Literature Review:

Diebold Inco (2002), indicated that fraud at the Automated teller machine although more
difficult than at a POS, has become more widespread. As further investigated by Ogbuji,
Onuoha & Izego (2012), the converging forces of technology have tremendously altered
manual systems of delivering banking services and have subsequently paved way for
electronic delivery platforms in recent time. As banks move into new territory, several
challenges arise in the context of banking risks (Pennathur, 2001). Adepoju & Alhassan
(2010) while analyzing the cases of ATM usage and fraud occurrences with some banks
in Nigeria discussed that consumers have come to depend on and trust the Automatic
Teller Machine (ATM) to conveniently meet their banking needs. Agoyi and Seral (2010
have shared their concern on the growing number of ATM frauds and have suggested
using the SMS encrypted messages to authenticate the users to improve ATM security
against frauds and crimes. Criminals are taking the battle a stage further, by directly
manipulating the software inside the ATMs to give them money (Bradbury, 2010).

Report on Global ATM Fraud (2007) published by ICMR has reported that the ATM
frauds have evolved from the conventional ‘trick of shoulder surfing’ to steal the PIN of
customers at the ATM to more sophisticated methods such as the Lebanese loops, use
of electronic gadgets, card jamming, card swapping, diversions, website spoofing, or
phishing, ATM Burglary etc. Drimer, Anderson & Bond (2010), in their paper has
demonstrated a protocol flaw in Europe pay, MasterCard and VISA (EMV) protocol.

Realizing the severity and the frequency of the ATM frauds, Diebold in their one of the
white papers titled ‘ATM Fraud and Security-2012’ has reported that the ATM fraud is
not confined to a particular region of the world. As further reported, the card skimming
was the most prevalent crime affecting ATMs in Europe. Card skimming at ATMs
resulted in losses of nearly 111 million Euros across Europe during the first half of 2011.

Greene (2009) has defined the key areas of payment fraud. He segregated the fraud
into two categories. There is first-party fraud, which is the abuse of the account
privileges by the account holders themselves, or the acquisition or expansion of those
privileges by deceitful means. There is also third-party fraud, which is often identity
fraud, or the abuse of one person’s account by another. Third-party fraud is what we
usually think when we consider fraud. While investigating the risk management, security
and controls in the context of ATMs, Rasiah (2010) has described that the crime at
ATMs has become a nationwide issue that faces not only customers, but also bank
operators. Based on a survey of bank corporate clients in Singapore, Rexha, Kingshott
& Aw (2003) concluded that trust was the key factor influencing the adoption of
electronic banking. The trust, therefore, remained to the key factor influencing the
adoption of various e-banking channels and products offered by the banking industry.
In CA journal October 2012 an article has been published by CA T.S. Subramanian has
said, “After analyzing thirteen hundred cases, has classified the vulnerabilities into four
groups viz., Customer and the Bank being cheated, Machine failure, Security failure and
Accidents.
In Bangladesh, the central bank a few days ago asked all banks to tighten security,
including installing anti-skimming devices at their ATM booths, in a bid to crack down on
rising card frauds.
“Though anti-skimming devices are available in the country, many banks are yet to
install those, making their clients vulnerable to frauds.”

There are around 7,000 ATMs around the country, through which 2 to 3 lakh
transactions take place per day.
Result and output:
Automated teller machine has now become an inseparable part of our daily life and it
has gained such an important part of our life; which began in the 1960. As software
changes, so does the concern for Automated teller machines’ security. Today’s biggest
worry for Automated teller machine industry professionals is to maintain the security of
global systems beyond the traditional advice to consumers to keep their PIN secret.
When a person collects the PIN as well as the card details without the knowledge of the
customer it is known as ‘Skimming’. Most bank Automated teller machine security
issues and Automated teller machine fraud issues involving Automated teller machine
skimming are the result of criminals attaching a skimmer to the Automated teller
machine card.
PIN BASED AUTHENTICATION A PIN pad or PIN entry for second stage verification
device is important in a very debit, credit or sensible card-based dealings to simply
accept and cipher the cardholder's personal selection (PIN). PIN entry technique can be
used for cash dispenser machine, associate integrated purpose of sale devices among
that associate electronic till is chargeable for taking the sale quantity and
initiating/handling the dealings. The PIN can be used employed to verify a client (the
user of a bank card) at intervals associate degree electronic funds transfer system, and
(typically) to authorize the transfer of funds, thus it's necessary to guard it against
unauthorized access or misuse. fashionable banking systems want ability between
totally different card issuers, effort banks and retailers – as well as transmission of PINs
between those entities – thus a standard set of rules for handling and securing PINs is
required to confirm technical compatibility and a reciprocally in agreement level of
security. Information and laptop security area unit supported for the most part by
passwords that area unit the principle a part of the authentication method. This private
number (PIN) is common authentication technique employed in varied devices like
ATM’s, mobile devices and electronic door locks.
Managing the risk associated with ATM fraud as well as diminishing its impact are
important issues that face financial institutions as fraud techniques have become more
advanced with increased occurrences. A second stage verification via SMS will help the
ATM user to know when and where his card is being accessed. It will send a unique
verification code to the user and after pressing the code it will be verified by the bank
and only then he can collect money from the ATM.
As the second stage verification is associated with the phone number of the user, this
will cause to safe transaction of money. All the information regarding the transaction will
be provided to the user after transaction and without verifying via SMS the money
cannot be transacted without the permission of the user.
The phone number of the user will lead to avoiding identity theft which is taking place
every now and then by impersonating. And this will eventually decrease any kind of
fraudalence and result in decrease in skimming fear.