How does an ATM work?

An ATM Machine is programmed with a Terminal Identification Number (aka "TID") along with other identifying information lets the cardholder's bank (the issuer) know where the transaction is taking place (which ATM). The ATM connects to the ATM networks through a processing center (or network switch via a telephone line or internet service provider or other communication method) 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. Most large banks that issue ATM cards use a real-time system with the networks, some smaller banks operate a nightly upload or use a cache database (no pun intended) meaning they use the account balance from within the database not real-time.

Once the bank or processing network approves the transaction the ATM receives the authorization and dispenses the cash requested. Most ATM Machines can also be used if someone just wants to check their account balance or transfer funds before or after withdrawing cash. There is no surcharge fee charged by ATM Machines for non-cash withdrawal transactions.