“A STUDY OF

ATM & DEPOSIT MACHINE”

BACHELOR OF COMMERCE

(BANKING & INSURANCE)

SEMESTER V

(2015-16)

SUBMITTED BY

RAJPUT MANPREET SINGH

UNDER THE GUIDANCE OF

PROF. SAMMA NARANG

SINDHU EDUCATIONAL SOCIETY

SWAMI HANSMUNI MAHARAJ DEGREE COLLEGE

OF COMMERCE

NETAJI ROAD, ULHASNAGAR-4

“A Study of ATM & Deposit Machine”

Business CRM Services With ATMs & Deposit Machine Saturating The Market And Declining Revenues Per Machine, Forward-Looking Financial

Institutions Are Rethinking Their ATM & Deposit Machine Strategy And Moving Toward Exciting New Technologies.

“A STUDY OF

ATM & DEPOSIT MACHINE”

Bachelor of commerce

(Banking & Insurance)

Semester V

(2015-16)

Submitted

In Partial Fulfillment of the requirements for the Award of Degree of Bachelor of Commerce - Banking & Insurance

By

RAJPUT MANPREET SINGH

Seat No-1150303

UNDER THE GUIDANCE OF

PROF. SAMMA NARANG

SINDHU EDUCATIONAL SOCIETY

SWAMI HANSMUNI MAHARAJ DEGREE

COLLEGE OF COMMERCE

NETAJI ROAD,

ULHASNAGAR-4

SINDHU EDUCATIONAL SOCIETY’SSWAMI HANSMUNI MAHARAJ DEGREE

COLLEGE OF COMMERCE,

2015-2016

This to certify that, RAJPUT MANPREET SINGH of B.com (Banking and Insurance) Semester-V (2015-16) has successfully completed the project on “A STUDY OF ATM & DEPOSIT MACHINE” under the guidance of Prof. SAMMA NARANG.

Date:-

Place- Ulhasnagar.

(Prof. Mrs. Samma Narang) (Prof. Vandana Kodwani)

Project Guide BBI Coordinator

External Examiner (Dr. Prema Gurbaxani)

Principal

Rajput Manpreet Singh

Seat No. 1150303

CERTIFICAT

DECLARATION

Date-

I, RAJPUT MANPREET SINGH the student of B.com (Banking & Insurance) Semester- V (2015-16) hereby declare that I have completed the project on “A STUDY OF ATM & DEPOSIT MACHINE” successfully.

The information submitted in this project is true and original to the best of my knowledge.

Thank you,

Yours faithfully,

RAJPUT MANPREET SINGH

ACKNOWLEDGEMENT

At the beginning, I would like to thank Almighty GOD for his shower of blessings. The desire of completing this dissertation was given a way by my guide Prof. Samma Narang. I am very thankful to her for the guidance, support and for sparing her precious time from a busy and hectic schedule.

I am thankful to Dr. Prema Gurbaxani, Principal of SHM College where I am a student in Commerce. My sincere thanks to Prof. Samma Narang who always motivated and provided a helping hand for conceiving higher education.

I would fail in my duty if I don’t thank my parents who are pillars to my life. Finally, I would express my gratitude to all those persons who directly and indirectly helped me in completing dissertation.

Rajput Manpreet Singh

DECLARATION

Date-

I the undersigned PROF. SAMMA NARANG, have guided RAJPUT MANPREET SINGH for his project, he has completed the project “A STUDY OF ATM & DEPOSIT MACHINE” successfully.

I, hereby, declared that information provided in this project is true as per student to the best of my knowledge.

Thank you,

Yours faithfully,

Prof. Samma Narang

Literature Review

The purpose of this paper is to review literature on the impact of adoption of ATM technology from the perspective of customers, banks and suppliers. As per the changing demand of the customers, innovative software solutions are regularly released. Similarly, banks are deploying CRM technology to facilitate personalized needs of customers on one to one basis. Suppliers of ATMs are also under pressure to provide ATMs to banks which can meet the latest customer needs.

Abstract:

Indian banking system touches the lives of millions of people and it is growing at a fast pace. Banking industry in India is facing number of challenges like changing needs and perceptions of customers, new regulations from time to time and great advances in technologies. The pressure of meeting these challenges have compelled banks to change the old ways of doing business. The research paper focuses on how the technology has transformed the face of banking in India. India’s banking system has seen some major financial innovations in the past decades which lead to tremendous improvements in banking services and operations. The various innovations in banking and financial sector are ATM, Debit and Credit cards, Deposit Machine and many more value added products and services. This paper also highlights the benefits and challenges of changing banking trends. Banks are investing heavily in adoption of these innovations. The need of hour is to design such a system that encourages the efficiency of investment in innovations and widens the gap between revenues and costs involved with reference to technological up gradation

Sr. no. Content Pg. No.

1.

2.

3.

INTRODUCTION

UNIT-1

Introduction To ATM

a. Introductionb. ATM Meaningc. ATM Networkd. Inter-Connectivity Of ATM Networke. Hard cash transaction

Review Of ATM Machine

a. Brief History Of Bank ATMb. Features Of ATMc. Self-Service Kiosksd. Business & Customer Benefit

Detail Study Of ATM

a. Versatility Of ATMb. Challenges in Using ATMc. ATM As An Effective Marketing

Channel

01-13

14-17

18-21

22-27

Sr. no.

ContentPg. No.

4.

5.

1.

Role Of RBI

a. Changes Made By RBIb. New Rule For ATM Customerc. Reason For Framing New Rules By RBId. Comparison of ATM usage charges

Introduction To ATM Encryption Method

a. Introductionb. Hardware & Softwarec. ATM Encryption Methodd. Smart Intruders

UNIT-2

Introduction To Cash Deposit Machine

a. Cash Deposit Machineb. Why Use A CDMc. How Does CDM Help Youd. Salient Featurese. Advantages

28-33

34-36

37-40

Sr. no. Content Pg. No.

2.

Detail Study

a. System Overviewb. CDM Provide Busy Customer Servicec. Customer Requirementd. Benefitse. Customer Require Fast Technology

UNIT-3

ANALYSIS OF DATA

Findings

Conclusion

Questionnaire

Bibliography

41-44

45-50

51

52

53-54

55

UNIT-1

CHAPTER-1

Automated Teller Machine(ATM)

INTRODUCTION TO ATM MACHINE

Introduction

Banking industry in India has also achieved a new height with the changing times. Customer services and customer satisfaction are prime responsibilities of banks now days. Information technology has given rise to new innovations in the product designing and their delivery in the banking and finance industries. Technology offers a chance for banks to build new systems that address a wide range of customer needs including many that may not be imaginable today. Banking through internet has emerged as a strategic resource for achieving higher efficiency, control of operations and reduction of cost by replacing paper based and labor intensive methods with automated processes thus leading to higher productivity and profitability. Financial innovation associated with technological change totally changed the banking philosophy and that is further tuned by the competition in the banking industry. Challenging business environment within the banking system create more innovation in the fields of product, process and market.

As the most highly used customer access channel in retail banking, the ATM is a critical customer touch point. Recent ATM innovations offer financial institutions the opportunity to transform the ATM from a cash dispenser to a customer relationship management tool, helping to enhance loyalty among all customers, particularly those who almost exclusively use the ATM. From transaction personalization to customized, one-to-one marketing capabilities, the future of ATMs is in their value as customer relationship and marketing vehicles, allowing financial institutions to mitigate the trend of declining ATM profitability while maximizing the potential of their ATM programs.

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ATM

ATM means neither “AVOIDS TRAVELING WITH MONEY “nor “ANY 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. In a way, they

are rewriting the rules of financial transaction. A smart person no longer needs to carry a

wallet-full of paper money on his person. All he needs to do is fish out an ATM (automated

teller machine) card, insert it in the slot, punch in a few details and go home with hard cash.

Automated teller machines (ATMs) were the first well-known machines to provide

electronic access to customers. 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 cheques, 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 institution. The Indian

ATM industry has seen explosive growth in recent times. ATMs represent the single largest

investment in the electronic channel services for the Banks. In India, HSBC set the trend

and set up the first ATM machine here in 1987. Since then, they have become a common

sight in many of our metros. Automated Teller Machines (ATMs) have gained prominence

as a delivery channel for banking transactions in India. Banks have been deploying ATMs to

increase their reach. While ATMs facilitate a variety of banking transactions for customers,

their main utility has been for cash withdrawal and balance enquiry. As at the end of

October 2007, the number of ATMs deployed in India was 31,078. According to some

estimates the total cash movement through ATMs across India was around Rs. 70,000 crore

in FY 06. Clearly, industry watchers forecast a bright future.

.16

For ATMs in India. While the ATM is a great service for customers, for the banks it means immense savings on the cost of operations. While a typical cash transaction carried out in a bank’s branch premise would cost Rs 40 that in an ATM will only cost Rs 18translating into a cost saving of Rs 22 per transaction.

First ATM in India

Hong Kong and Shanghai Banking Corporation (HSBC) introduced ATM concept in India first time in 1987. But now almost every bank provides ATM facilities to their customers. ICICI bank has most number of ATM centers across India. The other banks UTI, HDFC and IDBI are leading in providing ATM facilities to their customers. Public Sector Banks are also taking the installation of ATMs seriously for Indian market. They are either setting up their own ATM centers or entering into tie-ups with other banks. The Corporation Bank has the second largest network of ATMs amongst the Public Sector Banks in India.

ATM Networks: The ATMs of a bank are connected to the accounting platform of the bank through ATM switches. Inter-bank ATM networks are created by setting up apex level switches to the use of ATM cards of one bank at the ATM(s) of other banks for basic services like cash withdrawal and balance enquiry. Banks owning the ATMs charge a fee for providing the ATM facility to the customers of other banks.

Inter-connectivity of ATM Networks for enhanced access

Inter-connectivity of ATM Networks provides access to the customers to use any ATM in the country irrespective of the bank with which the customer is banking. There are a number of ATM network switches such as CashTree, BANCS, CashnetMitr and National Financial Switch (NFS). In addition, most ATM switches are also linked to VISA or MasterCard gateways.

Why do banks prefer online transactions rather than hard cash? How are they benefited?

Money in the form of bills or coins; "there is a desperate shortage of hard cash"Electronic money, or e-money, is the money balance recorded electronically on a card. Another form of electronic money is network money, software that allows the transfer of value on computer networks, particularly the internet. Electronic money is a floating claim on a private bank or other financial institution that is not linked to any particular account. Thus, electronic money is used rather than hard cash..

17

CHAPTER-2

REVIEW OF ATM MACHINE

Brief History of the Banks Having Large No. of ATM Channels

The State Bank of India (SBI) is the oldest and largest bank in the country. Its origins

go back to the first decade of the 19th century, when the Bank of Calcutta was established

on 2 June 1806. The bank got its present name after an Act of Parliament in May 1955 and

the State Bank of India was constituted on 1 July 1955. Today, SBI has a phenomenal

9,559 branches and its ATM network is spread across 6,473 of its own locations& total

8,000ATMs including of those of its associate banks.

ICICI Bank India is the largest private sector bank. It’s banking products and financial

services are some of the superior ones. The reach and market of ICICI Bank is unmatched

in India as yet.It offers a countrywide network of 1,000 branches and 3,680 ATM’s reaching

out to your doorsteps.

The Housing Development Finance Corporation (HDFC) Bank is one of the first banks in

India to offer its customers the bill pay facility. HDFC Bank is also a leader in online

purchase (using the HDFC Bank DirectPay product). The bank also offers its customers a

free personalized payable-at-par chequebook and services like real time gross settlement

and national electronic fund transfer. HDFC Bank was among the first to receive an ‘in

principle’ approval from the RBI to set up a bank in the private sector as part of the

liberalization of the Indian banking industry in 1994. The bank has 1,148branches and

1,647 ATMs network spread across the country.

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Features of ATM

1. Cash withdrawal

2. Mobile phone recharge vouchers are available

3. Deposit cash and cheques (at selected ATMs)

4. Obtain a summary of balances for all your accounts

5. View and print a mini-statement (last 10 transactions)

6. Transfer money between linked accounts

Using ATMs as self-service kiosks for value-added services

By using self-service channels, consumers can purchase a variety of goods and services

without the help of a sales assistant. These interactive, self-service channels can be applied to a

number of areas.

ATMs still happen to be big crowd pullers for banks. They are now being increasingly used to

provide other services like credit card payments since the interface of an ATM is easy to

navigate, explore and use. It is a logical move to use ATMs to provide other value added

services. This is also supported by the fact that among self-help kiosks, ATMs have the best

penetration in many regions and this density is likely to grow. Currently, an ATM is

equipped with a card reader, a cash dispenser, a cash/envelope collector, and a printer. Using

these, a cardholder can conduct financial transactions such as cash withdrawal, cash or check

deposit, payment of utility bills, printout of mini account statements, and transfer of money

between linked accounts.

.19

Business benefits of using ATMs as self-service kiosksATMs provide the following advantages to the customer as well as the business:

1. Enhanced customer experience: ATMs can help enterprises retain and grow their customer

base by enhancing customer experience.

a. Customer convenience: ATMs can extend the transaction hours on bill payments,

ticketing, fee payment, and other transactions beyond office hours and beyond branch

premises to convenient locations.

b. Ease of use: ATMs have a simple UI that most bank customers find easy to use and

are familiar with. As mentioned earlier, many ATMs use local language and

biometrics for authentication, unlike internet or mobile interfaces that require the user

to be ‘net literate’, or websites that do not have regional customization implemented.

In many cases, the UI of some websites is not as user friendly.

2. Better quality of transactions: The quality of transactions via ATMs is better than those on

the Internet or mobile.

a. Persistent connectivity: ATMs provide dedicated and assured connectivity, unlike

the internet connection in many regions; ATMs provide dedicated and assured

connectivity.

b. Security: Transactions on ATMs are more secure than those on the internet. The web

is more vulnerable to hacking, viruses, phishing, etc. The introduction of the Europay,

MasterCard and Visa (EMV) standard, biometrics, contactless cards, and mobile

authentication further reduces chances of fraud in ATM transactions.

Customers benefits of Using an ATMIn an ever changing world of technology, everything gets faster, more convenient, and

more technologically advanced. The debit card has now been main stream in most

financial institutions for almost 20 years now. The advantages of using an automated

teller machine for customer are

.20

1. ConvenienceA debit card can be convenient in so many ways. If you need access to cash

and are either far away from your bank or after bank hours, you can still get

cash if you need it. Using a debit card speeds up lines at any place of business

by saving you from having to write a check; just swipe and your purchase is

completed. Most debit cards have the VISA or Master card logo which is

accepted almost anywhere, worldwide.

2. ProtectionThere is several ways that a debit card offers protection. First, if your cash is

lost or stolen, it cannot be replaced, it is gone. A debit card on the other hand

can be cancelled and a new one can be ordered. If someone did get the card or

card number before you realize it is gone, it has daily limit of Rs.500 for cash

or Rs.3000 for purchases. In addition, you are not liable for fraudulent

purchases. An unauthorized transaction can always be disputed and refunded.

3. BudgetWhen a debit card is used appropriately, it can help you budget much more

than a credit card. Most debit cards stop allowing transactions once your

balance is at zero, which also can save on fees such as overdrafts.

.21

CHAPTER-3

DETAIL STUDY OF ATM MACHINE

Tapping into the versatility of ATMs

ATMs have become the most popular channel of consumer interaction and the most used

marketing tool to reach a variety of geographies and increase regulated financial

penetration. The latest trend in unattended devices with touch screens combines a secure

payment solution with a multimedia delivery platform capable of delivering targeted

branding, promotions, etc.

Given the wide range of user demographics, ATMs employ a simple and easy-to-use

graphic user interface (GUI). They employ a limited set of keys, each transaction can be

completed in a few steps, each step is accompanied by an on-screen prompt for the user,

the on-screen text can also be displayed in a local-language, and the text is

Usually accompanied by images to enhance understanding. This makes ATM kiosks

extremely user friendly. Using ATMs, some of the potential value added services that could

be dispensed are:

1. Bill payments

Long queues at collection centers or insufficient literacy for online payments pose a

serious problem for consumers while paying utility bills. Hence, bill payment using

ATMs will be a welcome feature for most consumers. Customers can register their

utility accounts with banks. ATMs can then be used to check the dues and pay bills.

Since these payments are linked to bank accounts, the approval of such payments

will be faster and easier as well. On debiting their accounts, customers can receive

Printed receipts for the transactions. This can be extended to accept credit card

payments, institution fee payment, making charitable contributions, etc..22

2. Deposit automation using check imaging

Also known as ‘envelope free deposits’, this offers functionality to scan a check for

faster and assured processing. This is a win-win for customers who are able to

ensure faster and assured processing as well as for banks who can reduce incidents

of ‘lost checks’ as well as the cost of resource utilization in check processing. This

technology can be extended to offer customers a way to scan and pay bills at the

ATM, or to complete a transaction that requires scanning a document.

3. Sale of financial and other products

ATMs can be used to sell products and services such as travel tickets, mobile phone

recharge cards, financial products, and movie and theatre tickets, etc. The in-built

printer can produce the relevant ticket, statement, or receipt, and the ATMs can

facilitate secure and approved payments.

4. Information kiosks

ATM owners can charge customers a fee for providing non-financial information.

For example, the Union Bank of India has used ATMs to establish ‘Village

Knowledge Centers’ (VKCs). VKCs target the socio-economic development of the

local rural population in remote areas by giving them information on various vital

inputs such as weather, fertilizers, price of crops, etc. The bank also offers

counseling via financial education centers at 51 of the 200 VKCs.

5. Third-party advertising

Banks can effectively use the wait time at ATMs to promote brands, products, and

services based on customer information available in their accounting and CRM

databases. These can then be converted into potential sales. For example, if a

customer has been making regular payments for the purchase of a product category,

then advertisements and offers for those particular products can be displayed. If

customers are interested in the advertised service or product, they can use the ATM

to print a receipt with the contact details of regional sales representatives or the

location of the nearest outlet.

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6. Remittances

ATMs can be used to make cross-border remittances for migrant workers and

tourists. This reduces the delay inherent in postal money orders or wire transfers,

and eliminates the dependence on intermediaries and the need to travel to a brick-

and-mortar outlet. A recent news article quotes the Governor of the Reserve Bank

of India (RBI) on how people without bank accounts can use ATMs to receive

money.

7. Public announcements

ATMs can be used to make public announcements and disburse important

information. For example, police in the UK have used ATMs to publicize their

‘don’t drink and drive’ campaigns.

Challenges to consider in using ATMs as a self-service channel

Customers expect transactions across channels to have increased security and accessibility, and

they also demand timely delivery of services. Before adopting ATMs to propagate self-

service in various payments and non-financial transactions, ATM owners must review the

challenges in doing so.

1. Secure payment: ATM owners must assure customers that payments through this

channel are secure. The wide adoption of secure certified verification EMV

(commonly known as ‘chip and pin’) is a major step towards providing this

assurance. This method can authenticate a card and it can also verify a customer's

identity. This secures the payment and drastically reduces chances of fraud.

2. Software threats: While ATMs are more foul-proof than the internet, they can be

susceptible to malware attacks and anti-skimming jammers. ATM owners can

reassure users by providing effective security solutions to protect against targeted

threats and attacks.

3. Regulatory norms: It is necessary to comply with local regulations before deciding

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to deploy any of these services. For instance, in some countries regulatory authorities do not allow advertising for third-party products in ATM kiosks. In other cases, white-label ATMs may not have regulatory acceptance.

4. Consistent and timely services: The best way to attract customers is to ensure that transactions are fast, secure, and consistent. Though speed is of essence, the large volume of consumer payment and service transactions, diverse range of technologies and multi-vendor terminals can load the ATM network infrastructure heavily. Enterprises must ensure persistent network communications and

application performance for uninterrupted service availability. ATM owners must also be aware of third party hand-off issues and take steps to guard consumer interests.

Material Customer Satisfaction Level (MCS)

Material customer satisfaction level has been examined on the basis of three variables

i.e. reasonability of the fee charged, frequency with which problems are faced and the

post purchase behavior of the customers.

1. Fee ChargedFee charged by the banks is one of the variables taken for checking customer

satisfaction level. If customer feels that the fee charged by the bank is reasonable

then he is satisfied and vice-versa. Five degrees of reasonability have been taken

and they are coded as 5, 4, 3, 2, &1. There is direct relation between fee charged

and customer satisfaction.

2. Problems FacedSecond parameter for measuring MCS levels problems faced by the consumers

while using ATM of a particular bank. If consumers are facing problems more

frequently, customer satisfaction level will be less and vice-versa. There is indirect

relation between the problems faced and the customer satisfaction. Three degrees

namely often, rarely and never have been taken and they have rated as 3, 2, & 1

respectively.

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The purpose for which ATM is most often used

ATM does not mean the plastic card and PIN (Personal Identification Number) but the

services for which you can use it are the most important part. These services are

cash/cheques deposit, fast cash withdrawal, view account balances & mini statements and

request a chequebook or account statement.

Use Your ATMs as an Effective Marketing Channel

Using advances in technology to transform the ATM into an effective marketing channel

provides financial institutions a host of benefits, and for return on marketing investment,

the ATM has the potential to become a profit center once again.

1. Customization

Through transaction personalization options, customers can preset their

preferences for the types of transactions they want to perform and the

information they want to receive, which leads to feelings of personalized

relationships and loyalty.

2. Brand reinforcement

ATM screen graphics and messaging can be made consistent with the financial

institution’s other marketing channels, reinforcing messages with each ATM

transaction.

3. Cross-sell opportunities

One-to-one targeted messaging via an ATM can result in higher response rates

than from other marketing channels. Additionally, financial institutions have

the opportunity to cross-sell to non-customers who use the financial

institution’s ATMs.

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4. Customer Data

Marketing programs can be refined even further to target customers based on

user information and specific responses (i.e., customer data) captured at the

ATM.

5. Cost savings

ATM marketing campaigns can be less expensive to create and distribute than

marketing through traditional direct channels.

6. Advertising

Some financial institutions have partnered with local merchants to deploy

ATMs in their locations, offering coupons and other incentives to drive ATM

traffic and increase merchant ticket sizes.

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CHAPTER-4

ROLE OF RBI

Changes Made By Reserve Bank of India (RBI)

On 15 August, 2014, the 68th Independence Day, our Prime Minister Narendra Modi

announced a scheme called PradhanMantri Jan-DhanYojana in the cause of financial

inclusion in our country for the benefit of millions of families who do not have bank

accounts so far. Under this scheme every bank account holder will be given a RuPay

brand debit card with an accident insurance cover of Rs1 lakh guaranteed for each poor

family, so that all such families are covered with accident insurance to meet any crisis

in their lives.

A day before this announcement by the Prime Minister, the Reserve Bank of India

(RBI) announced certain changes to the ATM facility offered to bank customers and the

charges levied for withdrawals through ATMs with effect from 1 November, 2014.

According to the new RBI guidelines that come into effect from 1stNovember 2014,

savings bank account holders in metropolitan cities would be allowed only three

transactions from ATMs of other banks and five from the same bank in a month. For

any ATM transaction above the stipulated limit, a transaction fee of Rs. 20 would be

charged to the account holder. The new transaction fee is applicable only for people

living in six metropolitan cities including Mumbai, Delhi, Bengaluru, Chennai,

Hyderabad and Kolkata. People living in smaller towns and other centers would

continue to enjoy five free monthly transactions per month from the ATM of other

banks and the charges for them include Rs. 20 for each cash withdrawal and Rs 9 for non-

cash transactions. Account holders of zero balance and other no-frills accounts in non-

metros are exempted from such transaction charges as of now.

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New Rules for Bank Customers

The transaction fee has been increased from the earlier limit of Rs. 15 to Rs.20 and the

number of free transactions decreased from five to three for ATMs of other banks and

five from the same bank in a month. Another important change in the new RBI guideline

policy for ATM transaction fee is the fact that all ATM transactions including cash

withdrawal, balance enquiry and changing of PIN number etc would be considered as an

ATM transaction unlike in the past when balance enquiry was not considered a

transaction as such.

The inter banking fee charged by various banks through ATM services will also increase

since banks are using the fee as an incentive to install more number of ATM machines.

While all the above reasons have played their role in the decision to some extent the

game clincher has been Reserve Bank of India’s long term plan to promote the use of e

- transfers and cashless transactions as much as possible to avoid the use of any black

money in the system. The rise in ATM transaction fee is largely seen by financial experts

as a sum culmination of all of the above factors.

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Reasons for Framing New Rules by RBI

The charges for ATM usage may be an unpopular decision taken by the Reserve Bank

of India, the limit in free transactions is justified by the apex body considering high

expenses for managing ATMs across the country. With an increasing number of

robbery attempts on various ATMs especially in isolated areas and in semi urban and

rural areas, the banks have been forced to shell out funds to install a security

mechanism apart from using CCTVs and manual security guards wherever possible.

With the Reserve Bank of India laying down strict security guidelines not to leave any

ATM unmanned or without security cameras and other measures, banks are facing higher

overheads to manage the ATMs.

.30

Comparison of ATM Usage Charges

For People Living in Metropolitan Cities Including Mumbai, Delhi,

Bangalore, Chennai, Hyderabad and Kolkata.

BANK TRANSACTION TYPE TRANSACTION LIMIT

Same Bank

Cash withdrawal5 Free transactions per month. Additional transaction

will be charged at Rs. 20 per transactionBalance Enquiry

Change of PINMini Statement

Different Bank

Cash withdrawal

3 Free transactions per month. Additional transaction will be charged at Rs.20 per transaction.

Balance Enquiry

Change of PIN

Mini Statement

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For People Living in Non-Metropolitan Cities, Smaller Towns and

Holders of Zero Balance and Other No-Frills Accounts

BANK TRANSACTION TYPE TRANSACTION LIMIT

Same Bank

Cash withdrawal5 Free transactions per month. Rs.20 is applicable for each

cash withdrawal and Rs.9 for non-cash transactions.Balance EnquiryChange of PINMini Statement

Different

BankCash withdrawal

5 Free transactions per month. Rs. 20 is applicable for each cash withdrawal and Rs.9 for non-cash transactions

charged at Rs.20 per transaction.

Consumer Benefits

ATMs have provided an important expansion of banking services that has benefited all consumers. Before the introduction of ATMs in the early 1970s, bank customers' access to their cash was limited to traditional banking hours. Customers often found themselves waiting in long lines on Friday afternoons just to withdraw enough cash to carry them through the weekend. ATMs opened a whole new world of convenience by eventually allowing access to banking services 24 hours a day, 365 days a year. Networks between banks, such as Plus, Cirrus, and Honor, developed so that customers could have access to their money through other institutions' ATMs throughout the world. To pay for that service, banks typically charge a fee to help defray the cost of belonging to the network.

Before the 1990s owners of ATMs typically did not charge other banks' customers for the use of ATMs; indeed, such surcharges were expressly forbidden by most networks. But, in the early 1990s, local banks and other ATM owners, who could not cover the cost of maintaining ATMs that face a high demand for cash withdrawals from nonlocal banks, pushed for lifting the voluntary ban on surcharges. As a result, legislatures in 23 states passed laws that allowed individual members of ATM networks to impose surcharges. Operating an ATM that receives a lot of traffic but

.32

That not many local customers use makes no sense. ATMs generate huge costs, so banks were unwilling to provide free ATM services to noncustomers.

The reason for that growth is simple: Allowing ATM surcharges has encouraged firms outside the banking industry, as well as banks, to put ATMs in more convenient locations where, without surcharges, ATMs may not generate enough bank customer traffic to be profitable. Those locations include supermarkets, convenience stores, and airports. Consumers now have the option of paying a surcharge for getting money from the new machines or going to other, less convenient, ATMs.

Critics argue that without the surcharge consumers would get the convenience without the fee. In other words, consumers would still get the same service for free. In fact, fees have played a significant role in making ATMs more widely available. Before surcharges, a low-cost ATM needed 3,000 transactions a month to break even. Today, with income from surcharges, the same ATM can break even with only 500 transactions a month. Prohibiting surcharges would limit the number and location of ATMs and inconvenience consumers. In effect, government would be levying a "time tax" on consumers by denying them the choice of convenience and forcing them to travel to their own banks to get cash.

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CHAPTER-5

INTRODUCTION TO ATMS ENCRYPTION METHOD

Introduction

ATM also known as Automatic Teller Machine is a simple and yet security banking service. The basic concept is that an ATM allows an authorized cardholder to conduct banking transaction without visiting a branch. They are well known for its convenience to the customers, cost effectiveness to the bank and most importantly it is an extremely secure banking method.

ATMs rely on authorization of a transaction by the bank via a secure communications network. Encryption methods are built into the communication network to prevent unauthorized transactions that could result in losses. This data focuses on Data Encryption Standard and Advanced Encryption Standard, these are the encryption standards presently adopted by banks across globe.

Hardware and Software

ATMs contain secure crypto-processors, generally within an IBM PC compatible host computer in a secure enclosure. The security of the machine relies mostly on the integrity of the secure crypto-processor: the host software often runs on a commodity operating system.

In-store ATMs typically connect directly to their ATM Transaction Processor via a modem over a dedicated telephone line, although the move towards Internet connections is under way. In addition, ATMs are moving away from custom circuit boards (most of which are based on Intel 8086 architecture) and into full-fledged PCs with commodity operating systems such as Windows 2000 and Linux. Other platforms include RMX 86, OS/2 and Windows 98 bundled with Java. The newest ATMs with Microsoft technology use Windows XP or Windows XP embedded. [Lockergnome Encyclopedia 2004]

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ATM Encryption Methods

ATM transactions are usually encrypted with DES (please refer to the next section) but most transaction processors will require the use of the more secure Triple DES by 2005.

There are also many "phantom withdrawals" from ATMs, which banks often claim are the result of fraud by customers. Many experts ascribe phantom withdrawals to the criminal activity of dishonest insiders. Ross Anderson, a leading cryptography researcher, has been involved in investigating many cases of phantom withdrawals, and has been responsible for exposing several errors in bank security. There have also been a number of incidents of fraud where criminals have used fake machines or have attached fake keypads or card readers to existing machines. These have then been used to record customers' PINs and bank account details in order to gain unauthorized access to their accounts. [Lockergnome Encyclopedia 2004]

Data Encryption Standard

The Data Encryption Standard (DES) is an approved cryptographic algorithm selected as an official Federal Information Processing Standard (FIPS) for the United States. [Lockergnome Encyclopedia 2004]

In DES, data are encrypted in 64-bit blocks using a 56-bit key. The algorithm transforms 64-bit input in a series of steps into a 64-bit output. [William Stallings 2003].

FIPS PUB 81, DES Modes of Operation, describes four different modes for using the algorithm described in this standard. These four modes are called the Electronic Codebook (ECB) mode, the Cipher Block Chaining (CBC) mode, the Cipher Feedback (CFB) mode, and the Output Feedback (OFB) mode. ECB is a direct application of the DES algorithm to encrypt and decrypt data; CBC is an enhanced mode of ECB which chains together blocks of cipher text; CFB uses previously generated cipher text as input to the DES to generate pseudorandom outputs which are combined with the plaintext to produce cipher, thereby chaining together the resulting cipher; OFB is identical to CFB except that the previous output of the DES is used as input in OFB while the previous cipher is used as input in CFB. OFB does not chain the cipher. [Federal Information Processing Standards Publication 46-2 1993]

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Advanced Encryption Standard

There are cases where ATMs using DES has been breached within 24 hours. The most recent solution is to adopt a new encryption standard known as the Advanced Encryption Standard.

The Advanced Encryption Standard (AES) feature adds support for the new encryption standard AES, with Cipher Block Chaining (CBC) mode, to IP Security (IPSec).

The National Institute of Standards and Technology (NIST) have created AES, which is a new Federal Information Processing Standard (FIPS) publication that describes an encryption method. AES is a privacy transform for IPSec and Internet Key Exchange (IKE) and has been developed to replace the Data Encryption Standard (DES). AES is designed to be more secure than DES: AES offers a larger key size, while ensuring that the only known approach to decrypt a message is for an intruder to try every possible key. AES has a variable key length—the algorithm can specify a 128-bit key (the default), a 192-bit key, or a 256-bit key. [Cisco Systems, Inc. 2004]

Smart Intruders

Behind the friendly appearance of the Automatic Teller Machines, they are actually protected by some of the most advanced encryption technologies. However, ATM security requires progressively improving methods to keep up with smart intruders. A clear example is the upgrade from the Data Encryption Standard to the Advanced Encryption Standard, which is almost three times as powerful.

In the near future, a new method will be adopted to protect ATMs from intruders with better technologies. Although, this is a constant battle between intruders and the bank, ATMs are still a very convenient, cost-effective and secure banking method provided to customers today.

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UNIT-2

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Cash Deposit Machine

CHAPTER-1

INTRODUCTION TO CDM MACHINE

Cash Deposit Machine

The Cash Deposit Machine (CDM) is a self-service terminal that lets you make deposits and payment transactions by cash. All successful transactions are immediately credited and customers will be issued an advice slip confirming the transaction.

Conventionally, depositing cash into your bank account can be a tedious affair as it has to be done within the banking hours and you have to fill up a deposit slip and stand in a queue. To make the cash deposit process more flexible and convenient, banks have introduced Cash Deposit Machines and are expanding their availability across different locations to encourage electronic cash deposit without the assistance of banking personnel.

Why use a Cash Deposit Machine?

With close to 13,000 billion rupees in notes issued in FY 2013-14, RBI’s recent data highlights the fact that 90% of monetary transactions still take place in cash. With the high amount of cash transactions, the need for an efficient mode to deposit cash is more than ever before. To facilitate easier deposit of cash, banks allow you to deposit cash through Cash Deposit Machines.

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A Cash Deposit Machine is capable of accepting more cash deposit transaction in comparison to an over-the-counter cash depository service. For example, banks usually stop their business transactions by 4 PM. However, people might need to deposit cash during different times of the day and that is exactly what a Cash Deposit Machine is designed for.

And with your money getting credited into the desired account in real time, Banks are pushing to increase the availability of CDMs for customers’ convenience.

How does the Cash Deposit Machine help you?

Your money gets instantly credited into your account

You do not need to fill up any cash deposit slip or wait in long queues to deposit

cash

You receive immediate receipt

No need to sort and arrange your cash according to denominations

Facilities such as balance enquiry and mini statements are also available on a

Cash Deposit Machine

You can deposit cash round the clock and throughout the year. A Cash Deposit

Machine is enabled to function 24X7, even on holidays. Thus, you don’t need to

wait for the bank to open to deposit money.

Salient Features of Cash Deposit Machine

1. Accepts stacks of up to 200 mixed denomination notes

2. Quickly counts, validates, and denominates deposited currency

3. Displays deposit details on screen for customer verification

.394. Cash is held in secure area and returned if customer rejects transaction

5. Notes are deposited to specified cassettes

6. Itemized deposit details may be printed on customer receipt

7. Fake currencies are detected.

Advantages

1. Instant credit in CASA account.

2. Immediate receipt.

3. No need to fill cash deposit slips.

4. No need to stand in long queues.

5. No need to sort and arrange cash denomination wise.

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CHAPTER-2

DETAIL STUDY

System Overview

The project is designed to provide fully automatic cash deposit machine. The hardware

consists of LCD screen for displaying option to select the bank and enter Account No in

which cash is to be deposited and also guides the customer to next steps .The carriage is

provided to carry the currency notes one by one from customer where camera captures

image of every note and send the data image to PC with Matlab. Every data image of note

is compared with ideal stored image of every appropriate type of note. Every note is

passed through UV light to detect the originality of note which consequently results in

acceptance and rejection of faulty notes.

“Figure1. Database contexts”

Spindle is used to push notes from carriage to storage container of notes. Counter is

provided to count the cash and counted data will be sending to MC.

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CDM Provide Busy Customer Service

1. Improved levels of convenience and security

2. Improved speed of deposit and ease of use

3. Reduced queuing time, increased customer satisfaction

4. Unique receipt slip issued after each deposit made

5. Revenue generating opportunities, created by re-deploying staff to more

profitable activities

6. Flexibility to process cash at a convenient time or to outsource task

7. Speed of transaction minimizes customer exposure to risk of attack

8. Enhanced management information

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Customer Requirement

Banks customers’ taste and desire have begun to raise the stakes of expectation of

exceptional services. Customers want to transact their banking transactions at any time

and location convenient for their life-style. They want to pay their regular household

bills. The four forces - customers, technology, convergence and globalization have the

most important effect. The success of electronic banking, as agued by many researchers,

depends probably on bank service quality, customer preferences and satisfaction. Recent

studies found that consumer behavior is changing partly because of more spare time. The

way of use of financial services is characterized by individuality, mobility, independence

of place and time, and flexibility. Historically, banks have taken the attitude that they will

provide customers with the services and, the banks, wish to provide. In order to survive

both from domestic and the increasing level of global cross-border competition, banks

need to change their process of servicing their customers.

Benefit of automatic Banking

The perceived benefits of electronic banking have been documented in recent

studies, especially several electronic distribution channels available for banks in United

States and concluded that customer orientations towards convenience, service,

technology, change, knowledge about computing and the Internet affected the usage of

different channels. Convenience of conducting banking outside the branch official opening

hours has been found significant in cases of adoption. Banks provide customers

convenient, inexpensive access to the bank 24 hours a day and seven days a week.

Literatures indicate the movement away from cash transactions and in words of the use of

non-cash payment has continued to rise with increasing value. Tellers are today equipped

to issue receipts (deposit slips) for cash deposits the service of ordering bank draft of

certified cheques made payable to third parties has also been increasingly automated .

.43reduction in the percentage of customers visiting banks with an increase in alternative

channels of distribution will also minimize the queues in the branches. Increased

availability and accessibility of more self-service distribution channels helps bank

administration in reducing the expensive branch network and its associate staff

overheads. Bank employees and office space that are released in this way may be used for

some other profitable ventures.

Customer always require fast technology

New technology has raised your customers’ expectations, and whilst they may come from

many different backgrounds, lifestyles and professions, your customers have one thing in

common: Choice of leisure time, work patterns, shopping, and the choice of how, when

and with whom they carry out their banking requirements. In this competitive

environment the winners are responding to their customer’s needs, and improving the

banking experience with

1. A convenient customer service

2. A modern retail environment

3. Faster transactions and improved security

4. Extended hours access to services Communications

Complete with a monitoring system to constantly verify operation and status of the

CDM, whether remotely or centrally located. A file transfer utility is also available for

retrieving audit and event history files. Automated Cash Deposits help you deliver more

efficient Self-Service solutions. Our range of Cash Deposit Machines has been designed

either for free standing or in the wall installation

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Unit-3

ANALYSIS OF DATA

1. Classification as per data collected in regards to Account In bank:

Bank Account No. Of Depositor Percentage

Saving Account 20 66.67

Current Account 4 13.33

Fixed Account 6 20

Recurring Account - 0

Total 30 100

66.66

20

13.33

No. of Depositor as per Account

Saving AccountFixed AccountCurrent Account

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2. Classification as per data collected in regards to satisfaction

level of ATM service:

3. Classification as per data collected in regards to check that bank have enough ATM machine in their area:

Expected Ans

No. Of ATM

Machine

Percentage

Yes 19 63.33

No 11 36.67

Total 30 100

70

30

Satisfaction Level Of ATM Services

YesNo

66.3336.67

ATM Machine in their Area

YesNo

Expected Ans

Satisfaction Level

Percentage

Yes 21 70

No 11 30

Total 30 100

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4. Classification as per data collected in regards to ATM they always prefer while withdrawing money:

5. Classification as per data collected in regards to procedure they know if they forget the PIN:

ATMNo. Of ATM

MachinePercentage

Home Bank ATM 20 66.67

Other Bank ATM 10 33.33

Total 30 100

Expected Ans

People Who

Known The Procedure

Percentage

Yes 15 50

No 15 50

Total 30 100

66.67%

33.33%

ATM Machine Prefer While Withdrawing

Money

Home Bank Atm Other Bank ATM

50%50%

People Who Known The Procedure

Yes No

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6. Classification as per data collected in regards to procedure they know if they have to change the PIN:

7. Classification as per data collected in regards to bank who provide Cash Deposit machine:

Expected Ans

No. of Bank Providing

CDMPercentage

Yes 25 83.33

No 05 16.67

Total 30 100

Expected Ans

People Who

Known The Procedure

Percentage

Yes 24 80

No 06 20

Total 30 100

80%

20%

People Who Known The Procedure

Yes No

83.33%

16.67%

ATM Machine Prefer While Withdrawing

Money Yes No

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8. Classification as per data collected in regards to satisfaction level of CDM service:

9. Classification as per data collected in regards to Online transaction the ATM user used:

Person Who Does Online Transaction

PercentageExpected Ans

Satisfaction Level

Percentage

Yes 23 76.67

No 07 23.33

Total 30 100

Expected Ans

Yes 10 33.33

No 20 66.67

Total 30 100

76.67

23.33

Satisfaction Level Of CDM Services

YesNo

33.33

66.67

ATM Machine Prefer While Withdrawing

Money Yes No

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10. Classification as per data collected in regards to Awareness about other service provided by ATM Machine:

Expected AnsNo. of People Who Known Percentage

Yes 8 26.67

No 22 73.33

Total 30 100

26.67

73.33

Person Who Known The Other ServiceProvided By ATM Services

YesNo

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Findings

1. (As per Table no.1), 66.67% Customers are having saving account, 13.33% customers are having current account and 20%. Customers are having fixed account.

2. (As per Table no.2), 70% of customers are satisfied by ATM services while 30% of customers are yet not satisfied.

3. (As per Table no.3), 63.33% customers think that they there are enough ATM machine in their area while rest 36.67% of the customers doesn’t think.

4. (As per Table no.4), 66.67% customers usually withdraw from their own bank ATM while rest 33.33% customers used others bank ATM.

5. (As per Table no.5), 50% of the customers known the procedure about how to change the pin if they forget the pin while other 50% of the customers don’t know.

6. (As per Table no.6), 80% of the customers known the procedure to change the pin rest 20% of the customers don’t know how to change the pin.

7. (As per Table no.7), 83.33% of bank provides Cash Deposit Machine while 16.67% of bank yet doesn’t providing Cash Deposit Machine. It means banks are still working on CDM services and taking initiative to bring up the CDM service facility.

8. (As per Table no.8), 76.67% of customers find satisfied by CDM services while 23.33% of the customers are not satisfied by CDM services.

9. (As per Table no.9), 33.33% of the customers used their ATM Cards for carrying out their online transaction while rest 66.67% customers not used their debit card for online transaction.

10. (As per Table no.10), 26.67% of the customers known that ATM machine also provide other useful services like mini statement, mobile recharge facility, last 10 transaction, etc while 73.33% yet don’t know the services provided by ATM in regards to above services.

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Conclusion

Ties multiple accounts to one ATM card and PIN combination

Allows a cardholder to have as many accounts as desired (more than one checking, more than

one credit card, more than one loan, etc.)

Includes all of the account types specified by the assignment – “checking, savings, loan,

mortgage, car or boat loan account and credit card account” – although we chose to create

“vehicle loan” as a loan account which encompasses car, boat, motorcycle, etc.

Allows cardholders to make balance inquiries, deposits, withdrawals, account payments, and

transfer funds – all with the appropriate accounts displayed for selection depending upon the

type of transaction

Limits the amount of a withdrawal from an account to $200 – with no limits placed on fund

transfers

Limits the number of transactions per day to 10

Provides cardholder with the option of a receipt.

Instant credit in your account.

Immediate receipt.

24/7 availability.

No need to fill deposit slip.

No need to stand in long clues.

No need to sort and arrange your cash denomination wise.

No extra charge on direct cash deposits.

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Annexure

QUESTIONNAIRE (For Customer)

Name-____________________________________________Age-______________________Gender- Male FemaleEducational Qualification-____________________________Designation-_______________________________________

1. In Which Bank Do You Have Account?

______________________________________________

2. Which Type Of Account Do You Have?

Saving Recurring

Fixed Current

3. Are You Satisfied By ATM Services?

Yes No

4. Does Your Bank Have Enough ATM’s In Your Area?

Yes No

5. Which ATM You Always Prefer While Withdrawing Money?

________________________________________________

6. What Is Maximum Cash Withdrawal Limit Per Day?

________________________________________________

7. Does Your Bank Levy Any Service Charge For Use Of Other Bank’s ATM?

Yes No

8. If Yes, Then How Much?

________________________________________________

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9. Do You Know The Procedure If You Forgot The Pin?

Yes No

10. Do You Know The Procedure TO Change The Pin?

Yes No

11.Does Your Bank Provide Cash Deposit Machine?

Yes No

12.Are You Satisfied By The Services Of Cash Deposit Machine?

Yes No

13.Do You Use Debit Card For Online Transaction?

Yes No

14.Are You Aware About Any Other Services Provided By ATM Machine?

Yes No

15. Any Suggestion,

____________________________________________________

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Websites

www.ijarcsms.com http://www.atmmarketplace.com/whitepapers/5157/The-Future-of-

ATMs-Mobile-Security-and-Regulations-Oh-My-Infographic

http://en.wikipedia.org/wiki/atm http://en.wikipedia.org/wiki/debit_card www.articleblast.com “A Brief Introduction to the Automated Teller

Machine”. www.rbi.org.in/scripts/NotificaticationUser www.businessinsider.in Blog.bankbazaar.com/new-rules-for-atm-usage slideshare.com www.ibef,org

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