Post written by David Dennis, Legal Counsel
They haunt the urban landscape like relics of a bygone era, metallic monuments to a time when paper money mattered. Clunky and old-school, by all rights, the ATM should have faded from the urban tapestry as quickly, and as quietly, as the payphone, falling victim to the domination of new payment technologies.
Yet they endure.
Perhaps cash isn’t as obsolete as we think. Perhaps we still crave that oddly comforting whirring, whistling, flip-flip-flip “here comes the money” sound of the ATM. Whatever the reason for its continued durability, there’s no denying that this now humble machine was once a veritable “rock star,” the tantalizing new wave of modern banking convenience.
John Shepherd-Brown was in a hurry. It was a Saturday afternoon and the engineer for a British printing company needed money for the rest of the weekend. To his dismay, he arrived at his bank just as the doors were being locked for the day. He returned home cashless, and later, while he soaked in the bath, he lamented that cash should be more accessible—this was 1965, and if vending machines could dispense chocolate bars (a recent innovation), he mused, why couldn’t they dispense cash?
After giving the idea more thought, Shepherd-Barron approached Barclays Bank with the concept of a cash dispensing machine. Two years later, on June 27, 1967, the first automated cash dispenser debuted at Barclay’s Bank in north London. Rather than plastic cards, the device accepted pre-printed paper checks marked with machine-readable radioactive ink.
To ensure that the person inserting the check was the account owner, Shepherd-Brown conceived of a four-digit identifying number—the now ubiquitous PIN—which was encoded into the checks. According to Shepherd-Brown, he originally intended a 6 digit PIN number, but changed the number of digits after consulting with his wife—she could only remember four digits.
Contemporary society is eternally in her debt.
Like Led Zeppelin, the ATM first crossed the pond to the United States in 1969, making its debut appearance at Chemical Bank in New York City. The Chemical Bank ATM was the first to use plastic cards with account information stored on plastic strips–just like the ones we have today. Other banks soon followed Chemical Bank’s lead, and by 1970, dozens of U.S. banks had jumped on the ATM bandwagon.
Consumers, however, were slow to embrace the space-age contraption with its digital video screen and confusing array buttons, and banks resorted to elaborate advertising gimmicks to entice customers to use the self-service bank-tellers. For example, to attract female customers, a Columbus, Ohio bank sponsored a six-hour Paul Newman movie marathon on a local television station. Every 25 minutes, commercials for the bank touted the advantages of its new cash-dispensing machine. In Toronto, a Canadian bank dubbed its ATM’s “Johnny” Cash Machines, and launched an advertising campaign featuring the popular country music star.
It took a blizzard, however, for the ATM to finally win the confidence of American consumers. In January of 1977, New York was paralyzed by a blizzard that dumped record amounts of snow on the city, and closed down the banking system for days. ATM’s, however, continued to operate, and their use skyrocketed as snow-bound New-Yorkers flocked to cash oasis’ for desperately-needed funds. Within days, banks seized on the event, launching nationwide print and television advertising campaigns portraying desperate customers trudging through snow to reach cash-machines.
The age of the ATM had arrived.
Kelly Klem, a Senior VP for Stockman Bank, recalls the early days of the ATM in Montana and customer misconceptions regarding their use. On one occasion, a customer entered the bank night-lobby to use the ATM while Klem was on the other side of the wall restocking the machine. Klem yelled out, “I’ll be finished in just a minute.” Believing the ATM was speaking to him, the customer responded, “Okay…but, what do I call you?”
Today, ATM’s are a familiar fixture of our lives. There are almost 2 million ATMs around the globe, and in the U.S. their use has shown little evidence of slow-down. According to an annual survey from the American Bankers Association, the percentage of customers making regular use of ATM’s to manage their accounts has bounced-around between 8 and 15 percent over the past five years, with no clear sign of a decline.
At Stockman, ATM use has actually seen an increase over the past several years. In 2012, Stockman ATM’s processed just over 250,000 transactions. By 2016, that number had jumped to 329,000 transactions. Today, Stockman operates 95 ATM machines in 50 towns across Montana. And, as part of the Plus system, Stockman customers can get cash at over one million ATMs in 170 countries worldwide. By the way, Stockman’s ATM’s do much more today than dispense cash–customers can transfer money between accounts, check balances, and in many locations, make deposits.
At 50, the ATM shows few signs of following its cousin the pay-phone into extinction. If anything, the ubiquitous use of debit-cards has created an increased need for cash. More and more merchants have leveraged the popularity of debit cards into an excuse to discontinue accepting paper checks—leaving debit cards and cash as the only payment options.
Whatever the explanation, the ATM has inked its way into the tapestry of our daily lives. And for now, at least, it intends to stay there.