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Monday, October 24, 2016

LEARNING WITH THE TIMES - First ATM is believed to have been set up in 1967


When was the ATM invented?
An automated teller machine (ATM) is a telecommunication device that enables a financial transaction between a bank and its customer without involving any human cashier. Perhaps the first device on this concept was in stalled in Japan in 1966. Known as computer loan machines, these devices supplied loans to a bank customer after inserting a credit card. It is believed that the first cash machine that enabled withdrawal of money from a custom er's bank account was installed by Barclays Bank in the UK in 1967. Users had to in sert a special cheque issued by the bank and a six-digit per sonal identification number (PIN) to withdraw cash. The first modern ATM relying on an online network and capable of dispensing variable amounts of cash by deducting the money from the user's ac count was installed by Lloyds Bank in England in 1972.
How does the ATM work?
At its simplest, an ATM is a data terminal connected to an ATM controller (ATMC) like a computer connected to an internet service provider. Al so known as `EFTPOS (Elec tronic Funds Transfer at Point of Sale) Switch', the ATMC is used in financial institutions to route transactions between ATMs, the core banking system of the card-issuing bank and other banks.When a message enters an ATMC from an ATM, it examines the message, validates the PIN and routes the message to the core banking system of the bank.
How do interbank transactions work?
Initially, ATMs were connected to only one bank and a cardholder could withdraw money only if she was using the card issued by the bank. Later, to cut costs as well as provide more facilities to cardholders, an interbank network also known as an ATM consortium was established. This is a computer network connecting ATMs of different banks.Apart from connecting ATMs, these networks also connect EFTPOS terminals -the devices used at shops where one can insert or swipe their card to buy goods or services. India's largest interbank network is the National Financial Switch (NFS), which is a network of over 2 lakh ATMs.It has more than 90 banks as its direct members. Apart from the NFS, other ATM networks operating in the country include Cashnet, Immediate Payment Service, Banks ATM Network, Customer Services and so on.
What are card associ ations?
Card associations are the organisations that licence a bank's card programme and provide technology and access to various networks that help in transactions. These associations perform operational functions for their members.China Unionpay , VISA, MasterCard, American Express, Diner's Club are among the largest card associations.India has also started a similar payment service for domestic transactions known as RuPay.

Source: Times of India, 24-10-2016