. The customer will then usually need to apply centrally to get the card returned, although if ATM is situated in the lobby or through the wall of a branch where he is known, he can sometimes get the card back from the ATM by asking for the branch to extract it. The machines currently in use allow user to draw any sum of up to a limited account, view the current position of their accounts and order a new chequebook. To obtain money from the unit the customer need special ATM card and is notified of personal identification number, which is not shown on the face of the card. The card must to be inserted into machine and the personal number typed in. the machine will validate the code number and if correct will allow access the bank’s computer to check the account balance and if there are sufficient funds, to withdraw cash.
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3. HISTORY OF ATM ATM can be traced back to the 1960s, when the first ATM machine was invented by Scot John Shepherd-Barron and used by Barclays Bank in 1967. However, while Shepherd-Barron has the major claim to fame, there have been many other individuals who have also invented some version of the ATM. The machine itself has evolved over the years, with the earlier versions restricted to only one or few banking functions. There has been much debate, however, on who invented the first early versions of Automated Teller Machine. But the history of ATM can be visibly traced back to the year of 1967. In 1939, a rudimentary cash dispenser was invented by Luther George Simijian and established by the City Bank of New York. However, the machine did not work much and had to be removed within six months of putting up the machine. The early versions of the ATM were restricted to cash withdrawal only. In the 1967 model, patented by Shepherd-Barron, the plastic cards did not exist and instead a voucher with a strip of radioactive substance was used for withdrawing cash. Consequently, the vouchers were matched with a particular personal pin code used by the bank to identify the customer. The ATM was inaugurated by renowned British actor, Reg Varney. The personal identification number was initially a six numbered password, and was later changed to a four numbered password. However, this automated teller machine was very different from the modern day teller machines, which is based on an electronic system between the different branches of the bank. Thus, the history of ATM has seen many changes over the span of 25 years since 1939.
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Another co-patent to the invention of the ATM was Don Wetzel, the Vice President of Product Planning at Docutel. While the conceptualization began in 1968, the patent was issued only in 1973. This cash dispenser was first used by the New York based bank, namely, the Chemical Bank. As was the case with the ATMs of during those years, they were hardly a multi-functional unit. Moreover, they were not based on any electronic system. Hence, the debit cards, distinct from credit cards, were given to only selected clients with good track records. The first ATM cards, with magnetic strips were developed by three individuals, namely Don Wetzel, Tom Barnes and George Chastain. While there were many developments in the history of ATM, the service itself took a stronghold only in the 1970s. Today, the ATM service has become indispensable to our modern day lives.
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4. INVENTION OF ATM Many people have claimed to be the inventor of the ATM. Some believe that Luther George Simjian did it. Some believe that it was Don Wetzel. Still others say the inventor is John Shepherd-Barron. John D. White has contacted ATMmachine.com and gave very convincing evidence that he is the inventor of ATM and not Don Wetzel. James Goodfellow of Scotland also contacted ATMmachine.com and gave us convincing evidence of inventing ATM. Since the patent on an ATM as we know it was never applied until years after Simjian, confusion on inventor till exists. One reason for confusion is that John Shepherd-Barron lived in the United kingdom, James Goodfellow in Scotland, while others lived in USA. We present all the evidence, as we know it on this page. The ATM Inventors and the facts: Luther George Simjian: In the late 1930's, Luther George Simjian started building an earlier and not-so-successful version of an ATM, but he did register related patents. He initially came up with the idea of creating a hole-in-the-wall machine that would allow customers to make financial transactions; the idea was met with a great deal of doubt. Starting in 1939, Simjian registered 20 patents related to the device and persuaded what is now Citicorp to give it a trial. After six months, the bank reported that there was little demand. Today, as you know, there is a huge demand!
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John Shepherd-Barron: John Shepherd-Barron had an idea in the 1960's for a 24/7 cash dispenser. At the time, he was managing director of De La Rue Instruments. De La Rue today manufactures cash dispensers. In fact, there is a De La Rue cash dispenser in 1 out of every 5 ATM machines built. If you want to believe that Shepherd-Barron invented the ATM, then the world's first ATM was installed outside a north London branch of Barclays Bank in 1967. Later In 1967, Shepherd-Barron presented his idea to a conference of 2,000 US bankers in Miami, after the first ATMs had been installed in England. He spoke to the conference about the new self-service banking device he developed. On December 31, 2004, John Shepherd-Barron, was named an Officer of the Order of the British Empire, or OBE, by the Queen of England for services to banking. "It was a bit late, but better late than never," said Shepherd-Barron. Press releases stated that Shepherd-Barron was the "Inventor of the ATM." But, was he? James Goodfellow : As a Development engineer with Smiths Industries Ltd, James Goodfellow was given the project of developing an automatic cash dispenser in 1965. Chubb Lock & Safe Co. were to provide the secure physical housing and the mechanical dispenser mechanism. Eventually Mr. Goodfellow designed a system which accepted a machine readable encrypted card, to which he added a numerical keypad. UK Patent No.1,197,183 with a priority date of May 2 1966, covers this invention, and it is also covered by US Patent No.3,905,461 and Patents granted by many other countries. These Patents list James Goodfellow as inventor, along with the late A.I.O.Davies, the company General Manager. This US Patent still describes the basic ATM function almost 40 years later. These Machines were marketed by Chubb LTD and installed nationwide in the 12
UK during the late 60s and early 70s. You can read ATM inventor James Goodfellow's story here on ATMmachine.com. Thanks goes out to Mr. Goodfellow for giving us his permission. (Update: In 2006, James Goodfellow was selected by the Queen to be awarded an OBE for services to Banking as patentee of the Personal Identification Number (PIN), and his service to banking. Don Wetzel: In 1968, according to a NMAH interview, Don Wetzel, says he was the Vice President of Product Planning at Docutel, the company that developed automated baggage-handling equipment. He applied for a patent on an ATM machine. He said there were two other inventors listed on the patent. They were Tom Barnes, a mechanical engineer and George Chastain, an electrical engineer. It took five million dollars to develop their ATM according to Mr. Wetzel. If you want to believe that Wetzel and company invented the ATM, then you might want to read the next paragraph. John D. White: John D. White told ATMmachine.com that his work started in 1968. He told us that he installed the first ATM at Rockville Center, LI for the then Chemical Bank in August 1973. His design was patented on May 9, 1973 for the Docutel Corporation and was filed on July 29, 1970. The machine was called a "Credit Card Automatic Currency Dispenser". Mr. White provided copies of his patent to ATMmachine.com for our review. Indeed it states the inventor of the machine was John D. White and Kenneth Goldstein, and the assignee on the patent was the Docutel Corporation. It does seem to us that this is very convincing evidence that it was White and not Wetzel who received the patent. There is also a statement in the 13
patent that supports the idea of the modern ATM. "Both the original code and the updated code are scrambled in accordance with a changing key", which is basically what happens today. ATMs are programmed with security keys and the code changes and are scrambled to prevent fraudulent access to credit card and ATM numbers between the machine, the bank, and the network processor. We would like to thank Mr. White for contacting us. The patent drawings he gave us look very much like the free standing ATM that is sold on ATMmachine.com today. Jairus Larson: Jairus Larson told ATMmachine.com that although he did not invent the ATM, as far as he is aware , he did develop the very first 'on-line' ATM (Diebold's "550"). The first ATM's were all 'off-line' versions (sometimes referred to as 'stand-alone') meaning they did not have any means to communicate with the bank. Today's ATMs are 'on-line' meaning they communicate with the bank's computer system. Mr. Larson was kind enough to give us his account of how this happened in the early 1970's. You can read about Mr. Larson's ATM development here.
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5. INTRODUCTION TO ATM CARD If you have a bank account there is a good chance that you have an ATM card, which stands for Automated Teller Machine. This card gives you the ability to go to an ATM and perform transactions. An ATM is a machine or computerized terminal that gives bank customers the ability to access their funds without the need of a teller or bank employee. Every customer has a four-digit pin code, as a matter of security that must be keyed in before transactions can be performed. Customers have access to their funds 24 hours per day, seven days per week.
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6. TYPES OF ATM CARDS More people use plastic to pay for items than cash. There are many different types of cards used to make purchases or withdraw money and many people don't think about the differences. There are significant differences between ATM, debit and credit cards. There are several different types of cards that fall under the category of an ATM card. Basic ATM Card : Your basic ATM card only has a few uses. It can be used at any ATM machine for the bank that issued it and sometimes at other banks for a fee. You can use your ATM card to withdraw and deposit money, check your account balance and transfer funds. Some ATM cards also have a few more uses like paying loans and getting cash advances, however ATM cards cannot be used to make purchases Debit ATM Card : An ATM debit card has all the features of a regular ATM card with the added features of a debit card. This card can be used to make purchases at any store or online. Typically they will have a credit card logo on them, although they do not work the same way as credit cards. Every time and ATM debit card is used; money is taken out of the checking account it is linked to.
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ATM Credit Cards : A new type of debit card is available at some banks. This type of card has all the features of the ATM debit card plus the features of a credit card. This card is not only attached to a checking account, but also to a line of credit. This means that if the person overdrafts on their account they will not incur any fees and will instead have money taken out of their credit line to be paid back with interest when funds are made available.
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7.WORKING OF ATM There are mainly two types of ATM’s which differ according to the way they operate. They can be called as •
Leased-line ATM
Dial-up ATM machines Any ATM machine needs a data terminal with two inputs and four output devices. Of course, for this to happen there should also be the availability of a host processor. The host processor is necessary so that the ATM can connect and also communicate with the person requesting the cash. The Internet Service Provider (ISP) also plays an important role in this action. They act as the gateway to the intermediate networks and also the bank computer. 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 types of machines are preferred in places where the user volume is high. They are considered high end and the operating costs of this type of a machine is very high. The dial-up ATM machines only has a normal 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 mainly owned by the bank. It can also be owned by an ISP. If the host is owned by the bank only machines that work for that particular bank will be supported.
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8. PARTS OF ATM As told earlier, there are mainly two input devices and four output devices for an ATM. The input devices are: Card Reader – This is a part of the identification of your particular account number. For this the magnetic stripe on the back of the ATM card is either swiped or pressed on the card reader so that it captures your account information. To understand the account information of the user, the data from the card is passed on to the host processor. The host processor thus uses this data to get the information from the card holder’s bank. Keypad – After the card is recognized, the machine asks further details like the type of withdrawal you prefer, your balance enquiry, and your personal identification number (PIN) and so on. Since each card has a unique PIN number, there is very little chance for someone else to withdraw money from your account. There are also separate laws to protect the PIN code while sending it to the host processor. So, the PIN number is mostly sent in encrypted form.
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If your pin number is correct the ATM makes the necessary transactions for the required amount. For this transaction, there are mainly four outputs. They are: Speaker – When a particular key is pressed, the speaker provides the feedback as audio. Display Screen – The questions asked by the ATM machine regarding the transaction and the input from the user is all displayed on the display screen. Each step of withdrawal is shown by the display screen. A CRT screen or even an LCD screen is commonly used as an LCD screen.
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Receipt printer – All the details regarding your withdrawal like the date and time and the amount withdrawn and also the balance amount in the bank is also shown in the receipt. Thus a paper receipt of the current transaction is obtained by the user. Cash dispenser – This is the central system of the ATM machine. This is from where the required money is obtained. From this portion the person can collect the money. Functions of the Cash Dispenser: As the whole mechanism is regarding the withdrawal of cash, the cash dispenser should be highly efficient. These are the main functions that are to be carried out by the cash dispenser. It is the duty of the cash dispenser to count each bill and give the required amount. If there are cases where the bills are stuck together they should be rejected and instead new notes should be taken. If the money is worn, or even folded, they will be moved to another section called the reject bin. All these actions are carried out by high-precision sensors. There may be cases where the sensors may go wrong. To know this, the person responsible for the machine checks the number of rejected notes at a certain interval. If the numbers of notes are a lot than expected, then it would indicate that either the quality of the bills is not good or there is a problem with the cash dispenser. A complete record of each transaction made by a particular ATM machine is recorded each day and is kept as a journal. This journal is later collected and then printed out at times. This information regarding the transaction is kept by the authorities for a period of 2 years. As there may be cases regarding a particular transaction going wrong, the account owner or also the bank officers have a right to see the transaction. With this printout the account holder can contact the host processor.
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ATM Networking: When a transaction is made, the details are inputted by the card holder. This information is passed on to the host processor by the ATM machine. The host processor checks these details with the authorized bank. If the details are correct, the requested cash by the card holder is taken with the help of an electronic fund from the customer’s bank account to the host processor’s account. After this function is carried out, the processor sends an approval code to the ATM machine so that the cash can be transferred.
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9. HOW TO USE AN ATM ATMs, standing for "Automatic Teller Machines", are an easy, convenient way to access your account from almost anywhere. If you're new to them, don't worry. It's easy. The instructions are right there, on the machine.
Steps involved in Depositing Money: 1. Be alert. As you approach the ATM, look around for other people. If it is night time, pick an ATM in a well-lit location. If using a drive-up ATM, pull up close to it so no one can see you enter your PIN (Personal Identification Number). If you are uncomfortable with the area or the people around the machine, find a different machine or use the machine some other time 2. Fill out a deposit slip, if needed. Take an envelope and prepare any deposits you will make ahead of time.
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Fill out a deposit slip, if your bank requires one, and include it in the envelope. Write the amounts of money you are depositing in the space provided. Write the total of all your cash on the first line.
3. Endorse your check.
To deposit a check, sign the back of the check ( called "endorsing" the check) with your name as it is written on the front. Depending on the rules of your bank, you may also write "for deposit only" and include your account number, as shown. Write the amount of each check on a line of the deposit slip. Beside it, write the "fraction". This number appears on the face of the check, often in the upper right corner near the check number. It tells your bank where the check came from. Add up the amounts you are depositing and write the number down where you can see it after you seal the envelope. Then, seal the envelope. 4. Insert your ATM Card into the machine. 5. Select a language. Note that this option often only comes up
where your card is
registered as being from another country, unless you live in a country or region with languages other than English are in major use. 6. Enter your PIN (Personal Identification Number), Then press Enter. 7. Select a transaction. 8. Deposit money. If you want to deposit (put in) money: 24
Enter the amount you will deposit. Confirm the amount. Insert the envelope into the deposit slot when the machine opens it. Note that some ATMs will not allow you to deposit money. In this case, you need to find one at a branch. Steps involved in Withdrawing Money: 1. Insert your ATM Card into the machine 2. Select a language. 3. Enter your PIN (Personal Identification Number), then press Enter. 4. Withdraw money. If you want to withdraw (take out) money, select or enter the amount to withdraw. Most machines dispense money in fixed amounts. You may be given a choice between common amounts or you may be asked to enter a number that is a multiple of 20 (20, 40, 60, 80, etc.). Take the cash when the door opens. Put it directly into your wallet. 5. Choose whether to do an additional transaction. Select Yes or No. 6. Choose whether you want a receipt, select Yes or No. Take the receipt if you requested it. 7. Wait while the system processes your transaction(s). When the machine beeps at you, take your card, cash, and receipt (if applicable). Always make sure that you have both your cash and your card. 8. Use the receipt to record the transaction in your check register or passbook
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10. USES OF ATM Cash Withdrawal and Balance Enquiry : In spite of a number of innovative services being made available at many ATMs, cash withdrawal stills remains the most accessed service at ATMs. However, the migration of routine bank transactions like cash withdrawals and balance enquiries from teller counters to ATMs significantly raises the potential for savings in employee costs and greater employee focus on value-added revenue-enhancing activities such as selling other financial products and advisory services to customers. Cash /Cheque Deposit : Again, due to the strong cash culture in India, cash deposits are most likely higher than in other markets, especially cash deposits made by commercial customers such as retail shopkeepers and those whose work involves substantial traveling. A high cash withdrawal rate results in higher ATM servicing costs due to frequent cash replenishment requirements. Recent developments in ATM technology have made it possible to recycle cash in ATMs. Currency notes received as cash deposits are counted; soiled notes separated and deposited cash dispensed to fulfill withdrawal transactions. However, regulatory concerns relating to identification of counterfeit notes
and
its
depositors
need
26
to
be
addressed
first.
ATM with Cheque deposit facility is not picking up in India, like other countries. One of the reasons is the delay in collection of the cheque deposited in ATMs. Cheque deposited in ATMs is to be collected and deposited in the designated branch for collection. Another reason is the introduction of cheque deposit Kiosks by various Banks especially Private sector ones. These are kept at each some important locations/branches where customers can deposit there cheques which are collected at intervals which may be difficult in ATMs. Bill Payments : Most utilities have inadequate infrastructure for receiving bill payments resulting in long queues at collection centres. Hence, bill payment at ATMs has achieved noticeable acceptance by bank customers. Most banks provide this service through bi-lateral arrangements with bill-payment service providers. ATM users register their water, electricity and telephone utility accounts with banks, check their dues at ATMs, approve bill payments that are debited to their bank accounts and receive printed receipts for the transactions. This service has the effect of improving customer satisfaction for both the bank as well as the bill-payment service providers. Some Banks’ ATMs even accept charitable contributions to Temples. Sale of Paper sled Products: ATMs are ideally suited to sell paper-based products and services such as tickets, wireless phone recharge cards, financial products, etc. The screen interface allows browsing and customization, access to bank accounts facilitate payments and printing capabilities produce the actual
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product/service. A number of banks including ICICI Bank, SBI and PNB have ATMs at Mumbai’s local railway stations to dispense season tickets to commuters. Own-bank customers pay no extra charge while other bank customers pay a fee of Rs. 50 for this extremely useful service of anytime ticket purchase. Railway season tickets represent a high-volume massappeal
product.
As
technical
standards
get
established
and
product/service sellers become aware of the ATM sales channel, nicheappeal high-margin products like entertainment tickets will join the fray. Kiosks: Information Kiosks has been introduced by many Banks and also by PSUs like Railways, Tourist centers etc. While the revenue-producing capacity of non-emergency type of information at ATMs as a stand-alone product is doubtful, many customers may be willing to pay a nominal fee for information having “impulsive” demand such as cricket scores while they wait for their transactions to be processed. To be sure, providing information, some
whether
customers
and
priced
or
increase
free, customer
will
appeal
to
satisfaction.
Union Bank has used technology to establish Village Knowledge Centers (VKCs), which have proved to be a success in the 198 centers, where they have been set up. VKCs empower the local rural population by giving them information on various vital inputs such as weather, fertilizers, prices of crops, etc. The bank is also operating financial education centers offering counseling at 51 of these VKCs.
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Third Party Advertising: In India, ATM advertising for third-party products is currently not allowed by Regulatory authorities. However, the wait time at ATMs can be effectively used by banks to promote their own brands, product and services. Furthermore, banks can tailor advertising messages based on customer information easily available in their accounting and CRM databases. Customer wait-time at ATMs while transactions get processed, typically between 10 to 25 seconds, has been profitably used by many banks for their own advertising. Money Transfers: Indians, who have migrated abroad or to cities, regularly use money orders and wire transfers to send money to their families back home. ATM growth, especially in rural India, will capture substantial business from the expensive wire transfer agents’ network and the customer-service lacking postal network. In line with international trends, ATMs can be made capable to dispense printed money orders or initiate wire transfers against a charge on customers’ bank accounts. After addressing regulatory hurdles, these services can even be made available to non-account holders through cash payments using the currency acceptors built into ATMs. ATMs can also facilitate the encashment of wire transfer amounts by allowing even non-account holders to withdraw cash based on Pin’s or previously mailed special-purpose ATM cards.
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Recharge Mobiles via ATMs: ATMs are also used to recharge mobile phones. Initiated in 2004 by ICICI Bank, now most ATM/Debit Cardholders are able to recharge their pre-paid subscriptions of most mobile service providers from anywhere in the country using their bank‘s ATMs or by sending a SMS. The amount for recharging the mobile phone would be debited from the subscriber‘s Bank account and the subscription would be directly recharged accordingly. The mobile top-up facility provides convenience on ATMs and through mobile phones using SMS.
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11.FRAUD PREVENTION (FOR CONSUMERS) Most ATM frauds happen due to the negligence of customers in using, and more importantly, negligence of banks in educating their customers about the matters that should be taken care of while at an ATM. The number of ATM frauds in India is more in regard to negligence of the Personal Identification Number (PIN), than by sophisticated crimes like skimming. Banks need to develop a fraud policy – the policy should be written and distributed to all employees, borrowers and depositors. The most important aspect for reducing ATM related fraud is to educate the customer. Here is a compiled list of guidelines to help your customer from being an ATM fraud victim: Look for suspicious attachments: Criminals often capture information through ATM skimming – using devices that steal magnetic strip information. At a glance, the skimmer looks just like a regular ATM slot, but it‘s an attachment that captures ATM card numbers. To spot one, the attachment slightly protrudes from the machine and may not be parallel with the inherent grooves. Sometimes, the equipment will even cut off the printed labels on the ATM. The skimmer will not obtain PIN numbers, however. To get that, fraudsters place hidden cameras facing the ATM screen. There‘s also the helpful bystander (the criminal) who may be standing by to kindly inform you the machine has had problems and offer to help. If you do not feel safe at any time, press the ATM cancel button, remove your card and leave the area immediately.
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Minimize your time at the ATM: The more time you spend at the ATM, the more vulnerable you are. If you need to update your records after a transaction, one is advised do it at home or office, but not while at the ATM. Even when depositing a cheque at the ATM, on should not make/sign the cheque at the ATM. After the transaction, if you think you are being followed, go to an area with a lot of people and call the police. Make smart deposits: Some ATMs allow you to directly deposit checks and cash into your accounts without stuffing envelopes. As for the envelope-based deposits, make sure they go through – if it gets jammed and it doesn‘t fully go into the machine, the next person can walk up and take it out. After having made the ATM deposit, compare your records with the account statements or online banking records. Avoid using ATMs at night: While robberies are less prevalent than fraud at ATMs, there‘s still risk, especially at night. And if you have to use an ATM late at night, use one at a bank itself. Financial institutions have to follow certain guidelines and regulations as far as lighting is concerned. They also have cameras on all the ATMs. Be aware of your surroundings: Before you slide your card into the machine, look around if the area appears safe or if there is anybody who can see the PIN pad. Having the card ready before entering is ATM premises is better than searching for it though the purse at the machine. While you are fumbling with a wallet or purse, you are easy prey for a thief. A good rule of thumb is to 32
always shield your card, no matter how comfortable you are with the place. If your card is stuck inside an ATM, be suspicious of anyone offering
help.
Immediately
report
the
incident
to
the
bank
Keep your receipts and card before leaving the place: Before you leave the machine, make sure you have your card. Also, do not leave your receipt behind at the ATM. Keep copies of your receipts and compare them with your monthly statement. As much as 83 percent of all ATM and debit fraud results from stolen cards and discarded receipts bearing card/account numbers. Memorize your PIN: Many cardholders walk up to an ATM and pull out a piece of paper containing four numbers. If you are not sure, make it a point that you don’t keep the PIN and ATM card together in your wallet – If someone comes up and hits you over the head, they‘re going to have all your information right there. But ideally, one should never write down the PIN number – it should be memorized. Never disclose your PIN to anyone: Even bank officials do not require an ATM PIN – neither to process an issue involving ATMs, nor to remove a card stuck in the machine. Always change the PIN as soon as you receive it. Preferably, change it every quarter. This habit will also help remind you of changing the PIN if you find a suspicious activity.
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Never provide information via e-mail: About 3.5 percent of ATM and point-of-sale debit fraud originates from ‘phasing’ e-mails. Phi hers attempt to obtain information about your bank account by asking for your PIN, account number and personal information. Much like ATM skimming equipment, these e-mails appear legitimate. If you click on a link, you will be sent to a Web site that looks exactly like the one the phi hers are imitating. Reputable companies do not ask for information through e-mail. If you receive one of these emails, inform the organization. And if you believe your accounts have been compromised, inform your financial institution and cancel the account.
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12. ADVANTAGES AND DISADVANTAGES ATM Advantages : • Ability to draw cash outside normal banking hours. • Cheaper where bank charges are incurred and often quicker than using normal cashier services. • Does not just operate as a medium for obtaining cash. • Amount up to a set limit per day is available. • All customers can apply for the joint accounts two separate cards can be issued. •
Although ATMs are primarily located on bank premises, some are available elsewhere.
• Where an incorrect PIN is used several times in succession (say where a thief has stolen the card),the ATM will retain the card. • ATM service is available for 24 hours a day,7 days in a week. • It helps to check the balance in an account. • It is easy, saves time of customers.
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ATM disadvantages : •
If person who does not have sufficient
money in its account, then in this case the ATM may not recognize his card. •
May be ATM’s may not be situated near
by when it is urgently required. •
If some one watches or hacks ATM
machine then details of customers can be misused. •
Banks have maintained a limit of Rs
10,000/- per transaction. This information is displayed on the ATM. The maximum limit is Rs.25000/- per day. No one can withdraw money beyond this limit.
36
13. ATM CARD V/S DEBIT CARD Although both these cards serve the same purposes, most of the banks favour in the issue of credit cards. When you purchase something with a debit card, the money is automatically deducted from your savings account. This is different from the way a credit card works. For a credit card, you get a monthly bill for the amount you have spent. You can take money directly with the help of an ATM card. But, with a debit card, you can only purchase things. You can use ATM cards for some direct purchase as well, but it is limited. Debit cards can be used in different fields like grocery stores, hotels, booking tickets, pharmacies and so on. As credit cards are easier to use, some hotels and rental services often do not accept debit cards. Credit cards also bring in lesser risk and are also cheaper. There is a difference when using a credit card and a debit card when checking into a hotel. In the case of a credit card, the original amount will be billed in your account. When a debit card is used, a certain amount of money which includes the cost/rent of the room and an additional amount which may be a percentage of the total fee will be kept as an “on hold” bill in your bank account. The additional money is kept as a precaution as a damage money. When you check out of the hotel, you will be billed the original amount of your stay. But the difference between the “on hold” money and your actual money will be released back to your account. 37
The next difference comes in the way you bill the amount. If it is a debit card, you will have to enter your unique pin number. If it is a credit card, you will have to sign a slip. Some banks even put a fee for your debit card. There is also a difference in appearance between an ATM card and a debit card. A debit card has the users name, the company’s logo, the bank’s logo and also written “Check card” in front of it. An ATM card, on the other hand has the user name, account number and also the bank logo. Both the cards have a common strip on the back of the card, so that the user can sign on it.
38
14. SCOPE OF ATM IN INDIA Automated Teller Machines (ATMs) have gained prominence as a delivery channel for banking transactions in India. Banks have been deploying ATMs to increase their reach. As at the end of December 2007, the number of ATMs deployed in India was 32,342. From first day of April 2009, entire ATM network is now available to customers from any bank for transactions for no fee at all, irrespective of the banks in which they have their accounts, Now Customers will not be levied any fee on cash withdrawals using ATM and debit cards issued by other banks. This will in turn increase usage of ATMs in India More people are now moving towards using the automated teller machines (ATM) for their banking needs. According to a survey by Bank net India, 95% people now prefer this modern channel to traditional mode of banking. Almost 60% people use an ATM at least once a week Increased ATM usage is also helped by the fact that customers have now the flexibility of using ATMs of other banks, as most of the banks are part of major interbank networks like National Financial Switch (NFS), Mitr, BANCS, Cash tree and Cash net. The interbank networks have brought together ATMs of several banks so that consumers would gain access to any of the participating banks’ ATMs. Banks find it cheaper to pay membership fees to these networks as against setting up additional units in expensive-to-deploy areas. ATMs are now seen to be more than mere cash dispensing machines. Customers use ATMs to recharge their mobile phone pre-paid connections, pay their utility bills, even mutual fund transactions – 39
making them at par with flexibility given in internet banking – only more secure. Of the value-added services provided at ATMs, bill-payment is the most used service, followed by prepaid mobile talk-time recharges. However, still about one third of the respondents do not use any value added services at ATMs. The ATM market in India is not yet saturated. Though the concentration of ATMs is greater in metros, the demand is increasing for other cities and even rural areas. ATM's per million people approximately is 33 units is very low. Experts forecast that the growth rate is expected to grow 18 percent up by 2013. Banks going into a self service model can have huge saving potential for banks and may also increase the convenience for the customers. Many ATM vendors have devised specialized machines, embedded with biometric devices for authentication. Catering to the rural population, these machines have enabled them to interact with the machine in their local language and on a graphical user interface. The rural customer has seemed to accept this new medium. This has the potential to further widen the scope of ATM usage in the interior parts of the country. There is also interest towards white-label ATMs. Many companies are interested in this model, where the ownership of the ATM will not be with the banks but with third parties who deploy them and make money on fees charged on every transaction. The concept is prevalent in the American continent Wide acceptance of ATMs by consumers, introduction of biometric ATMs, and increasing scope of value-added ATM services will maintain growth in the industry.
40
15. ANALYSIS OF BANKS HDFC BANK With over
4,393 ATMs present across India, you can withdraw
cash and do much more at HDFC Bank ATM. The sophisticated, computerised network gives you the flexibility of accessing your account. Features & Benefits: •
24-hour access to Cash.
•
Personalised Cash Withdrawals.
•
View
Account
Balances
&
Mini-
statements. •
Change ATM PIN.
•
Order
a
Cheque
Book
/
Account
Statement. •
HDFC Bank Credit Card Payment.
•
Deposit Cash or Cheques.
•
Transfer Funds between accounts -
Transfer money between your accounts. Both accounts must be linked to your ATM / Debit Card. Maximum of 16 A/cs (Savings /
•
Current) can be linked to a card. •
Refill your Prepaid Mobile.
•
Pay your Utility Bills.
•
Cheque Status Enquiry.
•
NetBanking Password Request. 41
Difference between ATM and Credit card: An ATM Card is different from a Credit Card. Using your ATM Card, you can access your account and carry out most of your banking transactions, round the clock. But you cannot shop with your ATM Card. Also, unlike a Credit Card, your ATM Card prevents you from over-extending yourself by permitting you to withdraw cash only as long as there is money in your account. Finally, if you withdraw cash using a Credit Card, you will be charged a service fee, whereas using an ATM Card does not attract any charges. Necessary to maintain minimum balance: It is necessary to maintain any minimum balance in the account for using the card. One can only withdraw to the extent of the balance in the account. Fund transfer option at the ATM : In order to use the Funds Transfer option, you must have more than one Savings (single, either or survivor) or sole proprietorship Current Account with the bank. You need to make a request at any of our branches or on PhoneBanking to link your accounts to your Card. Once the accounts are linked to your ATM Card, you can use the Funds Transfer option. Charge on ATM transaction:
42
HDFC Bank does not charge on its customers who maintain the required AQB or on other Bank customers for using their ATM. For customers of HDFC Bank who have not maintained the required AQB in the previous quarter, all inter-city cash transactions will be levied Rs 1.50 per Rs 1000, minimum Rs 25.
Cards that can be used at HDFC ATM: 1. American Express : Charge/Credit Cards. 2. Cirrus: MasterCard Credit Cards - Domestic/International (of domestic, currently only Citibank, Standard Chartered and ANZ MasterCard Credit Cards can be used at our ATMs). Cirrus ATM Cards - Domestic/International Maestro
Debit
Cards
-
Domestic/International
(of
domestic
Cirrus/Maestro Cards, currently only Citibank Maestro/Cirrus Cards can be used at our ATMs) . 3. Plus: VISA Credit Cards - Domestic/International (of domestic, currently only Citibank, Standard Chartered, HSBC and ANZ can be used at our ATMs) Plus ATM Cards - Domestic/International VISA Electron Debit Cards - Domestic/International Note: All cards which can be used at HDFC ATM need to have a Personal Identification Number (confidential code) for ATM access. This is issued by the Bank issuing the Card. Limits and parameters are set by the Card issuing Banks regarding amount of cash withdrawal, withdrawal limit, number of PIN log-in attempts, transaction set allowed and declines. 43
HDFC Bank ATM Card can only be used at our ATMs. Cash advance / Cash withdrawal limit : HDFC Bank customers can withdraw up to Rs.10,000/- per day. For non-HDFC Bank customers, the limit is as decided by the bank issuing the Card.
Liability incase an ATM / Debit card is lost or stolen : For doing an ATM transaction, two things are required; an ATM / Debit card and PIN, which is known only to the customer. In case your ATM /Debit card is lost/stolen, any transactions taking place using the card on an ATM is the result of you compromising your PIN which should have been known only to you and no other person. Thus in such a scenario you are liable for the loss incurred due to the transaction happening on the ATM. However, there is 'Zero Liability' applicable for Debit cards only on fraudulent Point of Sale Transactions and not ATM transactions. Card lost or stolen: In case card is lost / stolen, as first step you need to block your card in order to avoid any fraudulent transaction happening from your account. For blocking card you need to either : •
Call up your local HDFC Bank Phone
Banking No. Log onto HDFC Bank NetBanking and
•
block the card using the option of 'Hotlisting' under 'Debit Cards'. 44
•
Visit your nearest HDFC Bank Branch.
If ATM card get stuck inside the HDFC Bank ATM : •
Log a complain with the local HDFC
Bank PhoneBanking Number Visit your nearest HDFC Bank Branch.
•
You can request for card to be delivered either at the mailing address which you have given to the Bank or at the nearest branch where you will have to collect the same in person.
IF ATM card get stuck inside any other bank ATM : In case HDFC Bank card gets captured inside any other Bank's ATM machine you are requested to block your card immediately by either Calling up the local HDFC Bank . In case ATM pin is forgotten by card holder: One can place the request for regeneration of ATM PIN either Calling up the local HDFC Bank PhoneBanking Number Charge incurred for regenerating ATM PIN : One will be charged Rs.25/-(exclusive of taxes) towards regeneration of the ATM PIN.
45
IDBI Bank Meaning of ATM : Automated Teller Machine is a computerized machine that provides the customers of banks the facility of accessing their accounts for dispensing cash and to carry out other financial transactions without the need of actually visiting a bank branch. Types of card used : The ATM cards/debit cards, credit cards and prepaid cards (that permit cash withdrawal) can be used at ATMs for various transactions. Transaction at ATM : For transacting at an ATM, the customer insert (swipe) their card in the ATM and enter their Personal Identification Number (PIN). Services and Facilities : In addition to cash dispensing ATMs may have many services/facilities such as: •
Account information
•
Cash Deposit 46
•
Regular bills payment
•
Purchase
of
Re-load
Vouchers
for
Mobiles •
Mini/Short Statement
•
However, if the card is used at an ATM
of any other bank, the customer would be able to do only cash withdrawal and balance enquiry transactions. Uses of ATM card at any bank of country : The cards issued by banks in India should be enabled for use at any bank ATM within India.
Personal Identification Number(PIN) : PIN is the numeric password for use at the ATM. The PIN is separately mailed/handed over to the customer by the bank while issuing the card. This PIN has to be reset to a new PIN by the customer. Most banks force the customers to change the PIN on the first use. In case one has forget his Pin or card is sucked by the ATM : The customer may contact the card issuing bank branch and apply for issuance of a new card. This procedure is applicable even if the card is sucked in at another bank's ATM. Card lost or stolen : The customer may contact the card issuing bank immediately on noticing the loss so as to enable the bank to block such cards. Minimum and Maximum cash withdrawal limit per day : Banks set limit for cash withdrawal by customers.
47
The cash withdrawal limit for use at the ATM of the issuing bank is set by
the
bank
during
the
issuance
of
the
card.
For cash withdrawals at other bank ATMs, banks have decided to maintain a limit of Rs 10,000/- per transaction. This information is displayed on the ATM. The maximum limit is Rs.25000/- per day. Service fees charged for use of other bank ATM : No charges are payable for using other bank's ATM for cash withdrawal and balance enquiry, as RBI has made it free under its "Free ATM access policy" since April 01, 2009. But banks can restrict the number of such free transactions to a maximum of five per month. For transactions beyond this minimum number of transaction, banks charge maximum of Rs 20/- per transaction.
In case, during the cash withdrawal process cash is not disbursed but the account gets debited for the amount : The customer may lodge a complaint with the card-issuing bank. This process is applicable even if the transaction was carried out at another bank's ATM. Days required by the bank to re-credit the account for such wrong debits : As per the RBI instructions, banks may re-credit such wrongly debited amounts within a maximum period of 12 working days from the date of receipt of the customer's complaint. Customers eligible for compensation for delays beyond 12 working days : Effective from July 17, 2009, banks shall have to pay customers Rs 100/- per day for delays beyond 12 working days. This shall have to be
48
credited to the account of the customer without any claim being made by the customer. In case of compensation is not credited as mandated : For all such issues, customer may lodge a complaint with the bank and if the bank does not respond, the customer may approach the local Banking Ombudsman
16. CONCLUSION In this era of growing competition among the banks, ATM’s have played a vital role in helping the bank to sustain in the market. The ATM’s have gained worldwide popularity within a few years. ATM machines are easy to operate and hence, attract more and more customers. There are quite of innovations, which are being taken place in the ATM machine. The locations of ATM’s are the key location of any particular area. ATM’s is a form of easy banking. The aim of banks of setting of ATM’s is to cater to the needs of the customers. The flexibility of the ATM’s has increased so much that now-a-days, have been reached the doorsteps of the customers. The customers using the ATM machine are satisfied with the service and have very less complaints about the machines. 49
Thus the ATM’s i.e. any time money machine has fulfilled the customer’s needs to its greatest extent. In the near future the banks have also promised to come up with new innovations in the ATM’s.
17. BIBLIOGRAPHY Books:New concepts of banking By – S.S. Kaptan Virtual banking revolution By – James Essinger Banking law and practices By – P.N. Varshney Websites:www.idbi.com www.hdfc.com www.google.com 50
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