Have you ever wondered about the process that
makes your bank funds available to you at an ATM on the other side of the
country?
An automated teller machine (ATM), also known as a Cash Point (which is a trademark of Lloyds TSB), Cash Machine or sometimes a Hole in the Wall in British English, 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. ATMs are known by various other names including ATM
Machine, automatic banking machine,
cash machine, and various regional
variants derived from trademarks on ATM systems held by particular banks. Invented by IBM, the first ATM was introduced in December 1972 at Lloyds Bank in the UK. 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. If the currency being
withdrawn from the ATM is different
from that which the bank account is
denominated in (e.g.: Withdrawing Japanese Yen from a bank account
containing US Dollars), the money will
be converted at a wholesale exchange rate. Thus, ATMs often provide the best possible exchange rate for foreign
travelers and are heavily used for this purpose as well.
The idea of self-service in retail
banking developed through
independent and simultaneous efforts
in Japan, Sweden, the United Kingdom
and the United States. In the USA, Luther George Simjian has been credited with developing and building the first cash dispenser machine.
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.
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.
A first cash dispensing device was used in Tokyo in 1966.Although little is known of this first device, it
seems to have been activated with a
credit card rather than accessing
current account balances. It was
followed in 1967 by a machine in Uppsala.
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, 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 of printing firm De La Rue,who was awarded an OBE in the 2005 New Year's Honours List.His design used special cheques that were matched with a
personal identification number, as
plastic bank cards had not yet been invented.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 machine (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 strip at the back. They used
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 on the MD2 named James Goodfellow in 1965 (patent GB1197183 filed on 2 May 1966 with
Anthony Davies). The essence of this
system was that 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 filed 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 reference this patent as “Prior Art Device”.After looking first hand at the
experiences in Europe, in 1968 the
networked ATM was pioneered in the
US, 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.A Chemical Bank advertisement boasted
"On Sept. 2 our bank will open at 9:00 and never close again. 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.In 1995, the Smithsonian National Museum of American History recognised Docutel and Wetzel as the inventors of the networked ATM. 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[citation needed] historical models of ATMs include the IBM 3624 and 473x series, Diebold 10xx and TABS 9000 series, NCR 1780 and earlier NCR 770 series.
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