What Are ATMs and How Do They Work?

Updated: June 4, 2024

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ATMs are self-service electronic terminals that provide people with convenient access to banking transactions without the need for a human teller. ATM transactions often include withdrawing money, depositing cash or checks, viewing account balances or transferring money between accounts.

Some banks and credit unions may have on-site ATMs, drive-through ATMs that aren’t connected to a branch’s location or ATMs located in particular retail spots like malls and department stores.

Key Takeaways

ATMs are convenient terminals that provide 24/7 access to your financial accounts.

ATM transactions include withdrawing money, depositing cash or checks, viewing account balances and transferring money between accounts.

The availability of ATMs has transformed banking and has helped in providing bank access to more people in underserved areas.

What Are ATMs?

ATMs are self-service banking machines. The first ATM was introduced in 1967, and it allowed customers to withdraw cash without visiting a bank branch. Today, knowing how to use an ATM is a basic skill for most people, providing 24/7 access to various transactions like withdrawals, deposits and balance inquiries.

ATM services often provide the ability to check current balances across multiple accounts and facilitate transfers between accounts in the same bank.

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Bitcoin ATMs are specialized kiosks that allow users to buy and sell cryptocurrencies like Bitcoin with cash. Unlike standard ATMs, they don't connect to a bank account but facilitate the exchange of fiat currency for digital assets.

However, bitcoin ATMs can be attractive to criminals due to their accessibility, anonymity and the lack of consistent identification verification regulations.

How Do ATMs Work?

ATMs usually require a bank card, which you insert into the machine. Then, you can access your account information by typing in your unique personal identification number (PIN). You typically cannot deposit a check at an ATM unless you have a bank card, though there are some exceptions to this rule.

Services ATMs Offer

Although cash withdrawals are the most common ATM transaction, ATMs typically offer many other services. They also provide convenience and global access — you can usually use your ATM card at foreign ATMs to obtain local currency.

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    The most common ATM transaction, which allows customers to access their cash anytime, anywhere.

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    ATMs offer the convenience of depositing checks or cash without needing to visit a bank branch.

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    Fund Transfers

    ATMs enable customers to transfer funds between their accounts.

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    Balance Inquiries

    Customers can quickly check their account balance at an ATM.

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    Bill Payments

    Some ATMs enable you to pay bills or make loan payments directly.

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ATM transactions come with their fine print. For instance, using “white-label” ATMs, which are usually owned by private companies, might come with higher fees.

Be aware of the legal protections of ATM use. For instance, federal laws like the Electronic Fund Transfer Act limit consumer liability for unauthorized transactions if reported promptly. Some regulations also govern ATM fees, disclosures and accessibility requirements that banks must follow.

Caveats With ATMs

Although ATMs offer convenience, there are some things you should be aware of if you plan to use them frequently.

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    ATM Transaction Fees

    Banks may charge fees for ATM transactions, especially if the ATM is out-of-network.

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    ATM Transaction Limits

    Banks often set daily withdrawal limits, typically ranging from $300 to $1,000.

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    Skimming Devices

    Criminals may install skimming devices to steal card information, so inspect the ATM carefully.

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You can take certain steps to reduce fees, particularly when traveling or in emergencies:

  • Familiarize yourself with your bank’s fee structure for ATM withdrawals. Some banks offer a certain number of free ATM transactions per month or have partnerships with ATM networks that allow free withdrawals.
  • Take advantage of networks. Many banks are part of global ATM networks, and using ATMs within these networks can often help you avoid additional fees.
  • Withdraw larger amounts less frequently to avoid multiple transaction fees, especially if you know you’ll need a lot of cash.

Banks in the U.S. With the Most ATMs

The U.S. has the highest number of ATMs globally, with over 500,000 installed as of 2022. The banks with the most ATMs are Chase, Bank of America and Wells Fargo. Some large national banks, like PNC Bank, are part of broad ATM networks that can extend access to up to 60,000 different ATM locations or more.

ATMs Operated



Around 15,500

Wells Fargo


Around 11,000

Bank of America


Around 15,000

Branch data from FDIC; ATM data reported by each institution

The U.S. ATM services market is a multi-billion dollar industry. In addition to banks, independent ATM operators provide services such as hardware, software, maintenance and other services to support these ATM networks.

ATMs' Effect on Financial Inclusion and Safety

Financial inclusion in banking refers to the process of ensuring that people and businesses have easy access to needed and affordable financial services. ATMs play an important role in this area by providing access to basic financial services in regions with limited or no bank branch coverage. Some banks offer incentives to use ATMs by making them cheaper to use than similar in-person transactions.

But more widespread usage of ATMs also means more security risk. Keep safety in mind to protect yourself, your money and your financial information. Here are some easy tips to follow:

  • Use ATMs in well-lit and secure locations, and shield the keypad when entering your PIN.
  • Only use ATMs from reputable banks or institutions.
  • Always report a lost or stolen ATM card to your bank right away.
  • Whenever you receive a new ATM card, destroy the old one and activate the new one promptly.
  • Never lend your ATM card to others.
  • Regularly check your statements for any unauthorized or suspicious transactions.

FAQ About ATMs

Get answers to some common questions about using ATMs and ATM transactions.

Can I use a credit card at an ATM?
How do I find an ATM?
How much can I withdraw from an ATM?
Can I withdraw money from an ATM in another country?
How do ATMs benefit banks?
Can I do cardless transactions at an ATM?

About Alvin Yam, CFP

Alvin Yam, CFP headshot

Alvin Yam is a certified financial planner (CFP) with over 15 years of experience working with individuals and corporations. Before founding Paraiba Wealth Management, he was a director at HSBC and a financial consultant at Charles Schwab. Yam is MoneyGeek's expert consultant on wealth management and personal banking.

Yam earned his bachelor's degree in political science from the University of California, San Diego and his Master of Business Administration from Loyola Marymount University.

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