anatomy of an atm transaction

Anatomy of an ATM Transaction

An ATM transaction begins when a cardholder swipes his/her card through the cardreader, enters his/her PIN, and selects the desired transaction.

The ATM dials up the acquiring processor via either a local CompuServe number or a 1-800 number and transmits the transaction information. (A lease line ATM skips the "dial-up" portion as it is already connected.)
The acquiring processor directs the transaction information to the appropriate network (based on the network logos on the card and the routing tables used by the acquiring processor), which transmits the information to the card-issuing bank for authorization.
The card-issuing bank authorizes the transaction (withdrawal) and returns the transaction authorization via the acquiring processor to the ATM. The ATM dispenses the cash and a receipt. The card-issuing bank "blocks" the cardholder's account for the amount of the withdrawal.

Funds are settled each business day.

The acquiring processor sends a file of all the transactions processed prior to 2:00pm Central Standard Time (CST) to their clearing bank for transmission into the Federal Reserve System.
The Federal Reserve System receives the transmission from the clearing bank and then settles with the card-issuing banks by transferring funds from the banks' cardholders' accounts to the account of the person or institution who loads the cash into the ATM. All funds are recycled to the merchant's or other cash provider's account on the next business day. Some banks may take an additional day to credit the account.
Settlement occurs each business day. On weekends, the acquiring processor closes out the daily transactions (i.e., prepares them for transmission to the Federal Reserve System) but does not settle until the next business day, because the Federal Reserve System does not settle on weekends or holidays. (Therefore, all withdrawals occurring between 2:00pm CST on Friday and 2:00pm CST on Monday are considered Monday's business.)