How do Bitcoin ATMs work?

Bitcoin ATMs, also called Bitcoin Teller Machines (BTMs), aren’t really ATMs in the true sense of the term. Rather, these are physical centres where you can buy Bitcoins with fiat money and with some machines, sell Bitcoins too. Bitcoin ATMs are meant to offer access to Bitcoins to those who are not a part of the banking system.
Bitcoin ATMs also cater to the underbanked and the less tech-savvy people. Some just prefer the extra privacy that some BTMs offer when it comes to buying Bitcoin. Estimates peg the number of Bitcoin ATMs all over the world at around 1600, an exponential rise from just two years back when the number hovered around 450.
How do you use a BTM?
Search online to find a BTM near you. You can use services like CoinATMradar to locate your nearest BTM.
Depending on the manufacturer, the machine may support two-way transactions between Bitcoin and fiat money, that is, it allows you to buy as well as sell Bitcoin. Most machines only support fiat to Bitcoin transactions, that is, you can only buy Bitcoin with fiat money. Fiat money is nothing but legal tender issued by a government. It’s your basic currency of the country: rupees, dollars, roubles etc.
Very few machines allow you to buy Bitcoins without any ID, as most require your phone number or some other ID detail for access. Depending on the machine and the operator, you may have to divulge personal information to varying degrees. This is to meet compliance requirements and to keep your Bitcoins secure.
A BTM looks more or less like an ATM. You might be required to key in your phone number. After verification with a One Time Password (OTP), you are good to go and can buy Bitcoin now using the BTM. Some BTMs might require you to use the BTM scanner to provide an ID card such as a driver’s licence, passport etc.

The transaction process
The BTMs save Know Your Customer (KYC)/Anti Money Laundering (AMC) details, scrutinise them and report suspicious activity to the regulatory authority. After obtaining these details, the machines allow you to buy Bitcoin. The operators buy Bitcoin from exchanges and allow BTM users to withdraw Bitcoin from their wallets. One can buy as much Bitcoin as the operator holds.