How can you use your time in the ATM queue to your advantage? Here’s an exercise: imagine you have X-ray vision, and try to trace the entire path the bills take inside the machine.

To make it easier for you to navigate, here’s a post about the rich inner workings of the ATM. We tell you about the mechanical part and a little bit about the connection to the banking information loop. All those who are curious are invited under the hat.

From wallet to ATM

ATM models from different manufacturers may differ in details, but conceptually they all consist of the same key assemblies. The first to encounter money is the receiver – the same compartment for banknotes with a protective shutter.

The diagram shows the nodes that are inside and outside most ATMs

Old-fashioned people probably remember the ATMs that took money one bill at a time. Now it’s a rarity.

From the deposit compartment, the cash goes into the transport mechanism of the receiver. The specific implementation of the transport depends on the manufacturer. As a rule, it is a system of moving belts, feeding and guiding rollers.

One bill at a time goes into the validator. Its task is to check the denomination, currency and authenticity. To do this, the validator has a double-sided scanner, a set of sensors and electronic templates of all banknotes in circulation.

How the validation process works:

• First, the validator determines the dimensions of the banknote and scans it in different spectra: visible, magnetic, infrared, UV. All this is to check the characteristic features of authenticity. Modern banknotes have a lot of them: watermarks, hidden inscriptions, moiré stripes, special color variation paint, micro perforations, relief. 
• With the help of magnetic sensors the validator checks the presence and correctness of the marks. For example, some elements of banknotes are painted with inks with ferromagnetic additives. The security threads may also have magnetic properties.
• The resulting banknote “portrait” is compared with an electronic template of the same currency and denomination: in size, brightness, contrast, image histogram, as well as all the features listed above. The exact contents of the template and the comparison methodology is different for each ATM manufacturer and is kept secret.

Together, the receiver, transport and validator resemble a bank teller machine with a nominal counting and banknote verification function. It is a complex device with many sensors and moving parts. Not surprisingly, foreign objects falling into the receiver is fatal to the ATM.

You will be lucky if the conditional paper clip is not securely attached to the money. Then it will fall by gravity into the compartment for foreign objects, which is located directly under the receiver. But in most cases, a foreign object will either cause a malfunction or put the ATM out of business. So always check to see if there is a paper clip or coin between the bills.

The banknotes go through the validator, and then two options: ATM accepts them for further circulation or rejects them. 

The validator easily rejects counterfeit money when it detects a discrepancy with at least one of the features of a genuine banknote. Crumpled and torn banknotes won’t pass the test either: creases and tears make it difficult to assess all the signs. Finally, the validator will also return shabby cash – it will be given away by the thickness of the paper and again the poor readability of the signs.

An ATM distinguishes between counterfeit and tampered money, but does the same with them – returns them to the user. There is no special cassette for counterfeits in our ATMs. 

By the way, the reflection time is limited in all ATMs, this is the requirement of international payment systems. The time-out for each interaction is set when configuring the ATM software. Pressing a button or screen resets the counter.

If the validator rejects some of the bills and you do not have time to pick them up, then after a timeout, the ATM grabs the money back and places it in a separate cassette. 

If all signs match the electronic template, the banknote is authentic. In this case, the validator passes it to the next node – escrow. This is a module for temporary storage of cash, in which the money is held while you are standing at the ATM and checking the amount of money deposited on the screen. Up to and including this point, the banknotes still belong to you.

As soon as you confirm the crediting of funds to your account, your money turns into data inside the banking circuit. The banknotes inside the machine don’t belong to you anymore – they start living their own life. From there they have two ways: collection and recycling.

Money from escrow goes to a deposit cassette by default – all banknotes that the validator deems suitable for return to circulation are kept in that cassette. There is no sorting: banknotes are kept in the cassette in the same order as they came in. There may be one or several deposit cassettes in an ATM.

The money stays in the deposit cassettes until the next collection. After that, specialists at the bank’s cash office count the cash and check it against the list of transactions performed. Empty deposit cassettes wait for the next collection before going back to the ATM.

Some ATMs have a recycling function, i.e. issuing banknotes deposited by customers to other customers. The main criterion for recycling: the condition of the banknotes must be suitable for return to circulation.

In such devices, money from escrow is not sent to a deposit cassette, but to cash recycling cassettes – one recycling cassette for each denomination. The ATM initially knows the denominations of all recycling cassettes, so after validation it sends each bill to the appropriate cassette.

ATM recycling machines have a limited number of recycling cassettes, only for the most popular denominations. If a bill does not match any recycling cassette in denomination, it is sent to the deposit cassette.

The benefit of ATMs with recirculation is obvious: they need to be encashment less often, this function is partially assumed by the customers.

Let’s leave the paper bills at this point. Your money has turned into transaction data, let’s talk more about this data.

From ATM to banking loop

If we discard all the peripherals that interact with money, cards and the user, the ATM is just an ordinary computer. More or less modern models have 4 GB of RAM and a dual- or quad-core processor of x86 or x86-64 architecture on board.

When you have confirmed the crediting of funds to your account, the ATM sends a request to the bank’s processing center: “Credit XXX amount to card number NNNNN NNNNN NNNNNN”.

The protocol by which the ATM communicates with the processing center depends on the software under which the device operates. Most often highly specialized control protocols with financial messaging (NDC or DDC) act as the application layer protocol. Better known protocols, such as HTTPS, may also be used.

In any case, the ATM builds a secure connection to the center. 

The CA checks the PIN-code, the card number and expiration date, the name of the cardholder, the counter of transactions on the chip, restrictions on the card, the cryptogram formed by the card chip, and much more. If everything is in order, the center gives the go-ahead for the transaction. After its completion you will receive a push-notification or SMS about the successful card replenishment.

NCR ATM receipt printer

Let’s say you topped up your card with a zero balance and immediately made a purchase for the same amount. Whose money did you pay with? If the ATM and the card belong to the same bank, then you can be sure that your money is on your card, only in digitized form. And in a second after notification, you spend your own money in the store, not the bank’s money. Of course, there are subtleties here, depending on the infrastructure of the particular bank, but there is not much point in going into them now.

But if the ATM belongs to another bank, the picture is fundamentally different. In this case, the acquiring bank (the owner of the ATM) transmits information about the deposit to the issuing bank (your bank) through the payment system. You will see a notification of deposit immediately after the transaction is approved, as if you reloaded the card at the ATM of your bank. But in fact your money will reach the bank within three banking days.

It turns out that immediately after depositing cash on the card, you will not pay with your own money, but with the money of your bank. The bank itself is comfortable with this, because the payment system guarantees that it will eventually receive your money from the acquiring bank.

From the banking loop to the ATM

The conversion of digital money into cash follows the same pattern, only in the opposite direction.

ATMs have two main ways to dispense bills:

• “Uniform dispensing” – the amount is dispensed so that the number of bills in the cassettes of different denominations decreases evenly;
• “Thin pack” – the amount issued by the minimum number of bills.

There is a third option in some bank ATMs:

• “Purchased disbursement” – when the customer can choose what kind of bills he wants to receive the amount.

Depending on the selected withdrawal method, the server sends the ATM the appropriate command: how many banknotes from the corresponding denomination cassettes should be withdrawn. All banknotes loaded in dispensing cassettes and recycling cassettes can be dispensed, if the ATM supports recycling.

This is what the dispensing cassette looks like

The status of the cassettes is monitored in real time by counters, the indicators of which are visible online. Data from the counters is uploaded to the system, which forecasts the emptiness of the cassettes and recommends the optimal dates of collection.

If an ATM runs out of cash suddenly, an unscheduled collection will take place. But this happens rarely, more often collection is done in advance.

From ATM to Wallet

This is quite simple: on command from the server, the dispenser turns on. This module picks up one by one the required number of bills from the cassettes and then sends them one by one to the dispenser by means of transport.

Dispenser of interstitial ATM

When the entire pack is in the presenter, the curtain opens – you can take the cash.

If you pick up cash from the same compartment where you put it, then you have a recycling ATM. It combines the cash-in and cash-out modules in one device, so the presenter and the receiver are one device.

The other ATMs have separate cash-in and cash-out modules: you put cash into a separate cash-receiver and take it out of a separate presenter.

* If you are using a bitcoin teller machine, its construction if very similar to a traditional bank ATM. But it uses cryptocurrencies instead of traditional fiat money.

Security

In accordance with PCI DSS security standards, the ATM storage device stores information only about the fact of the transaction. ATM archives and deletes old logs once a day to prevent the storage device from becoming full.

The complete transaction log is stored on the bank’s internal secure server. The log remembers everything:

• denomination and currency of each banknote in the pack, and sometimes also the serial number of the banknote, if the ATM model is able to recognize and register serial numbers;
• the number of the ATM cassette to which the transaction is linked;
• and, of course, the number of the card to which the funds were deposited or withdrawn.

If you are worried about the fate of your money, keep a receipt of the transaction – a guarantee that in case of problems with the transaction you will be able to get from the electronic log exactly the record that you need.

Any transaction from the logbook can be timed with a video recording. All ATMs are equipped with cameras, which record all the appeals and mark on the video the main stages of the operation. The camera resolution depends on the ATM model, but the video quality is sufficient for identifying an intruder in any case. The video archive is stored on the bank’s internal secure server and is available on request.

NCR 6632 ATM: card reader and receipt printer

Naturally, ATMs have protection against fraudsters. For example, any card with a chip has unique data – a cryptogram. When an ATM contacts the center to make a transaction, it is necessary that each such reference contains a cryptogram. 

It can only be transferred by putting the card to the reader. That’s why contactless service requires the ATM to hold the card or the phone at every step. When the card is inserted in the slot, the cryptogram is also read all the time, just unnoticed by the client.

If you are willing to fast send and receive money in the form of cryptocurrencies, we recommend a new and popular way to do it through bitcoin ATMs near you – you can find one here.

Force Majeure

In case of a power outage, most ATMs are equipped with a UPS. If the power goes out and you don’t have time to confirm a deposit/withdrawal to your account, the device will almost certainly complete the transaction or return the money to your wallet or account. Then the ATM will stop serving customers and wait until the main power comes on.

Let’s say you were unlucky: the ATM ate the money and disconnected, or the money went from the card, but the ATM did not give it out. In this case, it is better to make a claim at once. But such failures occur very rarely – too many stars must come together. As a rule, a power outage does not bring the client any problems.

Another unlikely surprise is that the Internet went down while the ATM was sending data to the processing center. This is unlikely because the software regularly checks the connection to the server and, if it goes down, the ATM exits service mode.

If this happens, check the banking application just in case – maybe the transaction was nevertheless completed. If there is no push notification or SMS, stay where you are. ATM will send the problem transaction until the victory, but if communication with the center is not restored, the ATM will return your card and funds. It would be a shame if at this point you are no longer near the ATM.

In some cases, if communication with the server is lost, the ATM will seize the card and cash and keep them in a separate cassette. You can get them back by reporting the problem to the bank.

How can you use your time in the ATM queue to your advantage? Here’s an exercise: imagine you have X-ray vision, and try to trace the entire path the bills take inside the machine.

To make it easier for you to navigate, here’s a post about the rich inner workings of the ATM. We tell you about the mechanical part and a little bit about the connection to the banking information loop. All those who are curious are invited under the hat.

From wallet to ATM

ATM models from different manufacturers may differ in details, but conceptually they all consist of the same key assemblies. The first to encounter money is the receiver – the same compartment for banknotes with a protective shutter.

The diagram shows the nodes that are inside and outside most ATMs

Old-fashioned people probably remember the ATMs that took money one bill at a time. Now it’s a rarity.

From the deposit compartment, the cash goes into the transport mechanism of the receiver. The specific implementation of the transport depends on the manufacturer. As a rule, it is a system of moving belts, feeding and guiding rollers.

One bill at a time goes into the validator. Its task is to check the denomination, currency and authenticity. To do this, the validator has a double-sided scanner, a set of sensors and electronic templates of all banknotes in circulation.

How the validation process works:

• First, the validator determines the dimensions of the banknote and scans it in different spectra: visible, magnetic, infrared, UV. All this is to check the characteristic features of authenticity. Modern banknotes have a lot of them: watermarks, hidden inscriptions, moiré stripes, special color variation paint, micro perforations, relief. 
• With the help of magnetic sensors the validator checks the presence and correctness of the marks. For example, some elements of banknotes are painted with inks with ferromagnetic additives. The security threads may also have magnetic properties.
• The resulting banknote “portrait” is compared with an electronic template of the same currency and denomination: in size, brightness, contrast, image histogram, as well as all the features listed above. The exact contents of the template and the comparison methodology is different for each ATM manufacturer and is kept secret.

Together, the receiver, transport and validator resemble a bank teller machine with a nominal counting and banknote verification function. It is a complex device with many sensors and moving parts. Not surprisingly, foreign objects falling into the receiver is fatal to the ATM.

You will be lucky if the conditional paper clip is not securely attached to the money. Then it will fall by gravity into the compartment for foreign objects, which is located directly under the receiver. But in most cases, a foreign object will either cause a malfunction or put the ATM out of business. So always check to see if there is a paper clip or coin between the bills.

The banknotes go through the validator, and then two options: ATM accepts them for further circulation or rejects them. 

The validator easily rejects counterfeit money when it detects a discrepancy with at least one of the features of a genuine banknote. Crumpled and torn banknotes won’t pass the test either: creases and tears make it difficult to assess all the signs. Finally, the validator will also return shabby cash – it will be given away by the thickness of the paper and again the poor readability of the signs.

An ATM distinguishes between counterfeit and tampered money, but does the same with them – returns them to the user. There is no special cassette for counterfeits in our ATMs. 

By the way, the reflection time is limited in all ATMs, this is the requirement of international payment systems. The time-out for each interaction is set when configuring the ATM software. Pressing a button or screen resets the counter.

If the validator rejects some of the bills and you do not have time to pick them up, then after a timeout, the ATM grabs the money back and places it in a separate cassette. 

If all signs match the electronic template, the banknote is authentic. In this case, the validator passes it to the next node – escrow. This is a module for temporary storage of cash, in which the money is held while you are standing at the ATM and checking the amount of money deposited on the screen. Up to and including this point, the banknotes still belong to you.

As soon as you confirm the crediting of funds to your account, your money turns into data inside the banking circuit. The banknotes inside the machine don’t belong to you anymore – they start living their own life. From there they have two ways: collection and recycling.

Money from escrow goes to a deposit cassette by default – all banknotes that the validator deems suitable for return to circulation are kept in that cassette. There is no sorting: banknotes are kept in the cassette in the same order as they came in. There may be one or several deposit cassettes in an ATM.

The money stays in the deposit cassettes until the next collection. After that, specialists at the bank’s cash office count the cash and check it against the list of transactions performed. Empty deposit cassettes wait for the next collection before going back to the ATM.

Some ATMs have a recycling function, i.e. issuing banknotes deposited by customers to other customers. The main criterion for recycling: the condition of the banknotes must be suitable for return to circulation.

In such devices, money from escrow is not sent to a deposit cassette, but to cash recycling cassettes – one recycling cassette for each denomination. The ATM initially knows the denominations of all recycling cassettes, so after validation it sends each bill to the appropriate cassette.

ATM recycling machines have a limited number of recycling cassettes, only for the most popular denominations. If a bill does not match any recycling cassette in denomination, it is sent to the deposit cassette.

The benefit of ATMs with recirculation is obvious: they need to be encashment less often, this function is partially assumed by the customers.

Let’s leave the paper bills at this point. Your money has turned into transaction data, let’s talk more about this data.

From ATM to banking loop

If we discard all the peripherals that interact with money, cards and the user, the ATM is just an ordinary computer. More or less modern models have 4 GB of RAM and a dual- or quad-core processor of x86 or x86-64 architecture on board.

When you have confirmed the crediting of funds to your account, the ATM sends a request to the bank’s processing center: “Credit XXX amount to card number NNNNN NNNNN NNNNNN”.

The protocol by which the ATM communicates with the processing center depends on the software under which the device operates. Most often highly specialized control protocols with financial messaging (NDC or DDC) act as the application layer protocol. Better known protocols, such as HTTPS, may also be used.

In any case, the ATM builds a secure connection to the center. 

The CA checks the PIN-code, the card number and expiration date, the name of the cardholder, the counter of transactions on the chip, restrictions on the card, the cryptogram formed by the card chip, and much more. If everything is in order, the center gives the go-ahead for the transaction. After its completion you will receive a push-notification or SMS about the successful card replenishment.

NCR ATM receipt printer

Let’s say you topped up your card with a zero balance and immediately made a purchase for the same amount. Whose money did you pay with? If the ATM and the card belong to the same bank, then you can be sure that your money is on your card, only in digitized form. And in a second after notification, you spend your own money in the store, not the bank’s money. Of course, there are subtleties here, depending on the infrastructure of the particular bank, but there is not much point in going into them now.

But if the ATM belongs to another bank, the picture is fundamentally different. In this case, the acquiring bank (the owner of the ATM) transmits information about the deposit to the issuing bank (your bank) through the payment system. You will see a notification of deposit immediately after the transaction is approved, as if you reloaded the card at the ATM of your bank. But in fact your money will reach the bank within three banking days.

It turns out that immediately after depositing cash on the card, you will not pay with your own money, but with the money of your bank. The bank itself is comfortable with this, because the payment system guarantees that it will eventually receive your money from the acquiring bank.

From the banking loop to the ATM

The conversion of digital money into cash follows the same pattern, only in the opposite direction.

ATMs have two main ways to dispense bills:

• “Uniform dispensing” – the amount is dispensed so that the number of bills in the cassettes of different denominations decreases evenly;
• “Thin pack” – the amount issued by the minimum number of bills.

There is a third option in some bank ATMs:

• “Purchased disbursement” – when the customer can choose what kind of bills he wants to receive the amount.

Depending on the selected withdrawal method, the server sends the ATM the appropriate command: how many banknotes from the corresponding denomination cassettes should be withdrawn. All banknotes loaded in dispensing cassettes and recycling cassettes can be dispensed, if the ATM supports recycling.

This is what the dispensing cassette looks like

The status of the cassettes is monitored in real time by counters, the indicators of which are visible online. Data from the counters is uploaded to the system, which forecasts the emptiness of the cassettes and recommends the optimal dates of collection.

If an ATM runs out of cash suddenly, an unscheduled collection will take place. But this happens rarely, more often collection is done in advance.

From ATM to Wallet

This is quite simple: on command from the server, the dispenser turns on. This module picks up one by one the required number of bills from the cassettes and then sends them one by one to the dispenser by means of transport.

Dispenser of interstitial ATM

When the entire pack is in the presenter, the curtain opens – you can take the cash.

If you pick up cash from the same compartment where you put it, then you have a recycling ATM. It combines the cash-in and cash-out modules in one device, so the presenter and the receiver are one device.

The other ATMs have separate cash-in and cash-out modules: you put cash into a separate cash-receiver and take it out of a separate presenter.

* If you are using a bitcoin teller machine, its construction if very similar to a traditional bank ATM. But it uses cryptocurrencies instead of traditional fiat money.

Security

In accordance with PCI DSS security standards, the ATM storage device stores information only about the fact of the transaction. ATM archives and deletes old logs once a day to prevent the storage device from becoming full.

The complete transaction log is stored on the bank’s internal secure server. The log remembers everything:

• denomination and currency of each banknote in the pack, and sometimes also the serial number of the banknote, if the ATM model is able to recognize and register serial numbers;
• the number of the ATM cassette to which the transaction is linked;
• and, of course, the number of the card to which the funds were deposited or withdrawn.

If you are worried about the fate of your money, keep a receipt of the transaction – a guarantee that in case of problems with the transaction you will be able to get from the electronic log exactly the record that you need.

Any transaction from the logbook can be timed with a video recording. All ATMs are equipped with cameras, which record all the appeals and mark on the video the main stages of the operation. The camera resolution depends on the ATM model, but the video quality is sufficient for identifying an intruder in any case. The video archive is stored on the bank’s internal secure server and is available on request.

NCR 6632 ATM: card reader and receipt printer

Naturally, ATMs have protection against fraudsters. For example, any card with a chip has unique data – a cryptogram. When an ATM contacts the center to make a transaction, it is necessary that each such reference contains a cryptogram. 

It can only be transferred by putting the card to the reader. That’s why contactless service requires the ATM to hold the card or the phone at every step. When the card is inserted in the slot, the cryptogram is also read all the time, just unnoticed by the client.

If you are willing to fast send and receive money in the form of cryptocurrencies, we recommend a new and popular way to do it through bitcoin ATMs near you – you can find one here.

Force Majeure

In case of a power outage, most ATMs are equipped with a UPS. If the power goes out and you don’t have time to confirm a deposit/withdrawal to your account, the device will almost certainly complete the transaction or return the money to your wallet or account. Then the ATM will stop serving customers and wait until the main power comes on.

Let’s say you were unlucky: the ATM ate the money and disconnected, or the money went from the card, but the ATM did not give it out. In this case, it is better to make a claim at once. But such failures occur very rarely – too many stars must come together. As a rule, a power outage does not bring the client any problems.

Another unlikely surprise is that the Internet went down while the ATM was sending data to the processing center. This is unlikely because the software regularly checks the connection to the server and, if it goes down, the ATM exits service mode.

If this happens, check the banking application just in case – maybe the transaction was nevertheless completed. If there is no push notification or SMS, stay where you are. ATM will send the problem transaction until the victory, but if communication with the center is not restored, the ATM will return your card and funds. It would be a shame if at this point you are no longer near the ATM.

In some cases, if communication with the server is lost, the ATM will seize the card and cash and keep them in a separate cassette. You can get them back by reporting the problem to the bank.