What is ATM Processing?

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  • Written By: Patrick Roland
  • Edited By: Kathryn Hulick
  • Last Modified Date: 04 March 2020
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When an automated teller machine (ATM) works with a network of banks to approve a financial transaction, this is called ATM processing. It is a multi-step action that only takes a matter of seconds. By utilizing phone lines and bank account records, the machine knows whether the card holder has the funds to remove money from an account. Processing does not just mean removing money, because it is also used for checking a bank balance and depositing funds.

ATM processing during a withdrawal begins at a personal ATM machine when a card holder inserts a bank card and inputs that card's secret code. The code gives the machine permission to begin processing this card. The machine is already hooked up to a functional phone line and dials a specific toll free number that gives it access to its ATM alliance. The machine then provides its terminal identification number, so the network knows the location of the machine.

The bank is next contacted during the ATM processing. Banks all have a special line, much like the internet, that runs through the phone system and allows ATMs to access select account information. With the card and its corresponding secret code, the bank will check that specific account to inspect its funds.


The bank reviews the card holder's account to ensure there is enough money to cover the requested withdrawal from the ATM, including ATM fees. If the account clears, the bank sends a message back to the teller machine during this stage of ATM processing. This message authorizes the machine to dispense the money to the card holder. Amazingly, this process normally takes under a minute, usually only a matter of seconds. Many years ago, when online technology was still crude, processing took much more time but now is nearly instantaneous.

ATM processing is most commonly associated with making withdrawals, but the teller machine can also perform other duties. Machines associated with the card holder's bank will usually accept deposits. These work in reverse of withdrawals, by taking in checks and informing the bank to add that specified amount to the card holder's account. Another technique that requires processing is checking an account balance. This can normally be performed at any ATM and follows the same processing guidelines, but dispenses an account balance on the receipt instead of giving the operator cash.


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