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How does encryption prevent someone from replaying signals sent between an ATM and a bank?

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A Vigenere cipher table displays the alphabet in both the top row and left column, with rows shifted to create a grid for encryption and decryption. Highlighted letters illustrate how to use the table. An explanation and example using the words cipher, key, and plaintext appears to the right. — cryptology In encrypting plaintext, the cipher letter is found at the intersection of the column headed by the plaintext letter and the row indexed by the key letter. To decrypt ciphertext, the plaintext letter is found at the head of the column determined by the intersection of the diagonal containing the cipher letter and the row containing the key letter.

Encryption prevents a "replay attack"—where a thief records legitimate signals between an automated teller machine (ATM) and a bank to deceive the system later—by ensuring that the communication is not merely secret, but also authenticated.1

If signals were simply encrypted for secrecy, an attacker could still capture and re-send the exact same encrypted data to the bank’s central computer to trigger an unauthorized cash withdrawal. To prevent this, modern cryptography employs protocols that ensure each exchange is unique and verifiable. By using techniques such as sign/countersign exchanges or appending authentication data to messages, the system ensures that the bank only accepts instructions that are part of a legitimate, current transaction sequence.12

If an attacker attempts to replay a previously recorded signal, the bank’s system will recognize it as invalid or non-authentic, as the protocol requires fresh, unpredictable data for each interaction. This ensures that even if an eavesdropper intercepts a transmission, they cannot successfully impersonate a user or force the machine to dispense money illegitimately.12