# Understanding ATMs: Functions, History, and Usage Explained

> **Definition**
>
> An automated teller machine (ATM) is an electronic banking device that allows customers to perform basic financial transactions, such as cash withdrawals and check deposits.

## What Is an Automated Teller Machine (ATM)?

An automated teller machine (ATM) is an electronic banking outlet that facilitates the completion of basic transactions for bank customers without interaction with a teller or a branch representative. In fact, anyone with a credit card or debit card can withdraw money at most ATMs, either in the U.S. or other countries. Introduced in the 1960s, ATMs have evolved over time and now offer a range of benefits, including convenience due to their many locations, security, and availability, speedy transactions, access to a variety of transactions (such as deposits, withdrawals, [bill payments](https://www.investopedia.com/articles/pf/08/stop-paying-bills-late.asp), transfer of money between accounts), and access to cash 24 hours a day.

### Key Takeaways

*   An ATM (Automated Teller Machine) is an electronic banking outlet that allows customers to perform financial transactions without needing a bank branch representative, providing convenience and accessibility worldwide.
*   While ATMs are primarily used for cash withdrawals, many devices also allow deposits, balance transfers, and bill payments, enhancing their functionality for bank customers.
*   The first ATM was installed by Barclays Bank in London in 1967, marking the beginning of what would become a global network, with ATMs now numbering more than 4 million worldwide.
*   ATM usage can incur fees, particularly when using machines outside of your bank's network or when operating abroad, which could potentially add up significantly over time.
*   There are different types of ATMs, ranging from basic models that offer cash withdrawal services to more advanced versions that accept deposits and facilitate other transactions.

## The Evolution of ATMs Worldwide

The first ATM was at Barclays Bank in London in 1967, though Japan reportedly used a cash dispenser in the mid-1960s. The interbank communications networks that allowed a consumer to use one bank’s card at another bank’s ATM followed in the 1970s.

Within a few years, ATMs spread globally and appeared in every major country. They are even in small island nations like Kiribati and the Federated States of Micronesia.

ATMs are also known automated bank machines (ABMs), cashpoints, or cash machines.

### More than 4 million

Number of ATMs in use around the world.

## Exploring Different Types of ATMs

There are two main types of ATMs. Basic units let you withdraw cash and receive account balances. More advanced machines accept deposits, facilitate [line of credit](https://www.investopedia.com/terms/l/lineofcredit.asp) payments and transfers, and provide account information. To use advanced features, you often need to be an account holder at the bank operating the ATM.

> **Tip**
>
> You can buy and sell Bitcoin and other crypto tokens at Bitcoin ATMs, which are internet-connected terminals that dispense cash for crypto. They may also accept cash or credit card to purchase crypto. There are now more than 28,000 Bitcoin ATMs located around the world.

## Essential Components of ATM Design

Each ATM's design may vary, but they all have the same basic components:

*   **Card reader**: This part reads the chip on the front of your card or the magnetic stripe on the back.
*   **Keypad**: The keypad is used to input information, including your [personal identification number (PIN)](https://www.investopedia.com/terms/p/personal-identification-number.asp), the type of transaction required, and the amount of the transaction.
*   **Cash dispenser**: Bills are dispensed through a slot in the machine, which is connected to a safe at the bottom of the machine.
*   **Printer**: If required, you can request receipts that are printed out of the ATM. The receipt records the type of transaction, the amount, and the current account balance.
*   **Screen**: The ATM issues prompts that guide you through the process of executing the transaction. Information about accounts and their balances is also transmitted on the screen.

Full-service machines often have slots for depositing paper checks or cash.

## Using an ATM: A Step-by-Step Guide

1\. Insert your bank debit or credit card into the ATM slot.  
2\. Follow the on-screen prompts to choose your desired transaction.  
3\. Enter your personal identification number (PIN) on the keypad.  
4\. Select the amount of cash to withdraw or complete other transactions.  
5\. Collect dispensed cash, if applicable, from the cash dispenser slot.  
6\. Retrieve your bank card after completing the transaction.

Many cards are embedded with an electronic chip, which transmits data from the card to the machine. These work in the same way as a bar code that is scanned by a code reader.

Banks place ATMs inside and outside of their branches. Other ATMs are located in high-traffic areas such as shopping centers, grocery stores, convenience stores, airports, bus and railway stations, gas stations, casinos, restaurants, and other locations.

> **Fast Fact**
>
> Most ATMs in banks are multifunctional, while off-site ATMs are generally only for cash withdrawals.

## Understanding ATM Fees: What You Need to Know

Account holders can typically use their bank’s ATMs at no charge, but an ATM owned by another bank usually charges a fee. According to MoneyRates.com, the average total fees to withdraw cash from an out-of-network ATM was $4.55 in 2022. Some banks will reimburse their customers for the fee, especially if there is no corresponding ATM available in the area.

ATM fees can add up for users who make withdrawals regularly. For example, if you make weekly withdrawals at an ATM that charges $4 and is not from your bank, you would pay more than $200 a year in ATM fees.

## Accessing International ATMs: Tips for Travelers

ATMs make it easier for you to access your checking or savings accounts from almost anywhere in the world when you travel.

Travel experts recommend using foreign ATMs as a source of cash abroad, as they generally receive a more favorable [exchange rate](https://www.investopedia.com/terms/e/exchangerate.asp) than they would at most currency exchange offices.

However, the accountholder’s bank may charge a [transaction fee](https://www.investopedia.com/terms/f/foreign-transaction-fee.asp) or a percentage of the amount exchanged. Many ATMs don't list the exchange rate on the receipt, making it difficult to track spending.

## How Much Can You Withdraw from an Automated Teller Machine (ATM)?

The amount that you can withdraw from an automated teller machine (ATM) per day, per week, or per month will vary based on your bank and account status at that bank. For instance, some banks limit daily cash withdrawals to $300. But most Citibank accounts allow up to $1,500, depending on your account. You may be able to get around these limits by calling your bank to request permission or upgrading your banking status by depositing more funds.

## How Do You Make a Deposit at an ATM?

If you are a bank’s customer, you may be able to deposit cash or checks via one of their ATMs. To do this, you may simply need to insert the checks or cash directly into the machine. Other machines may require you to fill out a deposit slip and put the money into an envelope before inserting it into the machine. Be sure to [endorse the back of any checks](https://www.investopedia.com/how-to-endorse-a-check-5188585) and note “For Deposit Only” to be safer.

## Which Bank Installed the First ATM in the U.S.?

The first ATM in the U.S. was installed by Chemical Bank in Rockville Center (Long Island), New York, in 1969 (two years after Barclays installed the first ATM in the U.K.). By the end of 1971, more than 1,000 ATMs were installed worldwide.

## The Bottom Line

An ATM, or automated teller machine, is a self-service banking terminal that enables cash withdrawals and other transactions such as deposits, bill payments, and account transfers. You can use ATMs operated by your own bank or those operated by other businesses. Whenever possible, use your own bank's ATMs to avoid additional fees. Fees can be considerable when you have to use out-of-network ATMs, including those located in other countries. The first ATM was introduced by Barclays in London in 1967, paving the way for over 4 million ATMs worldwide today.

> **Article Sources**
>
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>     
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>     
> 3.  The World Bank, World Bank Open Data. “[Automated Teller Machines (ATMs) (Per 100,000 Adults)](https://data.worldbank.org/indicator/FB.ATM.TOTL.P5).”
>     
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>     
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>     
> 8.  Navy Federal Credit Union. "[Forget the Fees: Don't Pay Extra for Your ATM Transactions](https://www.navyfederal.org/makingcents/savings-budgeting/avoiding-atm-fees.html)."
>     
> 9.  Citibank. "[Compare Benefits: Options to Fit Your Needs](https://online.citi.com/US/JRS/pands/detail.do?ID=CitigoldCompare)."
>     
> 10.  NCR. “[A History of ATM Innovation](https://www.ncr.com/blogs/banking/history-atm-innovation).”