A Dissertation Submitted in Partial fulfillment of the Requirement for the award of Masters of Laws in Commercial Laws of the University of Mzumbe.This study is about the Inter -banking Automated Teller Machines (ATMs) its legal challenges in Tanzania. As the use of ATMs expeditiously expanding and almost becoming the way of life to many Tanzanians, the legal framework does not respond to meet with the current development. The researcher undertook this study to find out these legal challenges the banking industry faces especially in dealing with /providing ATMs services and the protection of the customers ultimately suggested the better ways to protect the customer‟s right and well deal with the legal challenges brought by these developments in ICTs. The study is qualitative one; the researcher has used interview and questionnaires as the means of obtaining the information from the respondents such as bankers from NMB, NBC and CRDB. The researcher also collected data from lawyers, judicial officers as well as customers of the banks. THE STUDY FINDS OUT THAT there are no specific laws and regulations regulating the operation and use of Inter –banking ATMs. All the lawyers who are the respondents stated that ATM transactions are guided in general legal framework hence lack the effectiveness to curb the peculiar features in the area thus the customers‟ rights are not well protected. The study also revealed various advantages that are being experienced by not only the bank customers but also the banks and the general public at large. Thus the study recommends that it is high time to have the specific laws to regulate the ATMs in place so as to assure the protection of the rights of those dealing with the instrument.