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Selling people the idea of a machine that spits out money was clearly not easy. But one day a weather event occurred that greatly contributed to the acceptance of ATMs as useful devices for society.
14% - the volume of transactions made using cash or checks in 2022, according to a study by Euromonitor (in Russia 38% - translator's note). In 2018, this figure was 28 percent (in Russia - 65%, translator's note). These statistics reflect the gradual decline in the use of ATMs: the number of ATMs fell from 470,000 to 452,000 between 2019 and 2022 (in Russia there were 173,500 as of March 2023, and over the last two years the number of ATMs has decreased by 11% - approx translator). The peak of ATMs came in 2019, and it is all the more noticeable that they are starting to slowly disappear, although, of course, they are still far from completely disappearing. But how did they appear?
But the first ATM (or rather, bankograph, as it was called at that time) was invented not by a corporation, but by a private individual. And this man's name was Luther Simjian , who was the president of Reflectone. An Armenian citizen whose family moved to the United States, he quickly gained a reputation as a prolific inventor, with more than 200 U.S. patents issued to his name between 1927 (“Positional Reflective System for a Photographic Apparatus”) and 1982 (“Golf Trainer”) ").
One of his inventions, the "Deposit Machine", is a prototype of the modern ATM. The machine had no screen, accepted cash in an envelope or change, and could also print receipts. As stated in the documentation:
Simdjian's patent application from the same period adds a key element to a modern ATM: a camera. From the text of the application it becomes clear that the purpose of the invention is to make banking services available at any time of the day.
You probably noticed an inconsistency in this text. Indeed, when you use an ATM, you usually withdraw cash from it. And Simdzhyan came up with a device that can only accept deposits. But this was enough to scare people. As one newspaper article from the time put it: “Bank tellers won't like it, but there's a new machine called a bankograph that claims to be able to automatically accept bank deposits and issue receipts.”
The device came at a bad time for Reflectone, and may have worsened its position in the market. Reflectone was then in the process of merging with Universal Match Corp. The device did not spread beyond New York, where it was installed in a number of branches of the First National City Bank, which is now much better known as Citibank. A short press release published in the media also did not greatly help the popularity of the “bankographer”.
Here's how the device was described:
Although there is evidence that Reflectone has tried to expand its reach beyond the city (by demonstrating the device at trade shows, for example), no one has bothered to try to create a full-fledged network of deposit-taking machines throughout the country.
The bankograph did not become a breakthrough in many respects because it did not know how to issue cash, offering only to deposit it - and Simdzhyan’s invention was forgotten. But Citibank eventually figured out how to get people to interact with the machine. This required a lot of investment and a lucky coincidence.
At the time of invention, plastic cards did not exist, so the device used checks that contained an element impregnated with carbon-14, a weakly radioactive isotope. This element carried information about the PIN code that the client entered using the keyboard. “I later found out that you would have to eat 136,000 of these checks for it to have any effect on you,” Shepard-Barron recalled.
Withdrawal voucher, Barclays. It had to be signed and put into the ATM
The ATM was announced by Reg Varney, a popular sitcom actor of the time. It was he who first received money from the machine.
During 1977, the company built dozens of these machines throughout New York City at a total cost of $100 million. The idea was to make them so common and so convenient that people got used to them. The ATM has begun testing in other parts of the world, including the UK, Sweden and Japan. But even more active advertising, as well as the emergence of new functions, did not make the ATM popular.
In 1971, a man named Donald Wetzel filed a patent for an “automatic credit card dispenser,” essentially the first patent for an ATM that included all the basic functions of the device we are familiar with, including the use of a credit card or similar device.
Citibank, excited by the idea of ATMs, began putting them everywhere, as if using these devices was going to be a core part of their business. But competitors did not think so and continued to be cautious. And an article about the proliferation of ATMs made it clear that most people did not find the devices useful:
For the sake of objectivity, people had the right to look at new and incomprehensible devices with skepticism. Something could have gotten stuck in them, or the bills could have run out during the money dispensing process. They could also issue several bills instead of one, and the bank could not find out about it. To use a specific ATM, it was necessary to use plastic or paper tokens, which were issued only by one bank, or even a specific bank branch. Some ATMs were unable to return tokens. They remained in the device, and only after some time the clients received them back by mail. Yes, early ATMs were clunky, inconvenient, and unreliable. And people were reluctant to use them.
The turning point for these devices in the public consciousness was the New York City snowstorm of 1978.
But there was another funny moment. With banks closed and people in need of groceries, Citibank ATMs built throughout the region proved extremely useful. When branches closed due to a snowstorm, ATMs were still working. And the number of users suddenly increased by 20%. These devices were again in the newspapers.
In the weeks following the storm, the company touted itself as a solution to accessing money during inclement weather. “We know how it happened. You found yourself in multi-meter snowdrifts, unable to reach us,” one of the advertisements said. "We understand."
This is how the ATM crawled into the narrow window of usefulness, showing people its indispensability in some situations. This was further facilitated by innovation and technological progress.
2. The emergence of drive-up ATMs. This is a device that you can drive your car to to perform all operations without leaving the driver's seat. They were developed by NCR in 1980, and the first ATM was installed in Louisiana. Thanks to this invention, ATMs became convenient to use in the suburbs.
3. Debit card. A card that can be used to use an ATM is one thing, but a card that can be used for any other transactions is quite another. Introduced in the 1980s and 1990s, these cards, which operate similarly to credit cards, made ATMs more popular.
4. Talking ATM. Availability matters a lot when it comes to cash. And ATMs were inaccessible to blind users. In 1997, the Royal Bank of Canada, together with NCR, came up with a solution to this problem: an ATM that could talk to the user through a headphone jack. This technology appeared in the USA in 1999 and has since become widespread.
5. Cash Recycling. This is a more modern trend where ATMs are capable of dispensing cash from a pool of money that has been deposited into the ATM.
The additional fees charged for accessing your own money only highlight this. While the ATM experience has improved somewhat over the years, with more user-friendly interfaces and greater capabilities, it ultimately has its ceiling. That is why bank offices have not yet closed. In addition, the ATM carries risks associated with physical security (a person who withdraws a large amount can be robbed) and account integrity (if it is a fake ATM or a skimmer is installed there).
Now it is very difficult to calculate the total number of ATMs in the world - they are located in the most remote corners of the planet. And it is likely that in the near future these devices will be transformed into something more convenient and advanced. But that will be a completely different story.
Sources
(c) Original author: Ernie Smith
14% - the volume of transactions made using cash or checks in 2022, according to a study by Euromonitor (in Russia 38% - translator's note). In 2018, this figure was 28 percent (in Russia - 65%, translator's note). These statistics reflect the gradual decline in the use of ATMs: the number of ATMs fell from 470,000 to 452,000 between 2019 and 2022 (in Russia there were 173,500 as of March 2023, and over the last two years the number of ATMs has decreased by 11% - approx translator). The peak of ATMs came in 2019, and it is all the more noticeable that they are starting to slowly disappear, although, of course, they are still far from completely disappearing. But how did they appear?
Box giving out money
By the time the first ATM was invented in the 1960s, machines were already increasing the level of automation in society by performing tasks that previously had to be done manually. But all this was unusual and not very widespread. So it turned out that many people’s first experience with a computing device was at an ATM. Therefore, the idea of a device that stores and issues money has caused some discomfort among people.But the first ATM (or rather, bankograph, as it was called at that time) was invented not by a corporation, but by a private individual. And this man's name was Luther Simjian , who was the president of Reflectone. An Armenian citizen whose family moved to the United States, he quickly gained a reputation as a prolific inventor, with more than 200 U.S. patents issued to his name between 1927 (“Positional Reflective System for a Photographic Apparatus”) and 1982 (“Golf Trainer”) ").
One of his inventions, the "Deposit Machine", is a prototype of the modern ATM. The machine had no screen, accepted cash in an envelope or change, and could also print receipts. As stated in the documentation:
Simdjian's patent application from the same period adds a key element to a modern ATM: a camera. From the text of the application it becomes clear that the purpose of the invention is to make banking services available at any time of the day.
You probably noticed an inconsistency in this text. Indeed, when you use an ATM, you usually withdraw cash from it. And Simdzhyan came up with a device that can only accept deposits. But this was enough to scare people. As one newspaper article from the time put it: “Bank tellers won't like it, but there's a new machine called a bankograph that claims to be able to automatically accept bank deposits and issue receipts.”
The device came at a bad time for Reflectone, and may have worsened its position in the market. Reflectone was then in the process of merging with Universal Match Corp. The device did not spread beyond New York, where it was installed in a number of branches of the First National City Bank, which is now much better known as Citibank. A short press release published in the media also did not greatly help the popularity of the “bankographer”.
Here's how the device was described:
Although there is evidence that Reflectone has tried to expand its reach beyond the city (by demonstrating the device at trade shows, for example), no one has bothered to try to create a full-fledged network of deposit-taking machines throughout the country.
The bankograph did not become a breakthrough in many respects because it did not know how to issue cash, offering only to deposit it - and Simdzhyan’s invention was forgotten. But Citibank eventually figured out how to get people to interact with the machine. This required a lot of investment and a lucky coincidence.
Second run
Although the fame of the inventor of the ATM is shared by several people, the version of the Scotsman John Shepherd-Barron looks interesting. He was somehow unable to withdraw money from his account because the bank branch was closed. As John said in an interview, “It dawned on me that there must be a way to get your money anywhere in the world or in the UK. I came up with the idea of creating a machine similar to the one that dispenses chocolates, but replacing the chocolate with cash.”At the time of invention, plastic cards did not exist, so the device used checks that contained an element impregnated with carbon-14, a weakly radioactive isotope. This element carried information about the PIN code that the client entered using the keyboard. “I later found out that you would have to eat 136,000 of these checks for it to have any effect on you,” Shepard-Barron recalled.
Withdrawal voucher, Barclays. It had to be signed and put into the ATM
The ATM was announced by Reg Varney, a popular sitcom actor of the time. It was he who first received money from the machine.
During 1977, the company built dozens of these machines throughout New York City at a total cost of $100 million. The idea was to make them so common and so convenient that people got used to them. The ATM has begun testing in other parts of the world, including the UK, Sweden and Japan. But even more active advertising, as well as the emergence of new functions, did not make the ATM popular.
In 1971, a man named Donald Wetzel filed a patent for an “automatic credit card dispenser,” essentially the first patent for an ATM that included all the basic functions of the device we are familiar with, including the use of a credit card or similar device.
Citibank, excited by the idea of ATMs, began putting them everywhere, as if using these devices was going to be a core part of their business. But competitors did not think so and continued to be cautious. And an article about the proliferation of ATMs made it clear that most people did not find the devices useful:
For the sake of objectivity, people had the right to look at new and incomprehensible devices with skepticism. Something could have gotten stuck in them, or the bills could have run out during the money dispensing process. They could also issue several bills instead of one, and the bank could not find out about it. To use a specific ATM, it was necessary to use plastic or paper tokens, which were issued only by one bank, or even a specific bank branch. Some ATMs were unable to return tokens. They remained in the device, and only after some time the clients received them back by mail. Yes, early ATMs were clunky, inconvenient, and unreliable. And people were reluctant to use them.
The turning point for these devices in the public consciousness was the New York City snowstorm of 1978.
Snow takeoff
The winter of 1978 brought unexpectedly strong snow storms, literally covering parts of Canada and the United States with snow. Although New York was spared the Great Blizzard of January, it did receive its fair share of precipitation, and in early February 1978, the entire Northeast was blanketed in so much snow that officials were forced to close schools and cancel a New York Knicks basketball game. Both measures were very rare.But there was another funny moment. With banks closed and people in need of groceries, Citibank ATMs built throughout the region proved extremely useful. When branches closed due to a snowstorm, ATMs were still working. And the number of users suddenly increased by 20%. These devices were again in the newspapers.
In the weeks following the storm, the company touted itself as a solution to accessing money during inclement weather. “We know how it happened. You found yourself in multi-meter snowdrifts, unable to reach us,” one of the advertisements said. "We understand."
This is how the ATM crawled into the narrow window of usefulness, showing people its indispensability in some situations. This was further facilitated by innovation and technological progress.
Five innovations that made the ATM popular
1. Network connectivity. ATMs capable of communicating over a network with a bank date back to the 1970s, when Jairus Larson developed the Diebold 550. Until this point, ATMs were not connected to a network at all. Today, this is a key element of ATM functionality as it allows you to check your balance and access the money you have deposited.2. The emergence of drive-up ATMs. This is a device that you can drive your car to to perform all operations without leaving the driver's seat. They were developed by NCR in 1980, and the first ATM was installed in Louisiana. Thanks to this invention, ATMs became convenient to use in the suburbs.
3. Debit card. A card that can be used to use an ATM is one thing, but a card that can be used for any other transactions is quite another. Introduced in the 1980s and 1990s, these cards, which operate similarly to credit cards, made ATMs more popular.
4. Talking ATM. Availability matters a lot when it comes to cash. And ATMs were inaccessible to blind users. In 1997, the Royal Bank of Canada, together with NCR, came up with a solution to this problem: an ATM that could talk to the user through a headphone jack. This technology appeared in the USA in 1999 and has since become widespread.
5. Cash Recycling. This is a more modern trend where ATMs are capable of dispensing cash from a pool of money that has been deposited into the ATM.
Finally
An ATM is not a beautiful machine with butterflies fluttering inside. This is not a machine you go to because you enjoy using it. As a rule, people think about it when they need cash, and preferably right now. And it’s customary to pay for urgency.The additional fees charged for accessing your own money only highlight this. While the ATM experience has improved somewhat over the years, with more user-friendly interfaces and greater capabilities, it ultimately has its ceiling. That is why bank offices have not yet closed. In addition, the ATM carries risks associated with physical security (a person who withdraws a large amount can be robbed) and account integrity (if it is a fake ATM or a skimmer is installed there).
Now it is very difficult to calculate the total number of ATMs in the world - they are located in the most remote corners of the planet. And it is likely that in the near future these devices will be transformed into something more convenient and advanced. But that will be a completely different story.
Sources
- https://tedium.co/2023/09/15/atm-history-important-moments/
- https://investor.ncr.com/news-releases/news-release-details/ncr-celebrates-50th-anniversary-atm
- https://www.investopedia.com/terms/a/atm.asp#:~:text=History of ATMs. The first,ATM followed in the 1970s
- https://www.origo.hu/gazdasag/20180629-atm-felemelkedese-es-bukasa.html
(c) Original author: Ernie Smith
