Wednesday, 3 April 2013

What is a Failed (Cash Not Received) ATM Transaction

A failed ATM transaction generally refers to one of the following or other similar events:

(i) Account of the customer is debited with the amount of intended withdrawal but no cash is dispensed by the ATM. (ii) Account of the customer is debited with the amount of intended withdrawal but the entire amount of transaction is not dispensed by the ATM. For example, the account is debited with Rs. 10,000 but only Rs. 1,000 are dispensed by the ATM. (iii) Account of the customer is debited with the amount of intended withdrawal but the customer leaves the ATM before collecting cash and the cash is either retracted by the ATM or is collected by another person after the customer has left the ATM. (iv) The customer makes a withdrawal (say Rs. 5,000) and his/her account gets debited with double the amount (say Rs. 10,000).

To be fair to the banking system in India, some failed ATM transactions automatically get credited back into the accounts of customers. These are the transactions that the ATM itself or the back-end server (called "Switch") mark as failed or unsuccessful. The Response Code printed on the Transaction Slip generated by the ATM for failed or unsuccessful transactions will be something other than "00" or "000". If any like "054" is printed, the system itself has marked the transaction as "failed". In such a case, even if your account has been debited, there is a good chance that the debit entry will be reversed. If "00" or "000" is printed on the Transaction Slip, the Switch and the ATM are telling you that the transaction was successful. "00" means no error. The ATM is supposed to dispense cash equal to the amount of the transaction. Any shortfall in the amount of cash dispensed means the transaction Failed.

Why do Failed ATM Transactions Happen

If the ATM or back-end server gave a response code "000" marking the transaction as successful, short or no-dispensation of cash can be caused by one of the following or some other reasons:

(i) Wrong denomination of notes

The cash handling agency or the bank's own staff put wrong denomination notes in the ATM, say Rs. 100 denomination notes in the tray that is supposed to contain Rs. 500 denomination notes. A customer withdrawing Rs. 5000/- from such an ATM will likely get Rs. 1400/-. Typically, for a cash withdrawal of Rs. 5000/- an ATM in India will dispense 9 pieces of Rs. 500 and 5 pieces of Rs. 100. Because in this case Rs. 500 notes have been replaced by Rs. 100 notes, all 14 pieces of notes dispensed will be of Rs. 100 denomination.

(ii) ATM may be Out of Cash

ATM may be out of cash but for some reason, the ATM software fails to recognise the same. In such a case, obviously no cash will be dispensed but the transaction will get marked as successful.

(iii) Network or Power Failure

After the account of the customer is debited and a network or power failure occurs before the ATM has dispensed cash, the transaction will be marked as Successful in the system but no cash will be dispensed by the ATM.

(iv) Technical / Mechanical Snag in the ATM

There may be a physical or software fault in the ATM resulting in non-dispensation of cash even after a success response from the Switch.

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All information given in this blog is obtained from sources in the public domain, RTI applications, discussions with bankers, bank customers in India and also with some employees of Reserve Bank of India having knowledge of the working of various Offices of Banking Ombudsman in India. All information in this blog is presented on a best effort basis and is not claimed to be complete information on any of the subjects covered in this blog. Use of any information given in this blog is purely voluntary on the part of the readers. Author of this blog does not assume any responsibility for any action of the readers related to any matter discussed in this blog or any consequences thereof. Readers of this blog are advised to consult a legal practitioner before taking any action related to any matter discussed in this blog.