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The rise of technology has brought into force many types of equipment that aim at more

customer satisfaction. ATM is one such machine which made money transactions easy for

customers to bank. ATM is a computerized telecommunications device that provides a financial

institution's customers a method of financial transactions in a public space without the need for a

human clerk or bank teller. ATM means neither ³avoids travelling with money´ nor ³any time

money,´ but certainly implies both. Slim ATM cards are fast replacing confounding withdrawal

forms as a convenient way of getting your money from Banks. ATMs are providing a wider

range of services to a wider range of users. Also, most ATMs enable card holders from other

banks to get their account balance and withdraw cash, even if the card is issued by a foreign

bank. There is an urgent need for improving security in banking region. With the advent of ATM

though banking became a lot easier it even became a lot vulnerable. The ATM frauds not only

cause financial loss to banks but they also undermine customers' confidence in the use of ATMs.

There is thus a need for precautionary measures that to the ATMs.


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The revolution in information and communication technologies has become central to

developments in the banking and financial services industry. Most banking industry analysts
include technological change on the short list of important factors underlying the dynamics in
banking industry structure and performance. In recent years, technology has become increasingly
important to the evolution of bank retail delivery systems and the development of new electronic
retail products. The ability to deliver new advanced technology products reliably has become a
central theme in the marketing strategies of a growing number of banks. Most institutions see
introducing new products and services such as PC (personal computer) banking as a necessary
step for retaining highly valued customers, and for positioning themselves strategically for the
future. The rise of technology in India has brought into force many types of equipment that aim
at more customer satisfaction. ATM is one such machine which made money transactions easy
for customers to bank. ATM is a computerized telecommunications device that provides a
financial institution's customers a method of financial transactions in a public space without the
need for a human clerk or bank teller. Most banks now have more ATMs than branches, and
ATMs are providing a wider range of services to a wider range of users. Also, most ATMs
enable card holders from other banks to get their account balance and withdraw cash, even if the
card is issued by a foreign bank. The other side of this improvement is the enhancement of the
culprit¶s probability to get his µunauthentic¶ share. Traditionally, security is handled by requiring
the combination of a physical access card and a PIN or other password in order to access a
customer¶s account. This model invites fraudulent attempts through stolen cards, badly-chosen or
automatically assigned PINs, cards with little or no encryption schemes, employees with access
to non-encrypted customer account information and other points of failure.







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Electronic banking is sometimes defined as the provision of retail and small value
banking products and services through electronic channels either through mobile devices,
Automated Teller Machines, or even the internet. It is also often used to describe processes in
which customers can perform banking transactions without visiting a physical institution e-
banking made an auspicious debut when automated teller machines (ATMs) were introduced it
revolutionizing how we viewed the usual, brick-and-mortar bank structure. The Automatic Teller
Machine (ATM) was first commercially introduced in the 1960s. By 2005, there were over 1.5
million ATMs installed worldwide. With advent of Automatic Teller Machines (ATM), banks
are able to serve customers outside the banking hall. ATM is designed to perform the most
important function of bank. It is operated by plastic card with its special features. The plastic
card is replacing cheque, personal attendance of the customer, banking hour¶s restrictions and
paper based verification. ATMs have made hard cash just seconds away all throughout the day at
every corner of the globe. ATMs allow you to do a number of banking functions ± such as
withdrawing cash from one¶s account, making balance inquiries and transferring money from
one account to another ± using a plastic, magnetic-stripe card and personal identification number
issued by the financial

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Automated teller machines are electronic devices, which allow banks¶ customers to make
cash withdrawals and check their balances 24 hours a day without the aid of a human teller. Cash
holders are given cards and personal identification numbers (PIN) to remember and use when
accessing the facility to withdraw money from their accounts. The machines are placed in areas
that are convenient to customers who can access services twenty-four hours a day. The services
are available at bank branches, airports, large retail stores such as super markets, hotels,
restaurants and other designated places. ATMs dispense cash faster than the manual operations.
They are automatic and less expensive which is helping to keep banks operating cost low.

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‘ 24- hours cash withdrawal facility
‘ Auick cash withdrawal without having queue
‘ Account activity enquiry
‘ Statement request through ATM
‘ Transfer funds to other account number in same bank
‘ Balance enquiry
‘ Mail with cash or cheque(s) (Cross cheque) deposit
‘ Changing Personal Identity Number
‘ Cash deposit which will originally deposit very next day of deposit
‘ Mini statement which contain 8-10 previous transaction records
‘ Cheque book request through ATM Withdraw money by using VISA, PLUS, MASTER,
MAESTRO and credit card
‘ Withdraw money from dollar account ATM card which gives taka by converting foreign
Currency
‘ Complete security as only the card holder knows the PIN
‘ Customer can sometimes use the services of other bank

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In spite of a number of innovative services being made available at many ATMs, cash
withdrawal stills remains the most accessed service at ATMs. However, the migration of
routine bank transactions like cash withdrawals and balance enquiries from teller counters to
ATMs significantly raises the potential for savings in employee costs and greater employee
focus on value-added revenue-enhancing activities such as selling other financial products
and advisory services to customers.

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Again, due to the strong cash culture in India, cash deposits are most likely higher than
in other markets, especially cash deposits made by commercial customers such as retail
shopkeepers and those whose work involves substantial travelling. A high cash withdrawal
rate results in higher ATM servicing costs due to frequent cash replenishment requirements.
Recent developments in ATM technology have made it possible to recycle cash in ATMs.
Currency notes received as cash deposits are counted; soiled notes separated and deposited
cash dispensed to fulfil withdrawal transactions. However, regulatory concerns relating to
identification of counterfeit notes and its depositors need to be addressed first.

ATM with Cheque deposit facility is not picking up in India, like other countries. One
of the reasons is the delay in collection of the cheque deposited in ATMs. Cheque deposited
in ATMs is to be collected and deposited in the designated branch for collection. Another
reason is the introduction of cheque deposit Kiosks by various Banks especially Private
sector ones. These are kept at each some important locations/branches where customers can
deposit their cheques which are collected at intervals which may be difficult in ATMs. 


 


Most utilities have inadequate infrastructure for receiving bill payments resulting in
long queues at collection centres. Hence, bill payment at ATMs has achieved noticeable
acceptance by bank customers. Most banks provide this service through bi-lateral
arrangements with bill-payment service providers. ATM users register their water,
electricity and telephone utility accounts with banks, check their dues at ATMs, approve bill
payments that are debited to their bank accounts and receive printed receipts for the
transactions. This service has the effect of improving customer satisfaction for both the bank
as well as the bill-payment service providers.


 


ATMs are ideally suited to sell paper-based products and services such as tickets,
wireless phone recharge cards, financial products, etc. The screen interface allows browsing

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 and customization, access to bank accounts facilitate payments and printing capabilities
produce the actual product/service.

A number of banks including ICICI Bank, SBI and PNB have ATMs at Mumbai¶s
local railway stations to dispense season tickets to commuters. Own-bank customers pay no
extra charge while other bank customers pay a fee of Rs. 50 for this extremely useful service
of anytime ticket purchase. Railway season tickets represent a high-volume mass-appeal
product. As technical standards get established and product/service sellers become aware of
the ATM sales channel, niche-appeal high-margin products like entertainment tickets will
join the fray.

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Information Kiosks has been introduced by many Banks and also by PSUs like
Railways, Tourist centres etc. While the revenue-producing capacity of non-emergency type
of information at ATMs as a stand-alone product is doubtful, many customers may be
willing to pay a nominal fee for information having ³impulsive´ demand such as cricket
scores while they wait for their transactions to be processed. To be sure, providing
information, whether priced or free, will appeal to some customers and increase customer
satisfaction.

Union Bank has used technology to establish Village Knowledge Centres (VKCs),
which have proved to be a success in the 198 centres, where they have been set up. VKCs
empower the local rural population by giving them information on various vital inputs such
as weather, fertilizers, prices of crops, etc. The bank is also operating financial education
centres offering counselling at 51 of these VKCs.


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In India, ATM advertising for third-party products is currently not allowed by

Regulatory authorities. However, the wait time at ATMs can be effectively used by banks to
promote their own brands, product and services. Furthermore, banks can tailor advertising
messages based on customer information easily available in their accounting and CRM

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 databases. Customer wait-time at ATMs while transactions get processed, typically between
10 to 25 seconds, has been profitably used by many banks for their own advertising.

 


Indians, who have migrated abroad or to cities, regularly use money orders and wire
transfers to send money to their families back home. ATM growth, especially in rural India,
will capture substantial business from the expensive wire transfer agents¶ network and the
customer-service lacking postal network. In line with international trends, ATMs can be
made capable to dispense printed money orders or initiate wire transfers against a charge on
customers¶ bank accounts. After addressing regulatory hurdles, these services can even be
made available to non-account holders through cash payments using the currency acceptors
built into ATMs. ATMs can also facilitate the encashment of wire transfer amounts by
allowing even non-account holders to withdraw cash based on PINs or previously mailed
special-purpose ATM cards. 




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ATMs are also used to recharge mobile phones. Initiated in 2004 by ICICI Bank, now
most ATM/Debit Cardholders are able to recharge their pre-paid subscriptions of most
mobile service providers from anywhere in the country using their bankµs ATMs or by
sending a SMS. The amount for recharging the mobile phone would be debited from the
subscriberµs Bank account and the subscription would be directly recharged accordingly.
The mobile top-up facility provides convenience on ATMs and through mobile phones using
SMS.

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ATM physical attacks are normally perpetrated with the intention of gaining access to the
cash or other valuable media within the ATM safe or ATM security enclosure. Some of the most
common methods include Ram Raid, Explosive Attack (gas and non-gas) and Cutting (e.g. rotary
saw, blow torch, thermal lance, diamond drill). The success of ATM physical attacks is often

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measured by what percentage of the cash is stolen and the speed by which the attack is
completed.

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There are many different categories of ATM fraud. In general ATM fraud can include
any deliberate 'criminal' technique which involves the use of an ATM to obtain something of
value to the perpetrator. The most common types of ATM fraud include Card Theft (e.g.
Lebanese Loop), PIN Compromise (e.g. Shoulder Surfing), Card Skimming, Cash Trapping,
Transaction Reversal and Deposit Fraud.

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Card theft is where the perpetrator physically obtains the consumer's card at or in the
vicinity of an ATM. The most common method of card theft is Card Trapping. The most popular
method of trapping a card at the ATM is known as Lebanese Loop. A Lebanese Loop is designed
to be entered within the card entry slot of the ATM card reader in such a way as it does not
prevent the consumer from entering their card, but it does prevent the ATM card reader from
ejecting or returning the card to the consumer. The perpetrator can subsequently remove the
trapped card once the consumer has departed from the ATM with the belief that the ATM has
captured or swallowed their card. Other methods of card theft include card swapping where the
consumer's card is exchanged for a card of similar appearance. This distraction method is often
executed at the time that the consumer's card is being returned or ejected to the consumer
following a transaction at the ATM.

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PIN compromise methods range from the very technically sophisticated to the relatively
easy technique known as shoulder surfing. Shoulder surfing involves the perpetrator standing
close enough to the consumer to observe the numbers entered on the key pad. A more
sophisticated method of observation or surveillance involves the use of a miniature camera

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which can either transmit the image of the PIN being entered or store the recording within the
device. With the increase in the number of mobile phones with video capture capabilities, such
phones are adapted to compromise PINs. Keyboard overlays are devices which are designed to
look very like the genuine ATM key pad and are fixed on top of the genuine key pad. The
Keyboard Overlay will record the numbers entered on the key pad but also permit the genuine
keyboard to accept the PIN being entered. Similarly to the use of cameras, the keyboard overlay
may transmit the information to a remote receiver or store the information locally. Sophisticated
ATM Infrastructure Hacking, Architecture Hacking, Network Hacking, Social Engineering,
Phishing and various other methods are also used to compromise PIN codes.

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Card skimming involves making a copy of the information encoded on the magnetic
stripe of the card. There are various different types of skimming device designed to be used in
different environments, from hand held devices through door access skimmers to miniature card
entry slot skimmers. Hand held skimming devices are more commonly associated with card
skimming in restaurants and other retail establishments. When used in the ATM environment the
perpetrator will either use distraction techniques to temporarily obtain and copy the consumer's
card or sometimes pick the pocket of the consumer. Some ATMs are installed in a controlled
environment whereby the consumer is required to swipe a card at the door of the ATM location
to gain access. Skimming devices may be attached to or used as a replacement for a genuine door
access device.ATM card entry slot skimmers have various shapes and sizes and also vary in
sophistication. When installed correctly they allow normal operation of the ATM in that the
consumer's card is entered and returned correctly, however the magnetic stripe is copied by the
skimming device. One of the most effective ATM skimming devices is known as the Sofia
skimmer. The skills of the perpetrators in modifying the packaging of skimming devices makes
them very difficult for the untrained observer to detect.

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Cash trapping is the term used to describe attacks where the consumer's cash is trapped
and prevented from being presented or delivered to the consumer. The variety of trapping
devices is significant, ranging from those which require insertion within the ATM's cash
dispenser through false fronts to well engineered electro-mechanical devices which simulate the
removal of the cash by the consumer.

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Transaction reversal techniques involve highly skilled manipulation of the ATM during a
transaction with the result that the host computer believes that the consumer did not receive their
cash and thus re-credits or reverses the transaction. Other variants of transaction reversal involve
either collusion with someone within the ATM network or detailed knowledge of the rules
governing transaction processing.

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Deposit fraud covers a variety of criminal techniques from making false deposits,
trapping deposits through skilful manipulation of the deposit accepting device. False Deposit
fraud includes exploiting processing rules to draw on funds before they have been verified and
officially cleared for crediting to an account. Similar to cash trapping, Deposit Trapping allows
the perpetrator to obtain the valuable media prior to it being secured within the deposit terminals
safe or security enclosure. Highly skilled perpetrators of deposit fraud may use techniques by
which the deposit terminal believes it has received and successfully validated a deposit when in
fact it has not.

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Most ATM frauds happen due to the negligence of customers in using, and more
importantly, negligence of banks in educating their customers about the matters that should be
taken care of while at an ATM. The number of ATM frauds in India is more in regard to
negligence of the Personal Identification Number (PIN), than by sophisticated crimes like

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skimming. Banks need to develop a fraud policy ± the policy should be written and distributed
to all employees, borrowers and depositors.

The most important aspect for reducing ATM related fraud is to educate the customer.
Here is a compiled list of guidelines to help your customer from being an ATM fraud victim:

‘ Look for suspicious attachments. Criminals often capture information through ATM
skimming ± using devices that steal magnetic strip information. At a glance, the skimmer
looks just like a regular ATM slot, but itµs an attachment that captures ATM card
numbers. To spot one, the attachment slightly protrudes from the machine and may not be
parallel with the inherent grooves. Sometimes, the equipment will even cut off the printed
labels on the ATM. The skimmer will not obtain PIN numbers, however. To get that,
fraudsters place hidden cameras facing the ATM screen. Thereµs also the helpful
bystander (the criminal) who may be standing by to kindly inform you the machine has
had problems and offer to help. If you do not feel safe at any time, press the ATM cancel
button, remove your card and leave the area immediately.
‘ Minimize your time at the ATM. The more time you spend at the ATM, the more
vulnerable you are. If you need to update your records after a transaction, one is advised
do it at home or office, but not while at the ATM. Even when depositing a cheque at the
ATM, on should not make/sign the cheque at the ATM. After the transaction, if you think
you are being followed, go to an area with a lot of people and call the police.
‘ Make smart deposits. Some ATMs allow you to directly deposit checks and cash into
your accounts without stuffing envelopes. As for the envelope-based deposits, make sure
they go through ± if it gets jammed and it doesnµt fully go into the machine, the next
person can walk up and take it out. After having made the ATM deposit, compare your
records with the account statements or online banking records.
‘ Avoid using ATMs at night. While robberies are less prevalent than fraud at ATMs,
thereµs still risk, especially at night. And if you have to use an ATM late at night, use one
at a bank itself. Financial institutions have to follow certain guidelines and regulations as
far as lighting is concerned. They also have cameras on all the ATMs.
‘ Be aware of your surroundings. Before you slide your card into the machine, look around
if the area appears safe or if there is anybody who can see the PIN pad. Having the card

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 ready before entering is ATM premises is better than searching for it though the purse at
the machine. While you are fumbling with a wallet or purse, you are easy prey for a thief.
A good rule of thumb is to always shield your card, no matter how comfortable you are
with the place. If your card is stuck inside an ATM, be suspicious of anyone offering
help. Immediately report the incident to the bank
‘ Keep your receipts and card before leaving the place. Before you leave the machine,
make sure you have your card. Also, do not leave your receipt behind at the ATM. Keep
copies of your receipts and compare them with your monthly statement. As much as 83
percent of all ATM and debit fraud results from stolen cards and discarded receipts
bearing card/account numbers.
‘ Memorize your PIN. Many cardholders walk up to an ATM and pull out a piece of paper
containing four numbers. If you are not sure, make it a point that you don¶t keep the PIN
and ATM card together in your wallet ± If someone comes up and hits you over the head,
theyµre going to have all your information right there. But ideally, one should never write
down the PIN number ± it should be memorised.
‘ Never disclose your PIN to anyone. Even bank officials do not require an ATM PIN ±
neither to process an issue involving ATMs, nor to remove a card stuck in the machine.
Always change the PIN as soon as you receive it. Preferably, change it every quarter.
This habit will also help remind you of changing the PIN if you find a suspicious activity.
‘ Never provide information via e-mail. About 3.5 percent of ATM and point-of-sale debit
fraud originates from µphishing¶ e-mails. Phishers attempt to obtain information about
your bank account by asking for your PIN, account number and personal information.
Much like ATM skimming equipment, these e-mails appear legitimate. If you click on a
link, you will be sent to a Web site that looks exactly like the one the phishers are
imitating. Reputable companies do not ask for information through e-mail. If you receive
one of these e-mails, inform the organization. And if you believe your accounts have
been compromised, inform your financial institution and cancel the account.





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The ATM fraud is not the sole problem of banks alone. It is a big threat and it requires a
coordinated and cooperative action on the part of the bank, customers and the law enforcement
machinery. The ATM frauds not only cause financial loss to banks but they also undermine
customers' confidence in the use of ATMs. This would deter a greater use of ATM for monetary
transactions. It is therefore in the interest of banks to prevent ATM frauds. There is thus a need
to take precautionary measures that give greater "protection" to the ATMs, particularly those
located in less secure areas. The nature and extent of precautionary measures to be adopted will,
however, depend upon banks.

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