automated teller machine

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AUTOMATED TELLER MACHINES (ATMs) are data terminals for convenient money transactions. Don Wetzel is credited as the inventor of the ATM. He created the machine while working for the Docutel Company in Dallas, Texas, during the 1960s.

ATMs are actually kiosk computers with a keypad and screen. The patron is prompted with instructions and given a choice of transactions. An optional receipt can be printed for patron records. Bank access to accounts is provided through telephone networking, a host processor, and a bank computer to verify data. Using an ATM card, a debit card, or a credit card, bank patrons can electronically access their accounts and withdraw or deposit funds, make payments, or check balances.

ATMs have eliminated the need to enter a bank for basic transactions and allow access to accounts at machines throughout the United States. Financial institutions started charging fees to use their ATMs in the mid-1990s, making the transactions very profitable for the host banks. The use of ATMs has cut service staff in traditional banks, impacting employment in the industry. As many machines are now commercially owned and leased in public venues, a technical industry for creating, leasing, and maintaining the machines has developed.

Innovation in ATMs has included machines designed for use by the blind, kiosk machines in stores, gas stations, malls, and other public places, and machines with verbal prompts.


Fitch, Thomas P. Dictionary of Banking Terms. 4th ed. Hauppauge, N.Y.: Barron's Educational Series, 2000.

Shaw, Tony. "Beyond Cash and Carry: Up-and-Coming Features Make Today's ATMs More than Simple Cash Dispensers." Independent Banker 50, no. 2 (2000): 64.

Karen RaeMehaffey

See alsoBanking: Overview .

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automated teller machine (ATM), device used by bank customers to process account transactions. Typically, a user inserts into the ATM a special plastic card that is encoded with information on a magnetic strip. The strip contains an identification code that is transmitted to the bank's central computer by modem. To prevent unauthorized transactions, a personal identification number (PIN) must also be entered by the user using a keypad. The computer then permits the ATM to complete the transaction; most machines can dispense cash, accept deposits, transfer funds, and provide information on account balances. Banks have formed cooperative, nationwide networks so that a customer of one bank can use an ATM of another for cash access; by 1997 there were more than 160,000 ATMs across the United States. Some ATMs will also accept credit cards for cash advances. The first ATM was installed in 1969 by Chemical Bank at its branch in Rockville Centre, N.Y. A customer using a coded card was dispensed a package containing a set sum of money.