Automated Teller Machines (ATMs): Benefits & Drawbacks – Video & Lesson Transcript | Study.com

Proprietary & Shared ATMs

The first ATM in the United States was opened for public use in 1969 by the Philadelphia National Bank. In some cases, ATMs are proprietary ATMs, or those that are owned, operated, and serviced by a specific financial institution, commonly a bank. As such, they can only be accessed and used by a particular bank’s customers. These are often located inside of a bank.

An ATM

Compare this to a shared ATM, which links together a network of banks and customers. This means customers from numerous banks can use the ATM for their transactional needs.

Benefits & Drawbacks

So what are the benefits and drawbacks of ATMs? Well, some of the benefits of ATMs include:

• The ability to access one’s account 24/7 at multiple locations
• The convenience of drive-up ATMs – you don’t even have to leave your car
• The ease of carrying a slim card as opposed to a wad of cash
• Improved customer service, as lines in traditional banks decrease
• Lowered costs, as fewer human tellers are needed
• More security when compared to cash; if an ATM card is reported as stolen, the thief won’t be able to withdraw any cash

Some of the drawbacks of ATMs include:

• Broken ATMs, or those that have run out of cash, can limit a customer’s ability to withdraw their money
• Costs and time associated with hiring and training staff to service ATMs
• Criminal manipulation of ATMs in order to obtain PIN numbers
• Fees for customers of other banks
• Potential to forget one’s personal identification number (PIN)
• Potential for an ATM machine to swallow and hold a card
• Risk of robbery while using an ATM

Lesson Summary

Let’s review. Automated teller machines (ATMs) are used to conduct simple banking transactions such as depositing or withdrawing cash or depositing checks. They can be proprietary ATMs, which are limited to the use of a bank’s customers only, or shared ATMs, which link together a network of banks and customers.

The benefits of ATMs include:

• The ability to access one’s account 24/7
• Lower costs due to the need for fewer human tellers
• No lines, or very short lines
• Storage of cash in a secure location (the bank) instead of one’s pocket

The drawbacks of ATMs include:

• ATM use fees
• The inability to withdraw cash if an ATM is broken
• Potential for robbery
• Potential for having your PIN hijacked by criminals manipulating an ATM