The Origins of the ATM Part 2

When Did the ATM come to the United States

When Did the ATM come to the United States?

When our last post ended, the automatic teller machine had made its successful premiere in the United Kingdom. Across the Atlantic Ocean, however, Americans were still largely unaware that this kind of technology could even exist. However, Don Wetzel, the Vice President of Product Planning at the now-defunct Texas technology firm Docutel, was about to change that.

In 1968, Don Wetzel was standing inside a bank in Dallas, waiting in line, imagining what life would be like if people did not have to wait in lines in banks. Then, all of a sudden, he could see it in his mind: the automatic teller machine.

Wetzel’s employer provided five million dollars to develop this idea. Two engineers at the company, Tom Barnes and George Chastain, worked with Wetzel to develop the product. The ATM was not such a great leap for Docutel, though, as it had worked extensively on creating automatic luggage transportation systems for airports.

The ATM prototype was finished about a year later, and Wetzel, Chastain and Barnes received the patent for this device in 1973. Several banks claim to have been the first to install this machine, but Wetzel has stated that the distinction belongs to a Chemical Bank branch in Rockville Centre, New York. Chemical Bank advertised the debut of this machine in a clever way. It announced in ads that it would open at nine a.m. on September 2, 1969, and that it would “never close again.”

Chemical Bank called its ATM the Docuteller. The machine could only dispense cash, and it was not connected to the bank’s network of computers. Unfortunately, the bank installed the machine outside. The machine was not waterproof. The bank tried to protect it from rainwater by setting up a canopy. The canopy was too high. The soaked machine suffered massive damage.

ATMs began sprouting up all over the place. That’s not to say there weren’t some snags in those early years, though. Just imagine the following issues:

  • For some banks, the cost of the initial ATMs was prohibitively high.
  • Many banks would only allow their best customers – those with the most sterling financial histories and records – to touch these machines.
  • Until 1972, a bank customer could not use an ATM unless he or she had a credit card.
  • Some customers were puzzled by the ATM at first. In Texas, an ATM refused to give money to a certain bank customer. That customer got so mad he pulled out a gun and shot the machine. Luckily, it was bulletproof.

Little by little, the ATM improved. Docutel put out a total ATM in 1971, one that could transfer money from one account to another, send money to credit card accounts, and so on. Wetzel, Chastain and Barnes also got to work on ATM cards equipped with magnetic strips. These strips proved so effective that they became standard on credit cards.

In 1995, the Smithsonian National Museum of American History officially designated Don Wetzel the inventor of the ATM, despite several people having made that claim over the years. In many ways, it’s astonishing to think about what a contribution Wetzel made to society. Today, there are more than 1.8 million automatic teller machines in existence. That number increases constantly. In fact, about once every five minutes a new ATM opens for business. The average American uses his or her ATM card between six and eight times every single month.

Of course, when you consider these statistics, you might reflect on that poor, solitary ATM in Rockville Centre, New York, standing outside, getting wet in the rain.

The Origins of the ATM

The Origins of the ATM

How Did the ATM Evolve?

The automatic teller machine is such a common sight nowadays that most people probably take it completely for granted. It might be hard to imagine, then, that there was a time when the only way to withdraw cash from a bank account was to actually go to a bank and speak to a human being.

The ATM was an invention with a long gestation period. The first ATM patent, issued in 1939, was for a version of an ATM that never caught on. A 34-year-old Turkish inventor, photography expert and resident of New York City named Luther Simjian built what he called the “Bankmatic machine” and nicknamed the “hole-in-the-wall machine.” This device was capable of handling a few rudimentary banking transactions. The City Bank of New York, which is now called Citicorp, allowed Simjian to install his invention in one of their branches as an experiment. Very few customers were interested in going near the Bankmatic, however. Simjian observed that only gamblers and prostitutes seemed to want to use the machine. City Bank got rid of the machine six months after it was installed. Simjian went on to develop a number of inventions in a wide variety of fields; he died in 1997.

The late 1960’s were the boom time for ATM inventors. Consider the following developments, all within the span of a few years:

  • In 1965, a British engineer at Smiths Industries began working on a machine with a keypad that could read numbers encrypted on cards. This machine could also dispense pieces of paper, including cash.
  • In 1966, Scottish inventor James Goodfellow patented an ATM that functioned much as ATM’s today function.
  • John Shepherd-Barron, who ran a technology company called De La Rue Instruments, became the primary inventor of an ATM introduced in 1967. This ATM was called the DACS, short for “De La Rue Automatic Cash System.”
  • Reg Varney, a comedic television actor, became the first British citizen to use a DACS machine on June 27, 1967.

Of the inventors listed above, Shepherd-Barron is most widely credited with launching the ATM into public consciousness. But how did Shepherd-Barron come up with this idea?

Professionally, Shepherd-Barron was involved in the printing and transporting of cash; the idea of moving cash from one place to another inside an armored vehicle was one he helped to initiate and promote. Anyway, the story goes that one night in the mid-1960’s, Shepherd-Barron wanted to get some money after work, but the banks were closed. He went home and into his bathtub, still feeling angry because he hadn’t been able to withdraw money. Then the idea hit him: What if there were machines people could access any time of the day or night, machines that would dispense cash and automatically subtract the amount of withdrawal from a customer’s account? Shepherd-Barron went to work right away on the details of just such a machine with a team at De La Rue.

Plenty of issues had to be worked out. For example, there was no such thing as an ATM card in the 1960’s, so early versions of the automatic teller machine would have to read something else in order to identify a customer. The DACS machine read checks stained with carbon 14; the carbon 14 stains identified customers with numbers. (The presence of carbon 14 also made checks radioactive, if only to a tiny degree.) Therefore, Shepherd-Barron is not only an ATM innovator, but also the father of the PIN number as it’s now used in banking. He thought PIN’s should contain six digits, but his wife argued that four-digit PIN’s would work better.

Once the DACS prototype had been created, Shepherd-Barron met with a manager at Barclays, and this manager loved the idea of the automatic teller machine. By the way, Shepherd-Barron never earned anywhere near the money he might have from his work on the ATM, because he never patented the machine. He was concerned that if he patented it, he would have to publicly release all of its technological secrets. Thus, he reasoned, criminals would be able to break into these machines and steal money, rendering them useless.

The DACS machine may have delighted British banking customers, but it had yet to make its grand debut in the banking capital of the world: the United States. How the machine hit the big time in the U.S. is a story of its own, one we will share in the next post.

ATMs for the Visually Impaired

Blind people, and people with visual impairments, can go into any bank in the United States and use an automatic teller machine unassisted. In fact, the Americans with Disabilities Act makes it a requirement that financial institutions be equipped with ATMs for the visually impaired. That’s because, under the law, having to wait in line to speak to a teller and ask for assistance with an ATM machine places an undue burden on visually impaired people. Not to mention, getting a teller’s assistance with an ATM requires customers to say all of their personal banking information out loud. And doing makes the customer vulnerable to thieves and skimmers.

How Are the Visually Impaired Guided Through an ATM Transaction?

ATMs for the Visually Impaired

ATMs for the visually impaired include Braille, both on the keys and Braille instructions. The keys of an ATM are designed in a certain way to assist the blind. Keys are raise, not flat against the keypad. The numbers are set up in a way that makes them easy to find, too. They’re arranged in order – either ascending order or descending order – and the number five has a tiny raised piece on it to help those with visual impairments orient themselves.

Most important, these ATMs “talk”, they deliver through voice recordings all the information that seeing customers read. These pieces of info include:

  • instructions for making transactions
  • error messages
  • the date
  • the time

Visually-impaired people listen to ATM voices through headphones. Banks provide headphones, but in order to avoid germs, customers can bring their own headphones to the bank. (These machines work with most standard versions of headphones and earbuds.) That way, these customers can keep private their personal information, items such as:

  • their monthly bank statements
  • the balances in their various accounts

What’s more, these ATM voices are not simply recordings that are played back at the touch of the button. They are more sophisticated than that. For example, customers can ask that the voice repeat a certain sentence. And some ATMs speak in voices that sound human, as opposed to the emotionless, non-modulated voices of many computers. Customers can adjust the volume of an ATM voice.

How are these ATMs Helpful to Others Not Visually Impaired?

Senior citizens who are not legally blind but who have issues with their eyesight can derive benefit from talking ATMs. That’s because these machines employ contrasting colors to make various keys stand out, making them easier to spot. In fact, everyone is allowed to use a talking ATM. Therefore, you can use one of these machines if you have 20/20 eyesight but you simply do not like to use touchscreens for whatever reason. These machines also provide assistance to people who are illiterate or who have reading disabilities.

History of the Talking ATM

The talking ATM made its public debut at San Francisco City Hall on October 1, 1999. Today, there are more than 100,000 of these machines in operation in the United States, with more coming all the time, and they can be found in nations all over the world. Indeed, they are more affordable now for banks than ever. Some companies that make ATMs even offer trade-in programs, whereby a bank can swap an existing ATM for a talking ATM, and thereby obtain the talking ATM at a reduced rate. Or banks can simply purchase conversion kits for the ATMs they already have; these kits include the voice software that makes the ATMs talk. Banks also have the option of setting up talking ATMs that speak languages in addition to English. Bank of America, to take one example, has owned and operated thousands of bilingual ATMs for almost a decade.

As a final warning, realize that many standalone ATMs – the kind of ATM you find on street corners and inside or outside non-financial institutions like convenience stores – do not talk. But as these ATMs age and are replaced, the financial institutions that operate these machines often replace them with ATMs that do have voice capabilities.

Drive-Up ATMs

Drive-Up ATMs

From the time the first automatic teller machine was invented, it was probably inevitable that someone would come along and create the drive-up ATM. After all, drive-through banking, with live tellers, was first invented in 1928. Drive-up ATMs, also known as drive-through ATMs, are one of the most convenient of banking features, allowing you to withdraw cash from your account without even getting out of the car.

Drive-up ATMs can be found all over the world nowadays. While the origins of the first drive-up automatic teller machine are a bit hazy, these machines spread throughout the United States at a rapid clip throughout the 1980’s and 1990’s. And the first decade of the 2000’s saw them becoming ubiquitous all over the world. In September 2001, the Standard Chartered Bank, or Stanchart, opened the first drive-up ATM in the West African nation of Ghana. In 2002, the National Commercial Bank, or NCB, opened the first drive-up ATM on the island of Jamaica. In China, Citibank opened the first drive-up ATM in the summer of 2007, at Beijing’s Upper East Side Central Plaza. In May 2008, the China Construction Bank opened a drive-up ATM in Guangzhou, southern China’s first such ATM. And today, there are plenty such ATMs throughout China; these devices just seem to have a way of catching on.

The typical drive-up ATM is a very secure device, made out of steel and concrete. After all, a drive-up ATM has to contend with all kinds of threats and dangers: would-be robbers and vandals, inclement weather, earthquakes, and drivers hitting into it. These ATMs usually come equipped with extremely loud alarm systems as well. Such alarms are especially important for drive-up ATMs located in remote places.

Using Safety and Precaution at a Drive-Up ATM:

Whenever you use a drive-up ATM, it’s important to keep safety and security in mind. Security precautions for a drive-up ATM are similar to the kinds of precautions you should take at any ATM, in the sense that you should always be acutely aware of your surroundings whenever you use any ATM.  Specifically, drive-up ATM safety practices include the following measures:

  • Before you pull up to an ATM, take a good look around in every direction to make sure you don’t see anything – or anyone – suspicious.
  • Spend as little time as possible with the ATM. Make your transaction quickly and then leave.
  • When you are waiting in line to use a drive-up ATM, make sure all your doors are locked. Don’t turn off your engine at any point, either.
  • Make sure as you are waiting in line that you can always flee the premises immediately if you have to. That means you should avoid getting sandwiched in between other vehicles, or between another vehicle and the building.
  • If anyone approaches your window, drive away. Now is not the time to be friendly or try to be helpful.
  • Try to use a drive-up ATM only during daylight hours.
  • Keep your cell phone in your lap when you’re at a drive-up ATM. Then, after you withdraw your money, watch your rearview mirrors closely to make sure that no one is following you. If someone does appear to be following you, call the police.

By the way, if you search the Internet for “drive-up” ATMs, you’re bound to find in your search results this famous rhetorical question: “Why do drive-up ATMs have Braille on their keys?” The answer to this question is simple. The law requires that drive-up ATMs include Braille so that people with visual impairments who are riding in an automobile as passengers, or who might be taking a cab, can use these ATMs as well.

Smart ATMs

How Smart is An ATM?

How Smart is An ATM

Thanks to digital technology, automatic teller machines, like so many gadgets we use in our daily lives, are getting smarter all the time. A few years ago, the only relationship between ATMs and smartphones was the fact that you could use a phone app to locate the nearest ATM. Now, however, smartphone apps in many instances are replacing ATM cards altogether.

Consider, for example, the ATM program that the self-service software company NCR has introduced recently. ATM users who have smartphones with cameras can approach an ATM and complete the following process:

  • Activate their NCR app
  • Enter their PIN number on their phone
  • Choose the account from which they want to withdraw money and the dollar amount of that withdrawal
  • Scan the QR code that the ATM screen displays

After doing these things, the money comes out and a receipt is sent directly to the smartphone. NCR says that this withdrawal should take a customer about ten seconds. It helps people avoid the threat of skimming, and takes away the fear that they might lose their ATM card or have it stolen.

Diebold, an Ohio-based company that also specializes in self-service systems, has likewise found a way to combine smartphones and ATMs to eliminate the need for an ATM card. Their program works in a way similar to NCR’s:

  • An ATM user scans the QR card on a smartphone.
  • An ATM screen appears on the phone, allowing that person to choose a dollar amount to withdraw.
  • A code appears, which the customer types on the screen of the ATM.

The cash is dispensed, and transactions are complete when customers receive the electronic receipt on their phones. Note that customers receive different codes every time they use this system; as soon as a transaction has gone through, that code is voided. This system not only makes ATM transactions more convenient for customers, but it benefits banks as well, in that it uses a cloud server rather than a bank’s computer. As a result, banks don’t need to use as much power on any given day. Further, banks do not have to pay for paper and printer ink to print out receipts.

The Diebold system also allows people to use their smartphones to “wire” money to others. Let’s say your son is on a spring break trip and loses his wallet and all his cash, and he has no bank account from which to withdraw money. All you have to do under such circumstances is use your ATM app to select an amount of money to withdraw. You will receive a code which you can send to your son’s smartphone. He can then go to an ATM, enter that code and withdraw the amount of cash you selected. Again, this code is a one-time-only code.

It may surprise you to learn that banks generally do not have to do much work in order to make their ATMs compatible with smartphones. In most cases, all a bank must do is update its ATM software and add a barcode scanner to each machine.

In the future, automatic teller machines might become even more interactive. The aforementioned company NCR is teaming up with a company headquartered in Utah called uGenius Technology to develop ATMs with video screens. These screens allow customers  interact with bank tellers; the tellers are on hand to guide ATM customers through complicated transactions – transactions which, in the past, usually required speaking with a real live teller at a bank. If this technology catches on, it might mean that bank branches will not need to hire as many tellers, as a smaller number of tellers will work in central locations and help customers remotely.