dnmmnd

Quite so. If cash is presented to the customer and then retracted there isn't (or at least wasn't) a way for the ATM to know exactly what had been retracted, i.e. you requested amount X that required the ATM to dispense Y number of notes, but the ATM wouldn't know if the number of retracted notes Z was the same as Y. The ATM would have reported this event to the bank's host and would have been present in the daily transaction log.

As you suggest, a customer initiated account credit is necessary to prevent fraud, and the failure to dispense claim can be verified against the host transaction log.

Whilst that maybe the way your bank has chosen to operate, it is most certainly possible for ATMs to report a step#5 failure to the banks host which will reverse the transaction.