Have you ever wondered what goes behind the scenes when you withdraw cash from an ATM? How does an ATM, which you may be using in a remote part of the world, identify your secret personal identification number (PIN) and the balance in your account? Have you been frustrated and angry when the ATM asks you to input your PIN, type of account and amount you wish to withdraw, only to tell you at the end that your PIN is incorrect or you don’t have sufficient balance in your account?
The ATM is basically a computer with a screen, a card reader, a secure chest carrying various denominations of notes, has a dispensing outlet and is connected through a secure network to a central application called the switch. The ATM by itself, cannot do any transaction, unless instructed by the switch.
Let us look at the various parts of an ATM that you can see when you stand in front of it.
Card reader slot: This is the slot in which you insert your card. Most of the ATMs in India have dip card readers where you just need to insert your card in the card slot and pull it out. Some ATMs may also have motorised card readers where the card goes into the ATM after you insert it and then comes out. Why do you need to do this? Your card would have a black or brown magnetic stripe on the reverse. This magnetic stripe contains details such as your card number, expiry date and card verification value (CVV). The ATM does not read the design or logo on your card or the card number, name or the expiry date printed on the front of your card. What it reads is the data encoded on the magnetic stripe. You may also have a chip card—a golden metal piece embedded on your card. This also contains more or less the same details as the magnetic stripe on the reverse. Very soon, ATMs in India will start reading the chip and not the magnetic stripe.
Screen: Most ATMs today have a 10 to 15 inch screen with four buttons on either side. Some of the screens would be touch enabled, like your smartphones. Depending on the type of screen, you may have to use the buttons on the side of the screen or tap the screen, to choose your options. Most ATMs give you an option to choose Hindi, English and a local language, to transact.
PIN pad: The numeric pad below the screen is the PIN pad. Once you insert your card and the ATM is able to read your card, a message will be displayed welcoming you and asking you to enter your PIN. Your PIN is the code which allows the further usage of the card for withdrawing cash. Once you enter the PIN, the ATM will ask you to enter the amount you want to withdraw. You again use the pad for entering the amount you want to withdraw.
Once the ATM has read your card, the PIN and the amount entered, it will send a secure message with all the details, to the switch. If the ATM you are using belongs to the bank which has issued the card, the switch will process the message. If the ATM belongs to another bank, that bank’s switch will send the message to a network like National Payments Corp. of India’s (NPCI) national financial switch or VISA or Mastercard or any other payments network to which the bank belongs. That network will in turn, route the message to the switch of your bank. Your bank’s switch does not store your PIN and hence to know whether the PIN is correct, it will send the PIN to a security module connected to it, along with certain verification parameters. Using very sophisticated algorithms, the security module decodes the parameters and verifies whether your PIN is correct. If correct, the switch will send a message to the core banking system (CBS) of your bank. The CBS will check if the account is a valid account and whether it has the required balance in the account. If there is sufficient balance, the CBS will debit your account and send a confirmation of the same to the switch which in turn, will send a message to the ATM to dispense the amount. All this happens in a matter of seconds and the ATM dispenses the required amount to you through the cash dispensing slot.