Today in Tedium: We live in a world where, conceivably, you can go without hitting an ATM for months, even years on end, as long as you have the right piece of plastic. After all, why carry money on you—which can get stolen or lost—when you can have it inside a centralized financial infrastructure that manages it for you and presumably will keep it safe? The ATM is on the decline, and its decline feels pretty similar to the decline we’ve already seen from legacy mediums like cable television (where younger people simply opted for Netflix), pay phones (which became less useful when everyone had a cell phone), or landlines (where younger people made cell phones their primary number). But there was a time when ATMs were scary and unusual, and there was a moment where everything started to click. Today’s Tedium talks about the day the ATM began to make sense. — Ernie @ Tedium
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The percentage of transactions made with cash or checks in 2022, according to research from the firm Euromonitor; in 2018, that number was 28 percent. This stat reflects a gradual drop-off in ATM use, with the number of units falling from 470,000 to 452,000 between 2019 and 2022. What’s notable is that the 2019 number was an all-time high for ATMs—which highlights that the cash machine is starting to fade from view, though it’s certainly long from disappearing entirely.
The initial discomfort of handing your paycheck to a machine
It’s worth keeping in mind that while the ATM has become something of a piece of modern furniture—a kiosk for managing and delivering money—it was not always that way. Most assuredly, the first experience that many people had with a computing device came in ATM form, so naturally, there was going to be some discomfort with the idea.
And no, people did not embrace this idea early on.
Behind the scenes, of course, machines were already kicking up the automation quotient, and then some. As I’ve written in the past, clearinghouses were already processing checks through automated machines in the 1960s and 1970s, which actually had the effect of reshaping the way we produced checks. Additionally, the early forms of optical character recognition were again used to make it easier to scan checks. It was natural to want to extend that automation to the tellers—but it wasn’t easy to get there.
This probably isn’t a surprise to you if you know anything about the history of computers, but the defense industry had the inside lane on a lot of early technology. Alan Turing’s groundbreaking decryption work was put to use by the British military during World War II. The first trackball was made for the Royal Canadian Navy. Ralph Baer was working at an aerospace company when he came up with the machine that became the Magnavox Odyssey.
And likewise, the company that first developed and deployed the first automated teller machine in the United States, Reflectone Electronics, was far better known for its work building military training systems.
Of course, it was not a corporation that invented the Bankograph, as it was called, but an individual. And that man’s name was Luther Simjian, who was Reflectone’s president. An Armenian national whose family fled during the that country’s genocide and eventually came to the United States, Simjian quickly gained a reputation as a prolific inventor, with more than 200 U.S.-based patents to his name between 1927 (a “Pose-reflecting system for photographic apparatus”) and 1982 (a “Golf putting training device”).
One of the patents he came up with, a “Depository machine,” represents one of the first steps on the journey to building the modern ATM. This machine did not have a screen. Rather, it would accept cash in an envelope or change, and then print a receipt. As the filing states:
This invention relates to a depository machine which receives articles or envelopes containing letters or money and automatically issues a receipt for the article deposited. It has particular reference to a recording means which identifies the article and means for issuing an identifying ticket exterior to the machine. The invention also has reference to a recording means within the machine for making a complete record of all the articles deposited.
As used throughout the specification and claims, the term article refers to a container which may include a closed bag containing coins, or any other closed receptacle commonly used to transport and store valuable papers and money.
A patent filing by Simjian from the same period adds a key element of any modern ATM—a camera. That filing makes clear that the goal is to make banking services accessible at all hours of the day:
This invention relates to automatic machines for depositing an article of value and has particular reference to a machine which is adapted to accept checks or money and to issue a deposit slip in return for the deposit. Specifically, the machine is adapted to accept checks, paper money and coin money, to record an image of the article deposited and to return to the depositor a deposit receipt which is identifiable with respect to the article deposited as well as with respect to the recorded image of the article.
The increasing demand of the public for banking services and the requirement of banks to seek and attract more and new customers and capital have made it necessary for banks to establish branch offices away from the downtown area and open branch stations in suburban and outlying districts, thus making it more convenient for the public at large to take advantage of banking services. In spite of these efforts, there still exist many impediments since banking hours are restricted to certain hours of the day and banks generally are closed on many of the legal holidays, Saturdays, and Sundays. It is apparent, therefore, that contact with banks is subject to a rather restricted schedule.
You probably noticed something about this passage: Most likely, if you use an ATM, you’re usually withdrawing cash from the machine. However, Simjian has at this point only come up with an invention that can handle deposits.
Still, that was enough to freak people out a little. As an AP writer noted in a 1961 piece, “Bank clerks won’t like this, but there’s a new machine called ‘bankograph’ which is said to accept bank deposits and issue receipts automatically.”
The machine came out at an awkward time for its parent company, which may have possibly hurt its chances in the market. Reflectone was in the midst of merging into Universal Match Corp. It did not get much further than New York City, where it was installed in a number of branches of the First National City Bank, a firm now far better known as Citibank. A brief published in cities across the country certainly didn’t make it sound like a particularly appealing idea:
The machine looks something like an automatic washing machine. It has a slot which will accept deposit slips, checks, pa-per money, or currency. It immediately returns a stamped receipt to a customer who has made a deposit and as the customer is moving away, the machine separately photographs everything he has deposited. It then processes the film and places the film and deposit in a bundle. At a later time, the bundles are collected and checked at the bank employees’ convenience.
While I can find evidence that Reflectone attempted to expand it beyond the city—for example, showing off the device at trade shows—evidence that they actually did so is scarce.
The bankograph did not do the trick—after all, it couldn’t dispense cash, only deposit it—and Simjian’s invention was later forgotten. But Citibank did eventually figure out the trick to getting people to interact with a machine.
It required the mixture of a lot of investment and a little good timing.
“It struck me there must be a way I could get my own money, anywhere in the world or the UK. I hit upon the idea of a chocolate bar dispenser, but replacing chocolate with cash.”
— John Shepherd-Barron, the man credited for developing the first ATM that could be used to remove cash, launched at a Barclays branch in Enfield, a borough of London, in 1967. As the BBC noted in a 2007 article, at the time of the invention, plastic cards did not exist, so the device used checks that used a mildly radioactive form of carbon that the machine would then detect. (“I later worked out you would have to eat 136,000 such checks for it to have any effect on you,” Shepherd-Barron recalled.) The ATM was introduced by Reg Varney, a popular sitcom actor of the era, who made the first withdrawal from the machine at that time.
The snowstorm that finally gave the ATM its edge
If you build them, they will come. It’s not just a Field of Dreams reference, but Citibank’s approach to getting people to embrace the ATM.
Throughout 1977, the company built dozens of them throughout New York City, at an apparent cost of $100 million. The idea was to make them so common and so convenient that people would widely embrace them.
A lot had happened between the point where Citibank tried the Bankograph and it built a sizable network of its own ATMs. The ATM had started to be tested in other parts of the world, including the United Kingdom, Sweden, and Japan. In 1971, a man named Donald Wetzel filed a patent for a “Credit card automatic currency dispenser,” effectively the first ATM patent that included all of the device’s basic functions, including the use of a credit card or similar device. Companies key to the growth of the ATM, such as Diebold, also began to coalesce around the budding industry.
Citibank was the company that seemed the most excited about the concept, and they built a network like it was going to become a major part of its business.
Its competitors did not do this, however, taking a much more cautious approach, and a piece on the uptake of the ATM from that period made it clear that most people did not think they were worth their time:
One problem, apparently, is that consumers are generally satisfied with paper checks. The inconvenience of paper checking may just be in the minds of bank marketing specialists. Most consumers are not only happy with paper checks, they are also worried by the threat of computer error and invasion of privacy. People do not want their security bent, folded or multilated.
"The stumbling block to electronic banking is the lack of personal touch," Chase Manhattan's [Edward] Sheeran points out. "Savings Centers (Chase's newest promotion) maintain the personal touch that electronic banking can't. Many people find it hard to deal with a computer instead of a person."
So what changed that made the ATM look like a good idea to average people? A snowstorm.
The winter of 1978 was a pretty insane time for snowstorms—that January, the Great Blizzard of 1978 dropped massive amounts of snow on parts of Canada and the United States.
While New York didn’t get the Great Blizzard, it got plenty of snow of its own, and in the early days of February 1978, the entire Northeast got nailed with so much snow that it closed the schools and caused the Knicks to cancel a game—both events were rarities.
Something funny happened as a result of this, though. Because the banks were closed and people still needed groceries, all those ATM hubs that Citibank built throughout the region proved extremely useful—and ATM usage jumped by 20 percent after the storm left the branches closed, but the machines open.
In the weeks after the storm, the company promoted itself as the solution to not being able to access your money in inclement weather.
“We know how it was. There you were in two feet of snow with no way to get to us,” one ad stated. “We understand.”
It was just the opening Citibank—and the ATM in general—needed to finally make inroads on popular culture, the small window of usefulness that helped the skeptics see why having access to money without needing a checkbook was a good idea.
Five key innovations that made the ATM worthwhile
- Network connectivity. ATMs that could talk to the bank appeared as early as the 1970s, with Jairus Larson developing the Diebold 550 device in the early 1970s. Before this point, ATMs were not networked at all—a key part of the machine’s functionality, today, as it allows you to do things such as check your balance and automatically access money you’ve deposited.
- The drive-up ATM. First developed by the point-of-sale giant NCR in 1980, with the first one located in Baton Rouge, Louisiana, this invention made it convenient to use an ATM in the ’burbs, too.
- The debit card. It was one thing to have a card that could be used with an ATM—but it was another entirely that could also be used with anything else. First popularized in the 1980s and 1990s, these cards, which work similar to credit cards, made ATMs more functional by ensuring that the card made sense in more places. (Of course, it could be argued that it also made ATMs less useful over time.)
- The Talking ATM. Accessibility matters when it comes to your cash, which is why ATMs were particularly troublesome for blind users. In 1997, the Royal Bank of Canada, working with NCR, embraced a solution to this problem: An ATM that could talk to users, through use of a headphone jack. The technology came to the U.S. in 1999 and has spread since.
- Cash recycling. This more recent trend, which essentially refers to ATMs that are capable of withdrawing cash from the pool of money that has been deposited, is seen as an important way to make the devices more efficient (by requiring less frequent replenishment of the machines) and capable of larger transactions.
The average total fees that users pay for using an out-of-network ATM in 2023, according to Bankrate. That number is up significantly from the first year of the survey, 1998, when the amount was under $2. These fees, like other banking fees, often hit different types of consumers inconsistently. A 2021 CBS News report, citing data from the Financial Health Network, found that Black and Hispanic Americans paid hundreds of dollars more in bank fees, on average, than their white counterparts, while Asian Americans paid about $25 more. ATM fees, along with overdraft fees, were among the reasons for this disparity.
An ATM is not a charming machine. It is not a machine you go to because you’re excited about it. It is in many cases a device of last resort, the place you go when you need cash, and specifically cash, at that very moment.
The additional fees it charges you to access your own money only underline that point. While the ATM experience has somewhat improved over the years, with better interfaces and more capabilities, it ultimately has a ceiling. You need to find one and have the right information to access it.
An ATM also adds concerns about physical safety (always a risk of someone trailing you to take your sweet, sweet cash) and account integrity (you don’t know if the ATM is legit, or if you’ve just given your PIN to a card skimmer).
It is by no means a perfect device—and honestly, in the wrong context, it can sometimes be predatory.
But while the number of ATMs in the world is on the dip, the truth of the matter is that it probably will not die like the payphone or like cable television. Maybe there will be fewer of them, but there will always be someone who needs to use one.
After all, cash is still king, even if some of us use it a lot less these days.
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