What is ATM? Types, Benefits and How to Use

ATM stands for Automated Teller Machine (ATM). Today, ATMs have become a cornerstone of modern banking, providing seamless access to financial services anytime, anywhere. These machines revolutionised banking by eliminating the need for in-person teller services for routine transactions, saving time and minimising human errors. From cash withdrawals to fund transfers, ATMs offer a wide array of banking solutions. Let’s dive deeper into the various aspects of ATMs and their significance in today's financial landscape.

What is an ATM?

An Automated Teller Machine (ATM) is an electronic banking device designed to facilitate various financial transactions without human assistance. By inserting a debit or credit card and entering a Personal Identification Number (PIN), users can perform tasks like withdrawing cash, checking balances, transferring funds, and even paying bills. ATMs are available 24/7, making them a crucial tool for convenient banking, especially outside regular bank hours.

Key Features of ATMs

ATMs have evolved significantly over the years, offering a broad range of features:

1. Cash Withdrawal

The most common function, allowing users to access their funds quickly. However, there’s a cap on the amount that can be withdrawn every day, which may vary across banks.

2. Balance Inquiry

Provides an up-to-date account balance. All you need to do is tap on the option (Balance Enquiry) of the ATM display screen. Once done, you will be able to see your account balance. Additionally, you can opt for a receipt – the receipt will have the details of your account balance.

3. Fund Transfers

You can also carry out easy money transfers between accounts.

4. Deposits

Some ATMs, also known as Cash Recycler Machines, allow cash or cheque deposits, updating the account immediately.

5. PIN Changes

Users can reset or change their debit card PIN for enhanced security.

6. Card Activation

Newly issued cards can often be activated directly at the ATM.

How to Locate an ATM Near Me?

Need to withdraw cash from ATM? Instead of using other bank ATMs, where you may be charged transaction fees if you exceed the transaction limit for the month (more on this later), it’s recommended to use your own bank ATMs. To spot an ATM near to your location, you can use an ATM locator.

For example, let’s say you’re looking for an Ujjivan Small Finance Bank ATM near your location. Use our ATM Locator to check the closest ATM near you. All you need to do is select your state, city and area – it’s that simple!

How to Use a Ujjivan Small Finance Bank ATM for Cash Withdrawal

Step 1: Locate your nearest ATM. Keep your Debit Card and PIN ready

Step 2: Insert your Ujjivan Debit Card

Step 3: Choose your preferred language – English, Hindi or regional language

Step 4: Select ‘Withdrawal’

Step 5: Enter Your PIN. The ATM will authenticate your PIN

Step 6: Enter the amount

Step 7: Withdraw cash and remove your card

Types of ATMs

ATMs come in various forms, catering to different user needs and banking environments.

1. On-Site ATMs

Located within or near bank branches, offering the highest level of security and access to all banking services.

2. Off-Site ATMs

Found in high-traffic areas like malls, airports, and gas stations, providing convenient access to basic services such as cash withdrawals and balance inquiries.

3. White-Label ATMs

Operated by non-bank entities, white-label ATMs are accessible to customers of various banks. 

4. Brown-Label ATMs

Owned by banks but operated by third-party service providers. The bank manages cash loading and branding, while the third party handles maintenance.

5. Specialised ATMs in India

• Green Label ATMs: Focused on agricultural transactions, supporting farmers with subsidies, loans, and crop insurance.
• Orange Label ATMs: Dedicated to stock market transactions.
• Yellow Label ATMs: Designed for e-commerce payments.
• Pink Label ATMs: Created with women’s safety in mind, often located in secure, well-lit areas.

Benefits of Using ATMs

ATMs offer numerous advantages that make them indispensable in today’s fast-paced world:

1. Round-the-Clock Availability

With 24/7 access, ATMs ensure users can conduct essential banking operations anytime, even on holidays.

2. Convenience and Accessibility

Strategically located ATMs in urban and rural areas make banking services more accessible, reducing the need for branch visits.

3. Reduced Bank Queues

By handling routine transactions, ATMs alleviate congestion in bank branches, improving service efficiency.

4. Enhanced Security

Modern ATMs are equipped with anti-skimming technology and encryption protocols, safeguarding user data and preventing fraud.

Design and Components of ATMs

Every ATM is designed with a combination of input and output devices to ensure smooth and secure transactions.

1.Input Devices

• Card Reader: Reads information from the card’s magnetic strip or chip to initiate transactions.
• Keypad: Allows users to input their PIN and select transaction options securely.

2.Output Devices

• Display Screen: Guides users through the transaction process with visual instructions.
• Cash Dispenser: Delivers the requested cash amount.
• Receipt Printer: Provides a printed record of the transaction.
• Speaker: Offers audio instructions for visually impaired users.

Security Measures for ATM Users: Safe Banking Tips

To ensure safe transactions, it’s crucial to adopt the following security practices:

• Shield Your PIN: Use your hand to cover the keypad when entering your PIN.
• Inspect the ATM: Check for unusual devices attached to the card slot that could indicate skimming attempts.
• Monitor Your Account: Regularly review your bank statements for unauthorized transactions.
• Avoid Sharing Your PIN: Never disclose your PIN to anyone, including bank staff.

Are There ATM Fees and Charges for Cash Withdrawals in India?

In India, ATM usage comes with specific fees and charges, varying by bank, transaction type, and ATM network. Understanding these charges can help consumers make informed decisions and minimise costs.

With Ujjivan Small Finance Bank, the transaction limit varies based on the type of account you have. For example, if you have a Privilege Savings Account, you can do unlimited free transactions across Ujjivan and other bank ATMs. If you have a Digital Savings Account, you can do up to 5 free transactions across Ujjivan and other bank ATMs.

Latest Information on ATM Fees and Charges

The Reserve Bank of India (RBI) has approved an increase in ATM interchange fees, raising charges by ₹2 for financial transactions and ₹1 for non-financial transactions. According to a report by The Financial Express, this revision will take effect from May 1.

As a result, the fee for cash withdrawals will rise from ₹17 to ₹19 per transaction, while the cost of a balance inquiry will increase from ₹6 to ₹7 per transaction.

ATM interchange fees refer to the charges that one bank pays another for facilitating ATM services to customers. This change is expected to significantly affect smaller banks with a limited ATM network.

The last revision of interchange fees by the RBI took place in June 2021. However, banks have yet to decide whether these increased costs will be passed on to customers.

To know more about ATM transaction fees and charges, click here.