This seems to be the bit that worries most merchants who cash up their ATM machines. The thing is there is nothing to worry about. The cash-dispenser has an electric eye that counts each bill as it comes out of the dispenser. The currency note (or bill) count and all the information related to a particular transaction are recorded in an electronic journal.
Our ATMs can store up to 2000 electronic journals. The journal information must be printed out periodically and a hard copy should be maintained by the ATM owner for two years. Whenever there is a dispute over a transaction, the ATM user and ATM owner will consult the journal printout which will show the transaction. After obtaining this printout, the cardholder needs to contact his or her bank and fax a form to the switching company. In most cases, his or her bank should handle this matter. Apart from the electric eye that counts each note, the cash-dispenser also has a sensor that assesses the thickness of each note, so if two notes are stuck together they are diverted to a reject bin rather than being dispensed to a cardholder. The same thing happens if a note is wet, worn, torn, folded or in any other way damaged.
The number of rejected notes is recorded so that the ATM owner or manager can be aware of the quality of the notes that are being loaded into the ATM. A high rate of rejected notes indicates either a problem with the notes (most likely) or the cash dispenser.