ATM and Cash Deposit Machine

ATM and Cash Deposit Machine

[ From chapter-10 of the book "Information Technology in Banking" written by Abul Kashem Md. Shirin and Nusrat Tamanna Prianka and published by Institute of Bankers, Bangladesh (IBB) ] 

1.         Automated Teller Machine (ATM)

ATM is used for cash-delivery operations with plastic cards. Besides, the ATM allows the holder of a card to receive the information on the current status of the account (including an extract on a paper), and also to transfer money from one account to another. Obviously, the ATM is supplied with the device for reading a card, and with the display and the keyboard for interaction with the card-holder. The ATM dispenser is equipped with the personal computer which provides management of a cash dispenser and the control of its status. The last is rather important, as the cash dispenser is storehouse of cash. Monetary denominations in an ATM are placed in cartridges which are in the special safe. The number of cartridges defines number of the denominations which are given out by an ATM. At present the majority of models is designed for job in on-line mode with magnetic strip cards as well as smarts cards. For maintenance of communication functions ATMs are equipped with modems or LAN Card.

           

The use of ATM in Bangladesh is limited to urban cities only. Most of the ATMs are installed in Dhaka, Chittagong and Sylhet cities. However, the number of ATMs is increasing rapidly, the number increased from 100 in 2003 to 1900 in 2010. Out of 1900 ATMs, Dutch-Bangla Bank installed 1200 ATMs alone. Next large ATM acquirers are BRAC Bank and Q-Cash network with more than 200 ATMs each.

1.1.      Services from ATM

The cardholders can perform many banking activities using an ATM as listed below:

•         Cash withdrawal

•         Cash / Cheque deposit

•         Fund transfer from one account to another

•         Balance enquiry

•         Printing Statement of account

•         Cheque book request

•         Utility Bill Payment

1.2.      How ATM works?

All ATMs are connected to a Switching Software at Data Centre of the Bank. When a card is inserted into the ATM, the card reader reads card number, date of expiry, banks identification number etc from the Meg-stripe or Chip of the card, take user input for PIN and amount to be withdrawn, and passes these information to the Switching Software.

                       

The Switching Software then checks if the card is a on-us or off-us. If on-us and the card is a debit card, the Switching Software checks the validity (card number exists in the database, date does not expire etc), status (not a stolen or hot card) and PIN of the card. If all the checks are passed, the corresponding account number and amount are passed into the Core Banking system of the Bank with a request to make debit in the account. If the Core Banking System found adequate balance in the account and the account is otherwise operative, it debit the account for the amount, and send a authorization code  to the ATM via Switch. ATM, then count the money and present to the customer.

If on-us and the card is a credit card, the Switch does not check anything but passed the information to the Credit Card System. The Credit Card System checks the validity (card number exists in the database, date does not expire etc), status (not a stolen or hot card) and PIN of the card. If all the checks are passed, and the Card account has sufficient available credit limit, the Credit Card System debits the card account for the amount, and send an authorization code to the ATM via Switch. ATM, then count the money and present to the customer.

If the transaction is not on-us, the Switch checks if the transaction is made by a cardholder of a partner bank. The partner banks share the ATM network for a mutually agreed interchange fee and thus establish a direct connectivity between them. Thus the transactions are passed directly to the partner banks without routing through payment association (MasterCard, VISA, Dinar Club, Discover, JBC network. This arrangement can avoid payment of higher interchange fee between the banks as imposed by the payment association, and also the network use fee payable to the payment association.

The Switching Software of the Partner Bank verifies the card validity, status, PIN etc and obtains authorization code from the Core Banking System (if debit card) or Credit Card System (if credit card) and passes this code to the ATM via Switch of the acquiring bank.

If the transaction is not on-us and the card does not belong to any of the partner banks, it forwards the transaction to the appropriate payment association. The payment association forward the transaction to its member bank, the Switch of which verifies the card validity, status, PIN etc and obtains authorization code from its Core Banking System (if debit card) or Credit Card System (if credit card) and passes this code to the ATM via payment association and Switch of the acquiring bank.

                       

If the authorization code is positive, the ATM counts the money and present to the customer.

1.3.      ATM Specifications & related topics

1.3.1    ATM specification

ATM Types: In Bangladesh two types of ATMs are available - Lobby type and Through-The-Wall type. The Lobby type ATM requires small space to install, whereas the Through-The-Wall type of ATM requires large space with two compartments in a room. Front part is used for customers and has a separate door and Air conditioning (AC) system. The back side is machine room and also has a separate door and AC. The cash is loaded from the rear side. In case of a Lobby type ATM, cash is loaded from the front side of the ATM and requires only one room with one unit of AC.

ATM Manufacturers: The top three brands of ATMs are: Diebold, NCR and Wincor-Nixdorf manufactured by Diebold, NCR and Wincor respectably at their plants in Singapore, China, Europe and USA.  The available models in Bangladesh are: NCR – Persona 77 and Self Serv 22; Diebold – 64ix, 71ix, Opteva 520, 720, 522 and 510; Wincor-Nixdorf – Procash 1500 xe and Procash 1500 xe USB.

           

Figure: A NCR ATM, a Diebold ATM and a Wincor-Nixdorf ATM

 

Computer: Each ATM has a computer in it. A latest processor is used for the computer such as: Intel Pentium IV, 2.8 GHz or Inter Core 2 Duo 2.13GHz. One GB RAM, 80 GB HDD, CDRW, 10/100 Base T Ethernet USB, Ethernet Adapter are integrated with the computer. The computer starts the ATM, stores journal records electronically, and communicate with the Switch using TCP/IP on leased line, ISDN, CDMA, GSM and V-SAT network with 3DES chip Encryption / verification / validation.

Display: 12” /15” / 17” color display – LCD or Touch Screen.

Card Reader: The card reader is very important parts of an ATM. It reads the customers card either from meg-stripe or from the Chip (if EMV card). The features and capability of a card reader are as follows:

1.   Motorized Card Reader capable to read Magnetic stripe card & capable to read Smart Cards, Chip Cards, HYCO Cards

2.   Capable to read track 1, 2 and 3, having adherence to ISO standard of Master/VISA, EMV (latest version) standards and any other standard formats

3.   Capability to write on card chip

4.   Card return on power failure

5.   Conformance to VISA and MasterCard standards

6.   Sensing gate to prevent wrong insertion of card or to prevent and protect from foreign objects other than valid cards

Protocol: Two protocols – NDC+ and D912 are used to communicate with the switch.

Key Pad: Encrypted / EPP (PCI Compliant) Standard keyboard with functional keys are used with ATM.

Printers: Two printers – a Consumer Printer and a Journal Printer are provided with an ATM. The consumer printer prints the slip after every transaction for the customers whereas the Journal Printer resides inside the ATM and prints all the transactions with fail / successful status. The disputes on cash delivery can be identified from this journal.

Dispenser: Dispenser is an unit which counts and dispenses money. Dispenser uses vacuum pick (for NCR & Wincor) or Friction Pick (Diebold) technology for counting and dispensing money.

Security: ATM vaults are provided with dual combination lock, as two officers are required to open the vault. The safe is available in 2 standards – UL291 and CEN. CEN is stronger than UL291.

Passbook and Statement printing option: The ATM may have additional features for printing passbook and account statement.

Cash Deposit Option: ATMs can have cash deposit option. The cash may be deposited in envelope or as bundle. If cash is deposited in bundle, the ATM counts the cash in different denominations and re-fills the dispensing cassettes. This type of ATMs are called Re-Cycle ATM.

1.3.2.   Denomination available at ATM

Number of denomination available in ATM depends on the number of cassettes that can be inserted in an ATM. If there are provision for housing 4 cassettes in an ATM, 4 types of currency notes can be loaded. However to avoid frequent cash loading, the banks are normally provide only one or two denominations in the ATM, like Taka 1000 notes in 2 cassettes and Taka 500 notes in another 2 cassettes. A cassette can hold 2000 notes. Thus if two cassettes are loaded with Tk.500 notes and another 2 cassettes with Tk.100 notes, total amount of taka that can be loaded into ATM at a time is Tk.2.20 million.

1.3.3.   Cash feeding by 3^rd party

With a size of 1000 ATM and 1 million cards, a bank needs to load Tk.500 million everyday in the ATM. As the quality of note in our country is not good and note contains holes, it is required to check all the notes one by one, reject the bad notes manually and then arrange the notes in such a way that the hole of two adjacent notes fall in two opposite sides. This requires a huge manpower every day. Thus this job is outsourced to 3^rd party.

1.3.4.   Partial Dispense of Cash and non-dispense of cash

Sometimes due to error in dispenser or bad note quality, the ATM can’t count all the notes requested by the customer. In such case ATM either dispenses part of the money or none. In such a case, normally the ATM sends a reversal request to the authorizer via Switch and the authorized credit the non-dispensed amount into the customer account.

Sometime, the reversal also fails and thus customer finds less money in his account. The cardholder, in such case, must report to the card issuing bank. The cardholder is not known to the acquiring bank, acquiring bank does not have access to the customer account, and thus they can’t take any action in this regard.

1.3.5.   Capture of money

After money is presented to the customer, the ATM beeps and waits for 45 seconds (configurable). If the customer does not receive money within this time period, the ATM captures the money and keeps in a cassette. If the money is captured, it should be reported to the Acquiring banks.

1.3.6.   Network used for connectivity

The ATM requires a small bandwidth to complete a transaction, only 16 Kbps. Thus any type of communication media can be used for ATM transaction. Most easy and cheap media for ATM transaction is mobile data network such as Zoom of CityCell and Edge of Grameen Phone. However the modems available are for home use, not for 24 hour’s continuous use, and thus they frequently goes out of order and thus uninterrupted ATM services become a challenge if mobile data network is used.

1.3.7.   Card Capture and hot card

For security reason, if a cardholder inserts wrong PIN 3 times, the ATM captures the card and the card become hot. In such case the customer should report to his home branch. The cash loading team, during their next visit, will collect the card and send to the cardholder’s home branch. If a hot card is inserted into the ATM, the ATM will capture the card immediately. Therefore it is required to call to the help desk of the bank and make the status of the card normal before using a hot card. During your call the bank officer may ask you several questions to be sure that you are the right person and thus the card is with the proper person and thus can be make normal. Other reasons for capturing cards are: power failure (or UPS backup exhausted) at ATM, card was blocked earlier, problem of cards reader of the ATM.

1.3.8.   Space requirement for installation of ATM

•         Lobby type ATMs

•         Minimum 6’ X 9’

•         Suitable for installation on the lobby like airport, international hotels, super markets, Rail Station etc.

•         Also suitable for off-side locations

•         Through-The-Wall ATMs

•         8’ X 15’ (4’ for machine in the middle, 4’ for cash replenishment & servicing at the back side, 4’ as customer area at the front side and 3’ for queue)

•         Suitable for off-side locations

1.3.9.   One-time and monthly expenditure for an ATM booth

The one-time investments in an ATM booth are as follows:

·         Price of ATM

·         Advance to the landlord

·         Price of UPS, CCTV, Air Conditioner

·         Cost of construction of booth, signage and decoration

The monthly recurring expenditures are as under:

·         Rent of the booth

·         Electricity cost

·         Salary of 3 Security Guards in 3 shifts

·         Cash sorting and feeding

·         Link charge

·         Maintenance charge for ATM, UPS, CCTV, AC and booth

·         Proportionate Switching System cost

·         Proportionate Data Centre manpower cost

The one-time cost may vary from Taka 2.00-2.50 million and the monthly recurring cost may vary from Taka 60,000 - 70,000 per ATM.

1.3.10. Income from an ATM

Normally there is no transaction fee for the on-us transaction at ATM. However for the off-us transactions, the Acquiring Bank receives Tk.12-40 for local transactions and USD1.00-1.25 for international transactions. This is called local and international ATM interchange fee respectively, and determined by the respective payment associations. Annual fee on the debit card charged to the cardholders may also be considered as fee income.

1.4.      ATM Fraud and remedy

ATM fraud throughout the world has increased significantly over the past few years and is becoming more sophisticated, incorporating technologies to record ATM card and PIN information. 

ATM fraud generally comes in two varieties:  card-reading devices and card-trapping devices.  

1.4.1.   Card Reading Devices

Criminals alter the ATM itself by adding a skimming machine and a mini-camera to it. The skimming device, mounted on the card entry slot, reads the bar code of the card. The mini camera records PIN as the cardholder enters his PIN. After the cardholder completes his transaction, receive card, and walk away, someone else has his card information and his PIN. Usually, the Fraudster makes a new card and uses it to withdraw money from the customer’s account. The skimming devices are not always easy to spot, especially if the customers are unfamiliar with the look of ATMs.

1.4.2.   Card-Trapping Devices

An alternative form of altering the ATM itself involves inserting a thin ribbon of x-ray tape into the card slot. The loop traps the customer’s card and makes it seem as though the card is not working. At this point, someone else, a Fraudster comes along and tells the cardholder that he (cardholder) can retrieve his card by re-entering his (cardholder’s) PIN code. The Fraudster watches while the cardholder does so. After the card still refuses to emerge and the cardholder walks away from the ATM, the Fraudster removes the device with the card, which he then uses to withdraw money from the cardholder’s account.

In order to prevent becoming the victim of such scams: 

·         Avoid ATMs where the card slots appear to have been mounted on the machine. Card entry slots should be flush with the surface of the ATM or recessed from it. If you see a card entry slot that is raised above the machine, it should raise your suspicions and you should not use it.

·         If you find it awkward to read the screen or enter your PIN, do not use the machine. It may have been altered. Legitimate displays are never mounted in front of ATMs. Anything that blocks or partially obscures a sign may house a camera.

·         Guard your PIN, especially when entering it, by shielding the keypad with one of your hands.

·         If a machine swallows your card, call the bank’s help desk and report it.

·         Change your PIN from the original number given when you first got your card. Do not keep your account number and PIN together.

2.         Deposit Machine

A deposit machine is a machine installed by a Bank and used by the customers for depositing money into it. Deposit machine is also called as KIOSK. A deposit machine may have a card reader. If a cardholder sweep his card before making a deposit, he does not require to type his account number or card number. The Deposit machine can recognize the customer. The amount to be deposited is inserted into a closed envelope and dropped inside the machine. The amount deposited needs to be key-in using the keyboard of the deposit machine.

Some time, the amount key-in and the physical amount inserted inside the envelope may vary. The envelopes are opened by a team within the coverage of CCTV. If dispute arises, the decision of the team (bank officials) will be final. However if the customer disagree, the customer can view the CCTV record.

However some banks, to avoid such disputes, engaged bank officers at each of the deposit machines to ensure amount inside the envelope. The envelope should be signed by both the officer and the customer.

The important part of a deposit machine is vault, its specifications (UL or CEN) and its note capacity. The vault capacity can be as large as to accommodate 700 envelops containing 500 notes in each Envelope.

The deposit machine is also equipped with a computer, monitor and software.

Locally manufactured deposit machine are available in Bangladesh.

3.         Fast Track

Fast Track is an unique concept developed by Dutch-Bangla Bank for its customers. The following are installed in a Fast Track:

·         Several numbers (5-15) of ATMs

·         Several number (1-3) of Deposit machines

·         One officer each for two shifts

·         Several UPS

·         Links for several network providers

ATMs are normally become out of order due to the following reasons:

·         No link with the bank server

·         No money inside the ATM

·         Cash jam due to soiled note which prevent withdrawing money by the next customers

·         ATM hardware problem

·         UPS is out of order

·         No electricity

To arrest all the above problems, Dutch-Bangla Bank has installed Fast Track. BRAC Bank and Standard Chartered Bank have also installed similar Centers with the same concept, but with different name.

The activities of a Fast Track are mentioned below

a) Cash Withdrawal:

Customers can withdraw money from any of the 5-15 units of ATMs installed at Fast Track. The ATMs are powered from different UPS and linked to Data Center through various link providers which created redundancy for power failure and network problem. Again due to multiple ATMs at Fast Track, further redundancy has been ensured for ATM disorder, Cash shortage and Cash jam. This ensures that a customer will be able to withdraw money from ATM at Fast Track without failure. On the other hand, presence of an officer at FT helps the customer to solve any ATM related problem such as Cash/Card capture.

b) Cash Deposit

A customer can deposit money at Fast Track and avoid a long queue at the branch counter for depositing money. The customer can also get service for the extended hours from the Fast Track for depositing money. The official on duty at Fast Track receives cash or cheque from the customers, counts, inserts into an envelope, closes the envelope, and puts a sign on it. The customers also sign on the envelope and drop it into the deposit machine.

c) Account Opening

The officer on duty assists the customers to fill the account opening form, receives the filled-in form along with necessary papers and sends the form to the nearest branch for opening the account observing due formalities. The customer can receive his deposit book and Card and/or PIN, and Cheque Book (if requested) within 3 working days from the Fast Track.

d) Customer Request Form

Various customer request forms are available at Fast Track. The duty offers provide the appropriate form to the customer, assist to fill-in the forms, receive the form from the customer and send to the relevant Division of the Head Office or branch for execution of the customer's request. A list of such services is given below:

i) Customers can fill-in a “Account Transfer” form and hand over to the Fast Track officer for fund Transfer to another account

ii) Customers can fill-in a “New Card” form and hand over to the Fast Track officer for getting a new Debit Card (MasterCard Debit / Maestro / Visa Debit/Visa Electron) or Credit Card (MasterCard / Visa)

iii) Customers can fill-in a “Card Replacement” form and hand over to the Fast Track officer for getting a replacement Card (Debit/Credit) for any of the following reasons:

• Card Lost / Stolen

• Incorrect name / spelling mistake on card

• Wrong photograph on card

• Card is physically damaged

• Magnetic Strip error/Faulty card

• Any other reason acceptable to Fast Track Officer

iv) Customers can fill-in a “Block/unblock Card” form and hand over to the Fast Track officer for blocking his Card / for reactivation of a blocked Card. Card may be blocked for any of the following reasons

• Incorrect PIN entered at ATM or POS terminal

• Customer blocked the card over a phone request to the Card Center

• Any other reason acceptable to Fast Track Officer

v) Customer can place a request for re-issue of PIN. Re-issue of PIN may be requested by a customer who have forgotten his PIN or in the fear that his PIN have been compromised to another person.

vi) Customer can place a request for linkage of a new account with his exiting card

vii) Customer can place a request for the following services on Credit Card account:

• Auto debit

• Increasing card limit

• Limit transfer

• Obtaining Supplementary Card

• Early renewal

• Cancellation

• Card Cheque

• Any other service acceptable to the Fast Track Officer

viii) Customer can place a request for refund of Cash not dispenses from ATM but account debited.

ix) Customer can submit application form for availing Internet, SMS & Alert facility on bank account

e) Delivery of Captured Card

If a Card is captured into an ATM at the Fast Track, the duty officers open the upper chamber of the ATM and deliver the captured card to the cardholder instantly after checking his photograph and signature recorded at the back of the card.