Advantages and Disadvantages of ATM (Automated Teller Machines)

Advantages and Disadvantages of ATM Machine

This article outlines the advantages and disadvantages of ATM Machines (Automated Teller Machines). In today’s era of digital banking ATM machines are very relevant. Many people around the world rely on ATM machines to access hard cash which remains a crucial part of people’s day to day transactions. Automated Teller Machines have several advantages and disadvantages and these are summarised as follows:

Table Of Contents

What is an ATM Machine

ATM stands for Automated Teller Machines. An ATM is an electronic banking machine that allows customers to withdraw money with an ATM card and perform other banking transactions without the aid of banking staff. Below are the advantages and disadvantages of ATM Machines.

Advantages ATM machines

Access to hard Cash Anywhere at Anytime

The biggest advantage of ATM machines is that they allow access to cash at any time. In addition to having a limited amount of time to obtain cash, there was only one way of accessing it before 1967, through visiting the nearest bank. This meant that if you lived in remote areas you had to travel all the way to the nearest town. People only had access to withdrawing their cash until 3pm. Thanks to ATM machines, anyone can withdraw cash anywhere at any time of day and night, you can even access 2 ATM machines in Antarctica.

ATM Machines offer Financial Inclusion

ATM machines can be used to deliver banking services in low income countries where only a few people use banks. Interactive Automated Teller Machines, that can dispense and take deposits, help increase financial literacy and facilitate the access to formal financial services in remote areas. Two thirds of the world’s population depend on hard cash. Most of these people reside in developing countries where a large portion of them is unbanked. Therefore, the importance of ATM machines in financial inclusion cannot be underestimated. So offering financial inclusion is an advantage of ATM machines.

ATM Machines offer wide range of services

ATM’s nowadays offer a wide range of services such as cardless transactions, cash deposits, balance enquiry, person to person payment as well as cheque cashing. Wells Fargo, Bank of America and JP Morgan Chase have introduced card free transactions on their ATM machines as well.  In some countries, ATM machines sell airline and movie tickets. ATM Machines have the big advantage of offering a wide range of services.

ATM machines are Cheaper to Maintain

Compared to brick and mortar, ATM machines are cheaper to build and maintain. Most of the services that can be obtained from a bank teller can be accessed on an Automated Teller Machine. This reduces a bank teller’s workload in addition to labour costs. Thus the other advantage of ATM Machines is that they are cheaper to maintain.

ATM machines Serve an Important Function in times of Crisis

ATM machines are essential in times of crisis. The advantage of ATM machines is that they continue to operate when businesses close due to natural disasters, a health crisis or economic depression. Historically, the demand for hard cash increases during times of crisis.  This is because people feel more secure when they have their wealth in their hands. The fact that Automated Teller Machines can be relied on during an emergency shows how they are vital in uncertain and normal times.


Disadvantages of ATM Machines


ATM machines can be targeted by criminals, robbers and hackers

One of the disadvantages of ATM machines is that they are both physically and electronically vulnerable. This makes them an easy target for criminals. Malware can be used to access people’s cash. Skimming devices and small cameras can be fitted onto Automated Teller Machines. Other criminals can physically destroy an ATM in order to access cash. People risk being robbed using ATM machines especially in isolated areas. This is a huge disadvantage of ATM Machines.

ATM Machines May Malfunction

An Automated Teller Machine like any other machine is bound to break down, although this is rare. Some machines may fail to recognise bank cards or can run out of cash. At other times the ATM system goes offline.  Also, there is a limit to the amount of cash one can withdraw from an ATM which can be an inconvenience if you require more funds. So the other disadvantage of Automated Teller Machines is that they may breakdown.

ATM machines Are Costly For The Users

Setting up ATM machines can be affordable for financial institutions, but it is not the same for the users. Banks and machine owners obtain a lot of revenue from ATM machines in the form of fees that users are charged for using them. The transaction costs are a huge disadvantage of ATM Machines.

Lack of Personal service

Lack of personal service is a disadvantage of ATM Machines. There are no bank assistants to help you or to ask questions to.


The other disadvantage of Automated Teller Machines is that they may become obsolete. ATM machines may slowly become obsolete due to the use of debit, credit cards, mobile money and internet banking. Transactions are becoming more digital and the use of physical cash is slowly declining. Also, the major reason people use ATM machines is to withdraw cash, these days, this can be done from any point of sale. Any point of sale (POS) vendor with enough funds can dispense cash quickly and conveniently just like an ATM. Thus, the use of ATM machines may decline in the near future.

Other Disadvantages of ATM Machines

  • If you get a problem with your bank card, or forget your pin, you can’t withdraw your money
  • Cash withdrawal limits on ATM Machines
  • If an ATM card is lost, it can be misused
  • Banks have limited ATM Machine in rural areas


Ways to Secure ATM machines

Due to the pressing issue of ATM security all over the world some of the ways in which security can be improved are described below;

  • Regularly checking ATM for skimming devices, these can be random or scheduled.
  • Using software that picks up unusual behaviour, for example when 2 things occur at the same time, a withdrawal amount or transactions times that are not consistent with a particular cardholder’s patterns.
  • Monitoring systems for software changes that have not been approved, banks should monitor their systems regularly
  • Employing guards to watch over an ATM machines
  • Making use of dye packs, using dye packs spoil banknotes and makes them unusable, these are used in many European countries and have reduced ATM attacks.
  • Locking down the ATM software by
  • Completely removing any software that is not necessary for ATM’s functionality, if that is not possible using security tools to restrict the software.
  • Creating a whitelist for application control
  • Implementing a firewall allowing remote access to only the services needed for ATM operation
  • Keeping the software up to date with the latest versions and patches
  • Placing photographic cameras, CCTV, and video on and around the ATM can also help deter criminals


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