Automated Teller Machine - ATM

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.