WORKING OF ATM:-
An ATM is
simply a data terminal with two input and four output devices. Like any other
data terminal, the ATM has to connect to, and communicate through, a host
processor. The host processor is analogous to an internet service provider(ISP)
in that it is the gateway through which all the various ATM networks become
available to the cardholder(the person wanting the cash).
Most host processors can
support either leased-line or dial-up machines.Leased-line machines connect
directly to the host processor through a four-wire, point-to-point, dedicated
telephone line. Dial-up ATMs connect to the host processor through a normal
phone line using a modem and a toll-free number, or through an Internet service
provider using a local access number via a modem.
Leased-line
ATMs are preferred for very high-volume locations because of their thru-put
capability, and dial-up ATMs are preferred for retail merchant locations where
cost is a greater factor than thru-put. The initial cost for a dial-up machine
is less than half that for a leased-line machine. The monthly operating costs
for dial-up are only a fraction of the costs for leased line.
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 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 checking 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.
An independent ATM host can
access any bank. It also supports a large number of ATM's placed with different
merchants.
So when you
request cash, the money moves electronically from your account to the host's
account to the merchant's account.
CREDIT CARDS::
A BIT OF HISTORY
According to
the Encyclopedia, the use of credit cards originated in the United
States during the 1920s, when individual companies, such as hotel
chains and oil companies, began issuing them to customers for purchases made at
those businesses. This use increased significantly after World War II.
The first universal credit
card -- one that could be used at a variety of stores and businesses -- was
introduced by Diners club ,inc. in 1950. With this system, the
credit-card company charged cardholders an annual fee and billed them on a
monthly or yearly basis. Another major universal card -- "Don't leave
home without it!" -- was established in 1958 by the American
Express company.
Later came the bank credit-card
system.Under this plan, the bank credits the account of the merchant as sales
slips are received (this meant merchants were paid quickly -- something they
loved!) and assembles charges to be billed to the cardholder at the end of the
billing period. The cardholder, in turn, pays the bank either the entire
balance or in monthly installments with interest (sometimes called carrying
charges).
The first national bank plan
was Bank Americard, which was started on a statewide basis in 1959
by the Bank of America in California. This system was licensed in
other states starting in 1966, and was renamed Visa in 1976.
Other major
bank cards followed, including Master card, formerly Master Charge. In
order to offer expanded services, such as meals and lodging, many smaller banks
that earlier offered credit cards on a local or regional basis formed
relationships with large national or international banks.
