How does ATM work?

How ATM Work Detail Explained

We always used ATM on ATM machine. You just insert your ATM card, do authentication and wait for a minutes and ATM machine gives you money 💰, but had you ever think what happened when you do transaction on ATM machine what happen internally. We are explaining in detail below.

This information is very useful, you should know what is the basic flow of ATM

(Source : Mobile Camera)

Above Image descriptions:-

1. HDFC ATM - ATM implemented by bank at residential and commercial area.

2. ICICI ATM CARD - Debit or credit card provided by bank to you.

3. HDFC BANK SWITCH-

Every bank which have ATM must buy an service from switch. Switch is nothing but the company which provides the switch services to bank. As bank can't directly communicate with other bank so that switch play an important role to communicate with other bank via NPCI. SARVATRA TECHNOLOGIES is the one of the company which provide the switch service to more than 400 banks.

ICICI BANK SWITCH - Same as HDFC, but service provider switch company may different.

HDFC BANK- On this bank ATM you are doing your transactions.

ICICI BANK - You have account with ICICI bank.and also used an debit card service. So all your account related information is stored in ICICI bank Databases. like name, address, Account balance Etc.

NPCI - Its play a major role in ATM transactions. When we get service of debit card by any bank, then every card come with Rupay,Visa and etc. NPCI provides the Rupay Card . NPCI communicate with switches. It is an intermediate between two switches as switches can't communicate with each other directly.

Actual flow of ATM process

ATM process start when you insert your ATM card in to ATM machine. First ATM machine only read you information present on black magnetic strip on ATM card. Them ATM machine ask for account type, Amount and PIN. You provide all the input.

Step 1 - After pressing enter, ATM check for available cash in ATM if cash is sufficient then ATM send the information to switch or else close the transaction. ATM can directly communicate with its respective switch.

Step 2 - First HDFC Bank Switch will detect that Card is HDFC bank card or not. HDFC bank switch can verify only HDFC card PIN. In our case it is ICICI bank card then to verify ICICI card PIN, switch send request to NPCI.

Step 3- Again NPCI detect it is ICICI bank card then, NPCI Send request to ICICC bank switch, to verify PIN. ICICI bank Switch will verify the PIN.

If PIN verification is fail then switch again send response to ATM machine through same return path HDFC SWITCH -NPCI -ICICI SWITCH -ATM machine as failed transaction and uses get the appropriate message.

If pin verification is successful then step 4

Step 4 - ICICI bank send the request to HDFC database to check the following points

i. User account is active or not.

ii. User account is dormant or not .

iii. User account have sufficient balance in account or not.

If any of the above verification failed then again failed response send to ATM machine through HDFC BANK DATABASE-HDFC SWITCH -NPCI -ICIC BANK SWITCH-ATM MACHINE as failed transition. And user get the appropriate message on screen.

If above verification is successful then CBS ( CBS is nothing but bank Software) will debit the value from your account. And send the response to ATM via HDFC CBS-HDFC SWITCH -NPCI -ICICI SWITCH - ICICI ATM ( Step 5-6-7-8-9-10-11) and then ATM get an response to push out the enter amount of money to user. After money pick up ATM print the transaction slip for us. And internet log for feature purpose

All the above process must complete in 20 Sec according to RBI guidelines.

Some other concerns -

CBS - Is is an software owned by bank to complete day to day bank offline and online transaction. Bank databases is linked to this CBS software.

Reconciliation - User can go any ATM to windrow the money. If user have ICICI ATM and user go to HDFC bank then money get deducted from HDFC ATM. In this case ICICI bank have to give money to HDFC this process is called as reconsideration.

In you have any question....just mention in comment section below

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