When you insert your debit or credit card into the ATM, it reads the information encoded on the magnetic strip on the back of the card. That black strip is encoded with your unique card number, expiration date and personal identification number (PIN). Your card is basically a hard copy of the access information to your account.
The ATM then asks for your PIN to verify your authorization to access account funds and information.
When you have verified your PIN, the ATM communicates with your bank to access your account information. It can then display your account balance or distribute cash to you from your bank account balance.
The ATM is connected to a collection of massive interbank networks. The two largest interbank networks are Cirrus and Pulse, although there are many others. An ATM can only provide access to bank accounts that are enrolled in the interbank networks it has access to; these are usually listed on the side of the machine. These interbank networks use phone lines, internet access and central computers to distribute information among one another and facilitate financial transactions.
If you are requesting an account balance, the ATM asks your bank through the interbank network what your account contains. It is then able to display checking and savings account balances to you. Some ATM machines are also able to display the available line of credit on a credit card.
If you are requesting cash, the ATM goes through the same initial step of communicating with the interbank networks to get your available balance, but instead of displaying a balance it dispenses cash from cash cartridges within its internal vault. Bills of various values are stored within different cash cartridges to allow the machine to accurately distribute the requested amount of cash. The ATM machine then releases the cash and sends a message to your bank to withdraw the cash amount, and any fees, from your account.
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