About the ATM: Is there a safer alternative to the ATM?


Withdraw cash at an ATM near you in Singapore.

Source: Freepik

If there’s one machine that defines our self-service culture, it’s the ATM. Withdrawing cash is a process that we're all familiar with: First, you search for an ATM, then insert your debit card, enter the 6 digit PIN, decide how much cash you need, and within seconds you’re walking away with cash.

The first ATM opened on June 27, 1967 at a branch of Barclays bank in Enfield, north London. Since then, the ATM has evolved to offer customers a variety of financial services including depositing cash and checking savings balance. Today, every ATM contains a ‘computer’ which is connected to a secure network that can connect to and validate information with your bank. In essence, an ATM is just an extension of your bank. But what happens behind the screen?


Let’s see how an ATM actually works:

When you insert your debit card into an ATM, you set off a chain of reactions. First, the ATM checks your credentials and account information to make sure that your debit card is valid. To do this the ATM uses 2 readers, where the first reader confirms whether or not the debit card is real and the second reader accesses your account number and password. Once your password in confirmed, the ATM connects to your banks’ host processor, which transmits the request to your bank.

When you request to withdraw cash, the host processor submits an electronic funds transfer (EFT) from your bank account to the host processor’s account. The processor sends an approval code to the ATM, which allows the machine to dispense cash.

For cash deposits, the ATM contains 1 empty tray to collect cash or cheques, which are later manually sorted. For cash withdrawals, a vacuum or suction cup grabs 1 note at a time and feeds it out through a roller system. After the ATM dispenser hands over the correct amount of cash, your banks’ computer records the transaction and signals to the ATM to return your debit card and print a receipt if you requested for one. What may seem like a simple transaction clearly involves many parts of the ATM to work together.

Banks use various methods to ensure safety for their customers. For example, most ATMs have PIN pads to prevent PIN numbers from being copied. Security cameras are also placed near ATMs so prevent fraud.


Are ATMs safe?

Despite measures like PIN pads and security cameras, ATMs are not always the safest way to withdraw cash. In Singapore, cases of ATM fraud have been steadily increasing over the past few years. In 2011, a syndicate cheated DBS customers of over S$1 million by skimming PINs at 2 ATMs in Bugis. Then in 2016, 2 men stole S$75,000 from ATMs by using cloned cards. ATM fraud occurs when a person is able to acquire a debit card and/or PIN to withdraw money. Credit and debit card skimming is a popular form of ATM fraud where a thief installs a machine or camera at an ATM in order to pick up card information and PIN numbers when customers use their cards.

With all things considered, from setting up an ATM to the security measures involved, ATMs are very costly for banks to maintain. Generally, ATM machines cost anywhere between $1,000 to $25,000. A freestanding ATM costs between $3,500 to $7,000, while a built-in ATM costs between $5,000 to $10,000.

But these figures are only relevant for 1 ATM. For the convenience of their customers, banks need to have a network of ATMs. According to Statista, in 2016, there were approximately 57.7 ATMs per hundred thousand adults in Singapore. A majority of these are clustered around the central areas like Orchard and Raffles Place. What about the families living in parts of Singapore where ATMs are more spread apart, like in Boon Lay, Pasir Ris, or Sembawang?

Because the supply of ATMs does not match the demand for withdrawing cash, it’s common to see long queues especially around hawker centers or shopping malls. By partnering with SOCASH, banks are able to provide customers living in these areas with greater convenience by withdrawing cash around the corner and without waiting in a queue.


Is there a safer alternative to the ATM?

As the saying goes, “Cash is king,” and even with the option of digital payments, there will always be the need to have cash in hand. While the ATM has served its purpose throughout the decades, there’s an easier way to withdraw cash using SOCASH. With our app, you’ll gain access to thousands of cashpoints including shops, grocery stores, salons, cafes, and more. With every transaction, you’ll earn Cashback, Rewards, and Deals from shops. Download SOCASH today and enjoy a $6 signup bonus using promo code BLOG.


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