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How ATMs Work

        Money | Banking & ATMs

Settlement Funds
An independent ATM host can access any bank. It also supports a large number of ATMs placed with different merchants.
An independent ATM host can access any bank. It also supports a large number of ATMs placed with different merchants.

­When a cardholder wants to do an ATM tra­nsaction, he or she provides the necessary information by means of the card reader and keypad. The ATM forwards this information to the host processor, which routes the transaction request to the cardholder's bank or the institution that issued the card. If the cardholder is requesting cash, the host processor causes an electronic funds transfer to take place from the customer's bank account to the host processor's account. Once the funds are transferred to the host processor's bank account, the processor sends an approval code to the ATM authorizing the machine to dispense the cash. The processor then ACHs the cardholder's funds into the merchant's bank account, usually the next bank business day. In this way, the merchant is reimbursed for all funds dispensed by the ATM.

So when you request cash, the money moves electronically from your account to the host's account to the merchant's account.


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