How ATM (Automated Teller Machine) System Works? Block Diagram
An ATM (Automated Teller Machine) system allows people to do banking transactions without visiting the bank or talk to bank staff. It helps users to withdraw cash, check their balance, transfer money, pay bills, and more. The ATM system provide a quick, secure, and easy way to access banking services anytime, day or night, without going to a bank branch.
The ATM system is made up of different devices, networks, and protocols working together. In this article, we will explain how the entire ATM system works with a simple block diagram. This diagram will break down the complex process in an easy-to-understand way. Keep in mind that we are not just talking about the ATM machine itself but the entire system that connects banks and customers.
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If you read the above block diagram carefully then you will easily understand the whole concept. Anyway, here we have given a simple explanation below,
Bank Server:
This represents the central server maintained by the bank that handles communication and transaction processing. It stores customer account information, performs authentication, authorizes transactions, and maintains transaction logs.
Core Banking System:
It is the main software system that manages the overall banking operations, including modules for customer accounts, transaction processing, funds transfer, balance inquiries, interacting with the ATM system, and other banking functionalities.
Network Infrastructure:
This includes the communication channels and protocols used to connect the ATM machine to the bank's server using wired or wireless connections, ensuring secure and reliable communication.
Transaction Processing System:
It performs account verification, PIN validation, funds transfer, cash withdrawal, deposit processing, balance inquiries, and transaction receipts, and communicates with the bank server to complete the requested transactions securely.
ATM Machine:
It includes the components such as the display screen, keypad, card reader, cash dispenser, receipt printer, and other input/output devices. Here, the user can interact and withdraw cash.
User Interface:
It includes the keypad for entering the PIN and transaction details, and the display screen for visual feedback and instructions.
Cash Management System:
It does cash inventory tracking, replenishment schedules, cash balancing, and error detection.
Bank:
The financial institution that owns and operates the ATM system, provides banking services to customers.
Customer/User:
The individual who uses the ATM system to perform various banking transactions, such as cash withdrawals, balance inquiries, and fund transfers.
Cash:
The physical currency is stored and dispensed by the ATM machine.
In summary, the ATM system works by connecting the ATM machine to the bank's server through a network infrastructure. The user interacts with the machine's user interface to initiate transactions, such as cash withdrawals or balance inquiries.
The transaction processing system communicates with the bank server to perform authentication, process transactions, and update account information. The cash management system ensures proper cash inventory and dispenses cash when requested.
The core banking system manages the overall banking operations and integrates with the ATM system. Together, these components enable customers to conveniently access banking services and perform transactions using an ATM machine.
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How ATM (Automated Teller Machine) System Works? Block Diagram
Reviewed by Author
on
March 12, 2025
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Reviewed by Author
on
March 12, 2025
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