ATM machines work on secured leased - lines or some even work on dial - up connection between the machine and the bank.
Leased-line ATMs are preferred for very high-volume locations because of their through-put capability, and dial-up ATMs are preferred for retail merchant locations where cost is a greater factor than through-put.
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).
The host processor may be owned by a bank or financial institution, or it may be owned by an independent service provider. Bank-owned processors normally support only bank-owned machines, whereas the independent processors support merchant-owned machines.
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