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How does an ATM work?

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Quick answer

An ATM works by securely connecting to your bank over a network to verify your card and PIN, then dispensing cash and updating your account. It is essentially a secure, automated teller linked in real time to the banking system.

Step by step

  1. You insert a card; the ATM reads your account details from its chip or magnetic stripe.
  2. Your PIN is encrypted and sent to the bank to confirm it's really you.
  3. The bank checks your balance and approves or declines the withdrawal.
  4. A precise mechanism counts and dispenses the exact bills requested.
  5. The transaction is recorded and your balance updated, often instantly.

People also ask

Is it safe to type my PIN at an ATM?
Your PIN is encrypted before it leaves the machine and isn't stored on the card itself. Still, cover the keypad and watch for tampering or skimming devices.
How does an ATM know my balance?
It doesn't store it — it connects in real time to your bank's systems over a secure network to check funds and record the withdrawal.
What is a skimmer?
A fraudulent device attached to an ATM to steal card data. Inspect the card slot for anything loose or bulky, and cover your PIN as you type.

Part of the guide: Everyday Machines →