| HOW DO ATMs
WORK?
An ATM is simply a data
terminal with two input and four output devices. Like
any other data terminal, the ATM has to connect to, and
communicate through, a host processor. The host processor
is analogous to an Internet service provider (ISP) in
that it is the gateway through which all the various ATM
networks become available to the cardholder (the person
wanting the cash).
Most host processors can
support either leased-line or dial-up machines. Leased-line
machines connect directly to the host processor through
a four-wire, point-to-point, dedicated telephone line.
Dial-up ATMs connect to the host processor through a normal
phone line using a modem and a toll-free number, or through
an Internet service provider using a local access number
dialed by modem.
Leased-line ATMs are preferred
for very high-volume locations because of their thru-put
capability, and dial-up ATMs are preferred for retail
merchant locations where cost is a greater factor than
thru-put. The initial cost for a dial-up machine is less
than half that for a leased-line machine. The monthly
operating costs for dial-up are only a fraction of the
costs for leased-line.
The host processor may
be owned by a bank or financial institution, or it may
be owned by an independent service provider. Bank-owned
processors normally support only bank-owned machines,
whereas the independent processors support merchant-owned
machines. |
