What is an 'Automated Teller Machine - ATM'

An automated teller machine (ATM) is an electronic banking outlet, which allows customers to complete basic transactions without the aid of a branch representative or teller. Anyone with a credit card or debit card can access most ATMs. The first ATM appeared in London in 1967, and in less than 50 years, ATMs spread around the globe, securing a presence in every major country and even tiny little island nations such as Kiribati and the Federated States of Micronesia.

BREAKING DOWN 'Automated Teller Machine - ATM'

There are two primary types of ATMs. Basic units allow customers to withdraw cash and receive reports of their account balances only. The more complex machines accept deposits, facilitate line of credit payments and report account information. To access the advanced features of the complex units, a user must be an account holder at the bank that operates the machine.

Analysts anticipate ATMs will become even more popular and forecast an increase in the number of ATM withdrawals. ATMs of the future are likely to be full-service terminals instead of or in addition to traditional bank tellers.

ATM Ownership

In many cases, banks and credit unions own ATMs. However, individuals and businesses may also buy or lease ATMs, on their own or through an ATM franchise. When individuals or small businesses such as restaurants or gas stations own ATMs, the profit model is based on charging fees to the machine's users. Banks also own ATMs with this intent, but in addition, the convenience of an ATM is a service banks use to attract clients. ATMs also take some of the customer service burden off bank tellers, saving banks money in payroll costs.

ATM Fees

Account holders can use their bank's ATMs at no charge, but accessing funds through a unit owned by a competing bank usually incurs a small fee. As of 2016, the average fee to withdraw cash from an out-of-network ATM is $4.52. Seattle boasts the lowest average ATM fees at $4.21, while Atlanta tends to have the highest average fees at $5.15. In 2014, consumers withdrew a total of $92 billion in cash from ATMs.

Using ATMs Abroad

For travelers, ATMs make it simple to access their checking or savings accounts from almost anywhere in the world. When travelers use foreign ATMs, they receive a better exchange rate than they would at most currency exchange offices. Additionally, using an ATM is easier than cashing traveler's checks, and arguably, it makes travel safer, as the traveler doesn't have to carry a lot of cash. However, the account holder's bank may charge a transaction fee or a percentage of the amount exchanged. Most ATMs do not list the exchange rate on the receipt, making it challenging to track spending.

RELATED TERMS
  1. Warm Card

    A type of ATM card that allows the bearer restricted access to ...
  2. Bank Card

    Any card issued against a depositary account, such as an ATM ...
  3. Activity Charge

    A fee charged to cover the servicing costs of an account. An ...
  4. Jitter

    An anti-skimming technique that distorts the readout of the magnetic ...
  5. Debit Card

    An electronic card issued by a bank which allows bank clients ...
  6. Checking Account

    A checking account is a deposit account at a financial institution ...
Related Articles
  1. Personal Finance

    Why You Should Stick With The Big Banks

    Big doesn't always mean bad. We tell you four reasons why.
  2. Investing

    Indians Use Crowdsourced Information to Find ATMs With Cash

    Indians are on a treasure hunt where the treasure is their own hard-earned money.
  3. Tech

    5 ATM Scams That Can Break The Bank

    Here are five common ways ATM users get ripped off.
  4. Investing

    JPMorgan Chase Is Done with Drugstore ATMs

    Big bank JPMorgan Chase (NYSE: JPM) is, uncharacteristically, reducing its presence in a classic segment of its business. It has begun un-branding thousands of ATMs in key retail locations across ...
  5. Personal Finance

    Best Checking Accounts For Couples

    Being a couple, especially if you both have jobs, can help you qualify for benefits and fee waivers that would be tougher to get on just one salary.
  6. Personal Finance

    Cut Your Bank Fees

    Find out how to get the bank to pay you for using their services, not the other way around.
  7. Personal Finance

    Where To Change Money in San Francisco

    The San Francisco airport and your hotel are convenient, but to save money use an ATM or your credit card.
RELATED FAQS
  1. How ATM Fee Reimbursement Works (ALLY, EVER)

    Learn how ATM fee reimbursement works, identify some of the banks that offer it and understand the typical limitations that ... Read Answer >>
  2. What US banks offer free checking accounts?

    Quit wasting money on monthly fees associated with your checking account and get a free checking account from reputable national ... Read Answer >>
  3. What Canadian banks offer the best savings accounts?

    Learn about different savings accounts in Canada. Explore different interest rates and fees as well as accounts that are ... Read Answer >>
  4. What's the average salary of a bank teller?

    Read this article to find out more about average bank teller salaries, median hourly wage rates and potential future career ... Read Answer >>
  5. Can a checking account go negative?

    Find out about negative checking account balances and the ramifications. There is a price to pay, but smart consumers can ... Read Answer >>
  6. Can Netspend cards be used internationally?

    Learn how NetSpend cards can be used internationally. Discover where NetSpend cards can be used, and understand the fees ... Read Answer >>
Trading Center