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How ATM Works and Problems of ATM Usage in Nigeria

How ATM Works and Problems of ATM Usage in Nigeria

Most ATMs are connected to interbank networks, enabling people to withdraw and deposit money from machines not belonging to the bank where they have their account or in the country where their accounts are held (enabling cash withdrawals in local currency). Some examples of interbank networks include PULSE, PLUS, Cirrus, Interac, Interswitch, STAR,
ATMs rely on authorization of a financial transaction by the card issuer or other authorizing institution via the communications network. This is often performed through an ISO 8583 messaging system.

ATMs typically connect directly to their host or ATM Controller via either ADSL or dial-up mo-dem over a telephone line or directly via a leased line. Leased lines are preferable to POTS lines because they require less time to establish a connection. Leased lines may be comparatively
expensive to operate versus a POTS line, meaning less-trafficked machines will usually rely on a dial-up modem. That dilemma may be solved as high-speed Internet VPN connections become more ubiquitous. Common lower-level layer communication protocols used by ATMs to communicate back to the bank include SNA over SDLC, TC500 over Async, X.25, and TCP/IP over Ethernet. In addition to methods employed for transaction security and secrecy, all communications traffic between the ATM and the Transaction Processor may also be encrypted via methods such as SSL. (Aimee Leeper,2007)
When an ATM transaction is processed the machine makes contact to begin the authorization process. The ATM machine has a TID (terminal ID number). This is the number that identifies it uniquely within the processing system. This is how the networks allow the transaction to be completed. This TID along with other identifying information lets the cardholder’s bank know that the trasaction is taking place on that particular ATM. Now the ATM can connect to the networks through our processing center and then to the cardholder’s bank. If there are sufficient funds in the ATM cardholders account for the withdrawal request, the transaction will be completed. Once transactions are approved the ATM receives the authorization and dispenses the cash requested. The ATM can also be used if someone just wants to check their account balance or transfer funds before or after withdrawing cash. There is typically no surcharge placed on non-cash withdrawal transactions. (Mosabber Hossain, 2006)

Although ATMs were originally developed as just cash dispensers, they have evolved to include many other bank-related functions. In some countries, especially those which benefit from a fully integrated cross-bank ATM network (e.g.: Multibanco in Portugal), ATMs include many functions which are not directly related to the management of one’s own bank account, such as:
• Deposit currency recognition, acceptance, and recycling.
• Paying routine bills, fees, and taxes (utilities, phone bills, social security, legal fees, taxes, etc.)
• Printing bank statements.
• Updating passbooks.
• Loading monetary value into stored value cards.
• Adding pre-paid cell phone / mobile phone credit.
• Purchasing
o Postage stamps.
o Lottery tickets
o Train tickets
o Concert tickets
o Movie tickets
o Shopping mall gift certificates.
o Gold – “In London last week [in 2011] some smart businessmen launched the country’s first gold ATM. Stick in your debit card or some cash, and the machine will swap your plastic or paper money for a small bar of the real stuff.
• Games and promotional features.
• Fastloans.
• CRM at the ATM.
• Donating to charities.
• Cheque Processing Module.
• Paying (in full or partially) the credit balance on a card linked to a specific current account.
• Transferring money between linked accounts (such as transferring between checking and savings accounts).
Increasingly banks are seeking to use the ATM as a sales device to deliver pre approved loans and targeted advertising using products such as ITM (the Intelligent Teller Machine) from Aptra Relate from NCR. ATMs can also act as an advertising channel for companies to advertise their own products or third-party products and services.
In Canada, ATMs are called guichets automatiques in French and sometimes “Bank Machines” in English. The Interact shared cash network does not allow for the selling of goods from ATMs due to specific security requirements for PIN entry when buying goods. CIBC machines in Canada are able to top-up the minutes on certain pay as you go phones.


To the Banks:
1.) ATMs reduce queues in banking halls.
2.) ATMs save banks cost of hiring tellers by automating many “Teller” transactions.
3.) ATM enables banks to re-design branches into more sophisticated customer services and sales outlet.

To the customers or cardholders:
1.) ATM allows customer withdraw cash outside of banking hours, enabling retail cash purchases around the clock.
2.) ATMs saves customers transport costs and time by bringing self-service banking into convenient, non-branch locations nearer to where they live work and shop.
3.) ATMs can help customer or cardholders monitor their bank accounts outside of bank hours through balance enquiries.

To the Economy:
1.) ATMs distribute and recycle the bulk of banknotes in modern economies.
2.) ATMs are a critical channel in the whole cash and spending cycle underpinning the consumer economy.
3.) ATMs make cross-border remittances possible for millions of the world’s migrant workers.

To the Government:
1.) ATMs provide a convenient outlet for public benefit and welfare payments.
2.) ATMs assist with electronic payroll in both the private and public sectors by supplying employees with a means to draw cash from their salaries deposited directly into their bank accounts. (Aimee Leeper, 2007)


Problem of ATM usage among customers in our clime may include the following:

An ATM card has at one time or the other witnesses the lack of sufficient funds at a service point. This usually happens when a customer for example wants to withdraw cash but the disbursable cash left in the ATM is not enough and may result in outright rejection of card.
At such instances, one may notice the attempt of the machine trying to activate a process that dispenses cash but for which no sufficient cash is available to complete the task. When this occurs, one of these may result
a. Cards may be withheld.
b. Non disbursable cash is deducted from an account.
c. Outright rejection of card.

Another source of concern in the implementation of ATM is lack of denomination required by customers at a particular point in time. Sometime customer with little balance in his/her account may want to draw some denominations that are not available in the system.

Stealing of cards/PIN number is one of the main security risks associated with ATM implementation in our environment. Incidences of card stealing have been reported. PINs have also been reported stolen through finger reading by people watching customers type in their Personal Identification Numbers (PINs)

Power is still a source of major challenge facing our country. ATM machines need power to operate. It is therefore imperative that the systems is kept running 24/7 uninterrupted if the gains of implementing them is to be achieved. (Sunday Adewumi, 2008)

A Report on Global ATM Frauds (2007) identified the following types of ATM Frauds:
(a) Shoulder Surfing: This is a fraud method in which the ATM fraudster use a giraffe method to monitor the information the customer keys in into the ATM machine unknown to the customers.
(b) Lebanese Loop: This is a device used to commit and identify theft by exploiting Automated Teller Machine (ATM). Its name comes from its regular use among Lebanese financial crime perpetrators, although it has now spread to various other international crime groups.
(c) Using Stolen Cards: This is a situation in which the ATM card of a customer is stolen and presented by a fake presenter.
(d) Card Jamming: Once the ATM card is jammed, fraudster pretending as a genuine
Sympathizer will suggest that the victim re-enter his or her security code. When the card holder ultimately leaves in despair the fraudster retrieves the card and enters the code that he has doctored clandestinely.
(e) Use of Fake Cards: Fraudsters use data collected from tiny cameras and devices called ‘skimmers’ that capture and record bank account information.
(f) Duplicate ATMs: The fraudsters use software which records the passwords typed on those machines. Thereafter duplicate cards are manufactured and money is withdrawn with the use of stolen Passwords. Sometimes such frauds are insiders’ job with the collusion of the employees of the Company issuing the ATM Cards.

(g) Card Swapping: This is a card theft trick whereby a fraudster poses as a “Good Samaritan” after forcing the ATM to malfunction and then uses a sleight of hand to substitute the customer’s card with an old bank card. As the customers is endlessly trying to push the card through, the fraudster offer assistance by pretending to help the customer push through the card.

Madu and Madu (2002) pointed out that the concern of customers about security and privacy, while using this service, is a major cause of their dissatisfaction. Ihejiahi (2009) expressed concern about the lack of cooperation among banks in the fight to stem the incidence of ATM frauds now plaguing the industry. He expressed that the silence among banks on ATM frauds makes it difficult for banks to share vital information that will help curb the menace. Obiano (2009) blamed the menace of ATM frauds on indiscriminate issue of ATM card without regard to the customer’s literacy level. According to him one of the frequent causes of fraud is when customers are careless with their cards and PIN numbers as well as their response to unsolicited e-mail and text messages to provide their card details. Omankhanleu (2009) opined that the current upsurge and nefarious activities of Automated Teller Machine (ATM) fraudster is threatening electronic payment system in the nation’s banking sector with users threatening massive dumping of the cards if the unwholesome act is not checked. Adeloye (2008) identified security as well as power outage as major challenges facing the ATM users in Nigeria. Brunner et al. (2004) in their study concluded that the location of ATM is a high determinant to fraud or crime carried out at ATM point. From this research over 75% of the respondents affirm that the location of ATM in secluded place contribute to the fraud perpetuated at ATM point. ATM within the banking premises is more secure than ATMs outside the bank premises. Also, it is obvious that the location of ATM in attractive place does not make it prone for fraud. Diebold (2002) in his view states that the major form of ATM fraud is PIN theft which is carried out by various means; skimming, shoulder surfing, camera, key pad recorder etc. This study elucidates that the common type of fraud perpetuated is PIN theft which is mostly as a result of congestion at ATM points. Other forms of fraud that were enumerated by respondents were; force withdrawal, card theft, and skimming and congestion method fraud at ATM. Cynthia (2000) states that the 24 hours access to the ATM machine is a double edge sword, it has both advantage and disadvantage.
Roli Bansal et al (2011) pointed out that amongst all the fingerprint features, minutia point features with corresponding orientation maps are unique enough to discriminate amongst fingerprints robustly; the minutiae feature representation reduces the complex fingerprint recognition problem to a point pattern matching problem.

Card Reader: Customer inserts their card in it when there is written “Please Insert your card” on the screen.
Keypad: Use for PIN code input, choices, amount of money etc as the input to the ATM machine.
Display Screen: This screen shows all the instructions or options for the customers’ convenience.
Screen Buttons: When options are given on the screen one user can choose any of the options accordingly by the use of button on left or right side of the screen. These buttons select the option from the screen.
Cash Dispenser: Withdrawal money is given by this slot.
Deposit Slot: To deposit money this slot is use.
Speaker: Speaker provides the facilities to the customer by giving auditory feedback.


When thieves cannot get access to secure properties, there is a chance that the thieves will stalk and assault the property owner to gain access. If the item is secured with a biometric device, the damage to the owner could be irreversible, and potentially cost more than the secured property. For example, in 2005, Malaysian car thieves cut off the finger of a Mercedes-Benz S-Class owner when attempting to steal the car. In the case of the examination system the impersonator might come with harmful substances so when he is denied access from entering he might decided to use forceful act to gain entrance entreating everybody in the centre to danger.


An essential aspect of security is the ideology of authentication – the ability to prove that someone or something is what it claims to be. In the system’s security realm there is three commonly accepted types of user authentication:
1. Something you have – digital certificates, tokens, smart cards and keys
2. Something you know – passwords, personal identification numbers
(PIN), or some other piece of personal information such as your pet‘s Name or mother‘s maiden name.
3. Something you are – a biological trait (a biometric) At first glance, biometrics appears to be the most secure and appealing of the three options. It is nearly impossible to steal or forge one‘s genetic traits. It is far more difficult than stealing a password or other personal information such as a PIN. They cannot be lent to another user, and they cannot be forgotten. In most cases, they are not intrusive and are convenient to the end user. But they do pose some interesting challenges as well. For example, if a user‘s fingerprint pattern is stolen, what can you do? The user can‘t just simply change their fingerprint like they could a password. A new fingerprint cannot be issued like a certificate could. Recent tests of biometric systems have demonstrated that they are not hack proof. This is interesting food for thought and should be considered when a decision is made to implement any type of authentication system. I will discuss the benefits and concerns in further detail throughout the paper.

An ATM is typically made up of the following hardware devices:
• CPU (to control the user interface and transaction devices).
• Magnetic and/or Chip card reader (to identify the customer).
• PIN Pad (similar in layout to a Touch tone or Calculator keypad), often manufactured as part of a secure enclosure.
• Secure crypto processor, generally within a secure enclosure.
• Display (used by the customer for performing the transaction).
• Function key buttons (usually close to the display) or a Touchscreen (used to select the various aspects of the transaction).
• Record Printer (to provide the customer with a record of their transaction).
• Vault (to store the parts of the machinery requiring restricted access).
• Housing (for aesthetics and to attach signage to).
• Sensors and Indicators.

Today the vast majority of ATMs worldwide use software like Microsoft Windows OS, primarily Windows XP Professional or Windows XP Embedded. A small number of deployments may still be running older versions of Windows OS such as Windows NT, Windows CE, or Windows 2000.
There is a computer industry security view that general public desktop operating systems have greater risks as operating systems for cash dispensing machines than other types of operating systems like (secure) real-time operating systems (RTOS). RISKS Digest has many articles about cash machine operating system vulnerabilities.
Linux is also finding some reception in the ATM marketplace. An example of this is Banrisul, the largest bank in the south of Brazil, which has replaced the MS-DOS operating systems in its ATMs with Linux. Banco do Brazil is also migrating ATMs to Linux.
Common application layer transaction protocols, such as Diebold 91x (911 or 912) and NCR NDC or NDC+ provide emulation of older generations of hardware on newer platforms with incremental extensions made over time to address new capabilities, although companies like NCR continuously improve these protocols issuing newer versions (e.g. NCR’s AANDC v3.x.y, where x.y are subversions). Most major ATM manufacturers provide software packages that implement these protocols. Newer protocols such as IFX have yet to find wide acceptance by transaction processors.

Talking ATMS are automatic teller machines that provide the ability to conduct transactions using both visual and auditory components. Essentially, a talking ATM will provide a means of persons with visual impairments to utilize the ATM by making use of audible instructions. While many ATMs today include an audio component that makes use of a speaker system, the talking ATM employs the feature of a headphone jack or telephone handset that allows the user to conduct the transaction with a degree of security.
The great advantage of the talking ATM is that it makes it possible for a wider range of users to conduct business utilizing an ATM. For many people, a visual display is sufficient to handle the basic banking functions associated with the device. However, persons who have vision issues and cannot read an ATM screen would either have to forego usage or entrust another person to assist them in making a transaction. With a talking ATM, visual impairment ceases to be an obstacle in making use of the automatic teller machine.
By providing a headphone jack that will work with most standard stereo headphones, the talking ATM makes it possible for persons to plug into the system and hear a series of audible communications that allow the user to indicate the type of transaction desired. Once the user has selected the transaction type, audible prompts walk the user through the process. Often, the technology currently in use with a talking ATM will involve either pre-recorded sound files or equipment that is configured to manage a text to speech synthesis process.
While the talking ATM is not yet a universal offering, a growing number of banks are installing this type of ATM at their branches. Because advances in technology are making the talking ATM more cost efficient for companies that provide remote access to bank accounts via ATMs set up in supermarkets and airport terminals. Some experts predict that within a decade, the talking ATM will be the standard for all automatic teller machines. (Malcolm Tatum, 2011).
A Voice Aided or talking ATM has the following features:
1. Physical accessibility facilities like ramp, floor guidance, door size, height and reach, floor space, railings, etc. for a wheelchair ATM user.
2. A visually challenged person can independently operate an ATM machine for Cash Withdrawal, Balance Enquiry and PIN change ATM operations.
3. Braille signage is put on the ATM machine for locating ATM parts like card slot, cash dispenser, receipt printer, etc.
4. Talking ATM mode enabled through insertion of a headphone in an audio jack of ATM machine.
5. Use of ATM keypad matrix to do complete ATM operation. This functionality is similar to an IVR wherein you use only number options to select different options.
6. A keypad is a standard telephone matrix keypad with a raised dot on the key number 5 which is a universal design. A visually challenged user use this key 5 as a reference key and can easily locate other number keys.
7. Keypad buttons orientation is provided so that a visually challenged person can easily find buttons like Cancel, Clear and Enter. Also these three function keys have distinct raised symbols so that a visually challenged user can feel and press a correct key. Keypad number pressed is supported by a beep sound.
8. Important features a visually challenged user can choose in the beginning of his ATM operation are language choice, volume control, hide or display screen and orientation to the ATM machine.
9. Complete screen text and audio synchronization is provided.
10. ATM screens with white text on red background, bigger font size of text and menu selection options with white text on blue background are following the accessibility norms for low vision persons. (Union bank of India website).

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