Definition[]
An automated teller machine (ATM) is
| “ | [a]n electronic funds transfer (EFT) terminal that allows customers using a PIN-based debit card (ATM card) to initiate transactions (e.g., deposits, withdrawals, account balance inquiries).[1] | ” |
Overview[]
ATMs usually allow deposits to and withdrawals from both savings and checking accounts, transfers between these accounts, and queries about the account balance. Some permit the use of credit cards for cash advances. Frequently overdraft privileges are offered with accounts that are accessible through ATMs.
Some ATMs have direct access to the financial institution's computer system and update accounts immediately. Cash disbursements are limited to either a predefined amount or the actual account balance. Others operate independently of the institution's computer system and merely limit the amount that can be withdrawn within a specified period. Actual account balances are updated daily. ATMs may be located on or off the bank premises; most are accessible around the clock.
The debit card used to activate the ATM may be proprietary to the bank, offered under the logo of a credit card association, or offered by a third party without showing any financial institution identification. Both the card and a personal identification number (PIN) are necessary for access.
The Electronic Funds Transfer Act of 1978 requires that financial institutions make receipts available to customers at the time a terminal transaction is initiated. The Act also requires that ATM transactions be shown on the periodic statement issued by the financial institution.
ATM networks may be proprietary to one institution, or they may be operated on behalf of multiple institutions by consortia or by third party operators.