IT IS A PPT ON ATM AND ECS( Electronic Clearing Service)

2. (ATM, American, Australian, Singaporean, Indian and Hiberno-
English), also known as an
• Automated Banking Machine (ABM, Canadian English)
• Cash Machine
• Cash Point
• Cash Line, or colloquially
• Hole in the Wall ( Australian, British, South African and Sri Lankan
English),
is an electronic telecommunications device that enables the customers
of a Financial institution to perform Financial Transactions without the
need for a Human Cashier, Clerk or Bank Teller.

4. On most modern ATMs, the customer is identified by inserting a
plastic ATM card with a Magnetic Stripe or a Plastic Smart Card with
a Chip that contains a unique card number and some security
information such as an expiration date or CVVC (CVV).
Authentication is provided by the customer entering a Personal
Identification Number (PIN).
Using an ATM, customers can access their bank deposit or credit
accounts in order to make a variety of transactions such
as Cash Withdrawals, Check Balances or Credit Mobile Phones.
ATMs often provide the best possible exchange rates for foreign
travelers, and are widely used for this purpose.
Many ATMs have a sign above them, indicating the name of the bank
or organization owning the ATM .

5. Software Used in ATM : Microsoft Windows

6. TYPES
There are two types of ATM installations:
• ON - PREMISE
On-premise ATMs are typically more advanced, multi-function
machines that complement a bank branch's capabilities, and are
thus more expensive.
• OFF - PREMISE
Off-premise machines are deployed by financial institutions and
Independent Sales Organizations (ISOs) where there is a simple
need for cash, so they are generally cheaper single function
devices.
In Canada, ATMs (also known there as ABMs) not operated by a
financial institution are known as “WHITE – LABEL ABMS”.

7. FINANCIAL NETWORKS
Most ATMs are connected to Interbank Networks, enabling people
to withdraw and deposit money from machines not belonging to the
bank where they have their accounts or in the countries where their
accounts are held.
Many banks charge ATM Usage Fees.
In some cases, these fees are charged solely to users who are not
customers of the bank where the ATM is installed.
GLOBAL USE
Estimates developed by ATMIA place the number of ATMs in use
currently at over 2.2 million, or approximately 1 ATM per 3000
people in the world.
Four regions (USA, Canada, Europe, and Japan) have high
numbers of ATMs per million people.

9. SECURITY
Security, as it relates to ATMs, has several dimensions.
ATMs also provide a practical demonstration of a number of security
systems and concepts operating together.
• Physical
(Common Method: Simply robbing the staff filling the machine with
money)
• Transactional Secrecy & Integrity
(Secure Crypto – Processors, MAC - Message Authentication Code)
• Customer Identity & Integrity
(Finger Patterns, Facial Recognitions)
• Device Operation Integrity
(Mechanical Shutters, Alarm Sensors)
• Customer Security
(Multiple Security Cameras, Security Guards)

10. USES
Although ATMs were originally developed as just cash dispensers, they have
evolved to include many other bank-related functions:
• Printing Bank Statements.
• Updating Passbooks.
• Cash Advances.
• Cheque Processing Module.
• Paying (in full or partially) the credit balance on a card linked to a
specific current account.
• Transferring Money between Linked Accounts (such as transferring between
checking and savings accounts).
• Deposit Currency Recognition, Acceptance and Recycling.
• Paying Routine Bills, Fees and Taxes (utilities, phone bills, social security, legal
fees, taxes, etc.)

11. RELIABILITY
Before an ATM is placed in a public place, it typically has undergone
extensive testing with both test money and the backend computer
systems that allow it to perform transactions.
Banking customers also have come to expect high reliability in their
ATMs, which provides incentives to ATM providers to minimize
machine and network failures.
Financial consequences of incorrect machine operation also provide
high degrees of incentive to minimize malfunctions.
If ATM networks do go out of service, customers could be left without
the ability to make transactions until the beginning of their bank's next
time of opening hours.

12. Not all Errors are to the Detriment of Customers
There have been cases of machines giving out money without debiting the
account, or giving out higher value notes as a result of incorrect denomination
of banknote being loaded in the money cassettes.
The result of receiving too much money may be influenced by the card holder
agreement in place between the customer and the bank.
Errors that can occur may be :
• Mechanical (Such as card transport mechanisms, keypads, hard disk
failures, envelope deposit mechanisms)
• Software (such as operating system, device driver, application)
• Communications / Operator Error

13. FRAUD
As with any device containing objects of value, ATMs and the systems
they depend on to function are the targets of fraud.
Fraud against ATMs and people's attempts to use them takes several
forms:
• Fake ATM (Stealing cards information’s and replicating it )
• Hacking (Obtaining Administrative Passwords)
For a low-tech form of fraud, the easiest is to simply steal a customer's
card along with its PIN.
A later variant of this approach is to trap the card inside of the ATM's
card reader with a device often referred to as a Lebanese Loop.
When the customer gets frustrated by not getting the card back and
walks away from the machine, the criminal is able to remove the card
and withdraw cash from the customer's account, using the card and
it’s PIN.

14. Another simple form of fraud involves attempting to get the
customer's bank to issue a new card and its PIN and stealing them
from their mail.
In an attempt to stop these practices, counter - measures against
card cloning have been developed by the banking industry, in
particular by the use of Smart Cards which cannot easily be copied
or spoofed by unauthenticated devices, and by attempting to make
the outside of their ATMs tamper evident.
The most actively developed form of smart card security in the
industry today is known as EMV 2000 or EMV 4.x (Widely Used in
UK).

15. ECS
Electronic Clearing Services

16. Electronic Clearing Service (ECS) is mode of electronic funds transfer from
one bank account to another bank account using the services of a CLEARING
HOUSE.
This is normally for bulk transfers from one account to many accounts or vice-versa.
A Clearing House is a financial institution that provides clearing and settlement
services for financial and commodities derivates and securities transactions.
These transactions may be executed on a future exchange or securities
exchange.
A clearing house stands between 2 clearing firms also known as the member
firms or clearing participants and its purpose is to reduce the risk of one clearing
firm failing to honor its trade settlement obligations.
A Clearing House reduces the Settlement Risks.

17. TYPES
There are two types of ECS called the
• ECS (Credit) i.e. used for affording credit to the large
number of beneficiaries by raising a single debit to an
account, such as dividend, interest or salary payment.
• ECS (Debit) i.e. used for raising debits to a number of
accounts of consumers/ account holders for crediting a
particular institution.

18. ECS - Credit System
Working Steps Include, Initiation of an ECS (credit) Transaction
ECS payments can be initiated by any institution (called ECS user) that have to
make bulk or repetitive payments to a number of beneficiaries.
They can initiate the transactions after registering themselves with an approved
clearing house.
ECS users have also to obtain the consent as also the account particulars of
the beneficiary for participating in the ECS clearings.
The ECS user’s bank is called as the Sponsor Bank under the scheme and
the ECS beneficiary account holder is called the Destination Account Holder.
The Destination Account Holder’s Bank or the Beneficiary’s Bank is called the
Destination Bank.
The Clearing House would debit the account of the ECS user through the
account of the sponsor bank on the appointed day and credit the accounts of
the recipient banks, for affording onward credit to the accounts of the ultimate
beneficiaries.
This is how the ECS credit system work.

19. Beneficiary Participation in ECS (Credit) Scheme
• The beneficiary has to furnish a mandate giving his consent to avail of
the ECS facility.
• He should also communicate to the ECS user the details of his bank
branch and account particulars.
• Such Authorization form is called a Mandate.
Advantages to the Ultimate Beneficiary
• The end beneficiary need not make frequent visits to his bank for
depositing the Physical Paper Instruments.
• He need not apprehend Loss of Instrument and Fraudulent
Encashment.
• The delay in realization of proceeds after receipt of paper instruments.

20. The Scheme Benefit the ECS User - Like Corporate
Bodies / Institutions by:
• The ECS user saves on administrative machinery for
printing, dispatch and reconciliation.
• Avoids chances of Loss of Instruments in Postal
Transit.
• Avoid chances of Frauds due to fraudulent access to
the Paper Instruments and Encashment.
• Ability to make payment and ensure that the
Beneficiaries Account gets Credited on a Designated
Date.

21. Advantages to the Banks:
• Banks handling ECS get Freed of Paper Handling.
• In ECS, Banks simply get the payment particulars
relating to their customers.
• Wherever the details do not match, they have to
return it back, as per the procedure.

22. Banks have been advised to ensure that the Pass –
Books / Statements given to the customers reflect the
particulars of the transaction provided by the ECS
users.
Customers can match these entries with the advice
received by them from the payment institution.
There is NO limit on the amount of individual
transaction prescribed under this scheme.
And YES it is necessary for the corporate / institutions
to collect mandate from the investors.

23. ECS - Debit System
ECS Debit Scheme is a scheme under which an account
holder with a bank can authorize an ECS user to recover
an amount at a prescribed frequency by raising a debit in
his account.
The ECS User has to collect an authorization which is
called ECS mandate for raising such debits.
These mandates have to be endorsed by the bank
branch maintaining the account.

24. Working Scheme
Any ECS user desirous of participating in the scheme has to register with
an approved Clearing House.
He should also collect the mandate forms from the participating
Destination Account Holders, with Banks Acknowledgement.
A Copy of the Mandate should be available with the Drawee Bank.
The ECS user has to submit the data in specified form through the
Sponsor Bank to the Clearing House.
The Clearing House would pass on the debit to the Destination Account
Holder through the clearing system and credit the sponsor banks account
for onward crediting the ECS user.
All the unprocessed debits have to be returned to the sponsor bank within
the time frame specified.
Banks will treat the electronic instructions received through the clearing
system on par with the physical cheques.

25. Advantages to the Ultimate Beneficiary
• Trouble Free – Eliminates the need to go to the collection centre’s /
banks by the customers and no need to stand in long ‘Q’s for payment.
• Peace of Mind – Customers also need not track down payments by
last dates.
• The debits would be monitored by the ECS users.
Advantages to the Banks:
• Banks handling ECS get Freed of Paper Handling.
• In ECS, Banks simply get the mandate particulars relating to their
customers.
• Wherever the details do not match, they have to return it back, as per
the procedure.

26. The Scheme Benefit the ECS User - Like Corporate
Bodies / Institutions by:
• The ECS User saves on Administrative Machinery for
collecting the Cheques, Monitoring their Realization and
Reconciliation.
• Better Cash Management.
• Avoid chances of Frauds due to fraudulent access to
the Paper Instruments and Encashment.
• Realise the payments on a single date instead of
fractured receipt of payments.

27. Institutions Eligible to Participate in the ECS Debit
Scheme:
Utility Service providers such as
• Telephone Companies
• Electricity Supplying Companies
• Electricity Boards
• Credit Card Collections
• Collection of Loan Installments by Banks and Financial
Institutions
• Investment Scheme of Mutual Funds etc.

28. YES, the Mandate once given can be withdrawn as it
is on par with the cheque issued by a customer.
YES, it is left to the choice of the Individual
Customer to stipulate any maximum debit, purpose
or validity period for the mandate.
There is NO limit on the amount of individual
transaction prescribed under this scheme.

29. ELECTRONIC CLEARING SERVICES
ADVANTAGES DIS - ADVANTAGES
Username and Password Protection are there. 1 Sharing them will put the User at RISK.
Maintain various accounts as per the organizations
requirement.
2 Too many accounts will become bothersome.
For secure transactions, sites must follow strict
security policy.
3 Proceeding without complete knowledge.
Reduces Paper Works. 4 Not all classes of people get adapted to this.
Banks Secure the Personal Information. 5 Hackers at large.
The Banks (Large Network) is risk free from Virus.
6
Personal desktop may be effected from Virus,
So Anti-Virus and Firewall must be always on
during transaction.
Smart Cards (easy to carry, is applicable almost
everywhere). No need to carry cash, Smart Card
does the trick.
7
Falling of this in wrong hands is danger to the
entire expenditure of the bank balance.
There are counter measure but time plays the
key factor.
Electronic Cash is based on Cryptographic Systems.
The transactions are encoded by means of the
Numeric Keys.
Transaction details travel across net.
8
Electronic Payments are resistant to forgery,
the Numeric Keys are Vulnerable to attack.

30. While we are moving towards a Paper – Free
Environment, We must encourage the ECS
and overcome the Disadvantages.