History of ATM Machines

ATM machinesAn automated teller machine (ATM), also known as a Cash Machine and by several other names (see below), is a computerised telecommunications device that provides the clients of a financial institution with access to financial transactions in a public space without the need for a cashier, human clerk or bank teller. On most modern ATMs, the customer is identified by inserting a plastic ATM card with a magnetic stripe or a plastic smart card with a chip, that contains a unique card number and some security information such as an expiration date or CVVC (CVV). Authentication is provided by the customer entering a personal identification number (PIN).

Using an ATM, customers can access their bank accounts in order to make cash withdrawals, credit card cash advances, and check their account balances as well as purchase prepaid cellphone credit.

The idea of self-service in retail banking developed through independent and simultaneous efforts in Japan, Sweden, the United States and the United Kingdom. In the USA, Luther George Simjian has been credited with developing and building the first cash dispenser machine.[3] There is strong evidence to suggest that Simjian worked on this device before 1959 while his 132nd patent (US3079603) was first filed on 30 June 1960 (and granted 26 February 1963). The rollout of this machine, called Bankograph, was delayed a couple of years. This was due in part to Simjian’s Reflectone Electronics Inc. being acquired by Universal Match Corporation.[4] An experimental Bankograph was installed in New York City in 1961 by the City Bank of New York, but removed after 6 months due to the lack of customer acceptance. The Bankograph was an automated envelope deposit machine (accepting coins, cash and cheques) and it did not have cash dispensing features.[5] The Bankograph, however, embodied the preoccupation by US banks in finding alternative means to capture core deposits, while the concern of European and Asian banks was cash distribution.

A first cash dispensing device was used in Tokyo in 1966.[6][7] Although little is known of this first device, it seems to have been activated with a credit card rather than accessing current account balances. This technology had no immediate consequence in the international market.

In simultaneous and independent efforts, engineers in Sweden and Britain developed their own cash machines during the early 1960s. The first of these that was put into use was by Barclays Bank in Enfield Town in North London, United Kingdom,[8] on 27 June 1967. This machine was the first in the UK and was used by English comedy actor Reg Varney, at the time so as to ensure maximum publicity for the machines that were to become mainstream in the UK. This instance of the invention has been credited to John Shepherd-Barron,[9] while disregarding other engineers at De La Rue Instruments who contributed to the design and development of that machine. Nevertheless, Shepherd-Barron was awarded an OBE in the 2005 New Year’s Honours List.[10] His design used special checks that were matched with a personal identification number, as plastic bank cards had not yet been invented.[11]

The Barclays-De La Rue machine (called De La Rue Automatic Cash System or DACS) beat the Swedish saving banks’ and a company called Metior’s (a device called Bankomat) by nine days and Westminster Bank’s-Smith Industries-Chubb system (called Chubb MD2) by a month. The collaboration of a small start-up called Speytec and Midland Bank developed a third machine which was marketed after 1969 in Europe and the USA by the Burroughs Corporation. The patent for this device (GB1329964) was filed on September 1969 (and granted in 1973) by John David Edwards, Leonard Perkins, John Henry Donald, Peter Lee Chappell, Sean Benjamin Newcombe & Malcom David Roe.

Both the DACS and MD2 accepted only a single-use token or voucher which was retained by the machine while the Speytec worked with a card with a magnetic stripe at the back. Hence all this these worked on various principles including Carbon-14 and low-coercivity magnetism in order to make fraud more difficult. The idea of a PIN stored on the card was developed by a British engineer working in the MD2 named James Goodfellow in 1965 (patent GB1197183 filed on 2 May 1966 with Anthony Davies). The essence of this system was that is it enabled the verification of the customer with the debited account without human intervention. This patent is also the earliest instance of a complete “currency dispenser system” in the patent record. This patent was filled on 5 March 1968 in the USA (US 3543904) and granted on 1 December 1970. It had a profound influence on the industry as a whole. Not only did future entrants into the cash dispenser market such as NCR Corporation and IBM licence Goodfellow’s PIN system, but a number of later patents references this patent as “Prior Art Device”.[12]

After looking first hand at the experiences in Europe, in 1968 the networked ATM was pioneered in Dallas, Texas, by Donald Wetzel who was a department head at an automated baggage-handling company called Docutel. On September 2, 1969, Chemical Bank installed the first ATM in the U.S. at its branch in Rockville Centre, New York. The first ATMs were designed to dispense a fixed amount of cash when a user inserted a specially coded card.[13] A Chemical Bank advertisement boasted “On Sept. 2 our bank will open at 9:00 and never close again.”[14] Chemicals’ ATM, initially known as a Docuteller was designed by Donald Wetzel and his company Docutel. Chemical executives were initially hesitant about the electronic banking transition given the high cost of the early machines. Additionally, executives were concerned that customers would resist having machines handling their money.[15] In 1995, the Smithsonian National Museum of American History recognised Docutel and Wetzel as the inventors of the networked ATM.[16]

ATMs first came into use in December 1972 in the UK; the IBM 2984 was designed at the request of Lloyds Bank. The 2984 CIT (Cash Issuing Terminal) was the first true Cashpoint, similar in function to today’s machines; Cashpoint is still a registered trademark of Lloyds TSB in the UK. All were online and issued a variable amount which was immediately deducted from the account. A small number of 2984s were supplied to a US bank. Notable historical models of ATMs include the IBM 3624 and 473x series, Diebold 10xx and TABS 9000 series, and NCR 50xx series.

ATMs are placed not only near or inside the premises of banks, but also in locations such as shopping centers/malls, airports, grocery stores, petrol/gas stations, restaurants, or any place large numbers of people may gather. These represent two types of ATM installations: on and off premise. On premise ATMs are typically more advanced, multi-function machines that complement an actual bank branch’s capabilities and thus more expensive. Off premise machines are deployed by financial institutions and also ISOs (or Independent Sales Organizations) where there is usually just a straight need for cash, so they typically are the cheaper mono-function devices. In Canada, when an ATM is not operated by a financial institution it is known as a “White Label ATM”.

In North America, banks often have drive-thru lanes providing access to ATMs.

Many ATMs have a sign above them indicating the name of the bank or organization owning the ATM, and possibly including the list of ATM networks to which that machine is connected. This type of sign is called a topper.

Article sourced from: http://en.wikipedia.org/wiki/Automated_teller_machine

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