ATM Machine History

The ATM, or Automatic Teller Machine, allows bank customers to withdraw money without the need for a live bank teller. These machines are available all over the world, and customers from one bank may almost always use ATM machines from other banks, though they may be charged a fee. While these machines are common place now, as recently at the 1960s people were afraid to trust their money to a machine. The basic concept and design of the ATM has changed little since its invention, though security and encryption methods are constantly being changed and improved.

The First ATM

The first ATM machine was invented by American inventor Luther George Simjian in 1939. As he developed his invention, he found banks were not interested in this type of technology. Nevertheless, he registered over 20 patents on these machines, including both the operational technology of the ATM and the name "ATM" itself. Finally, Simjian convinced the City Bank of New York to install one of his ATMs for a six month trial. Surprisingly, customers were hesitant to trust their money with this new technology, so few used his invention. At the end of the six month trial, Simjian removed the ATM and moved on to other inventions.

The 1960s

It wasn't until 25 years later that banks began to see the value of ATM machines. In 1967, a British inventor named John Shepherd Barron invented a cash dispensing machine. He sold his idea to De La Rue Industries, which named the machine DACS, or De La Rue Automatic Cash System. The first test unit was installed at Barclays Bank in London. To use the machine, customers had to buy paper vouchers from bank tellers. They could return to the bank after hours and feed the vouchers into the DACS machine to receive cash. The next year, the paper voucher was changed to a plastic card that was kept by the machine after each use.

ATM Cards Are Invented

In 1969, U.S. company Docutel created a machine similar to Britain's DACS machine. Called the Docuteller, it was installed at the Chemical Bank in New York, and was the first ATM machine to feature reusable plastic cards for bank customers. The cards used an encoded magnetic strip, making them secure and reusable. While the Docuteller is similar to Simjian's originial ATM machine, Docutel is known as the precursor of today's ATM machine. Docutel employee Donald Wetzel is given credit as the product's inventor.

The ATM Becomes Mainstream

The earliest ATMs were so expensive that they cost banks about $8,000 more each year than a live teller. When customers began to express interest in ATM machines, many banks began to purchase them from Docutel in an effort to keep customers from switching to other banks. Within four years of the product's creation, over 2,000 ATMs were in use in the United States, even though each machine had a price tag of over $30,000.
The Docutel model quickly became the industry standard, and banks from all over the world began to purchase these ATMs. By 2009, over 1.5 million ATM machines were in use throughout the world.

The Networked ATM

ATM machines were originally connected directly to an individual bank. In 1974, the first networked ATM machines were created. This allowed customers to get cash from any ATM machine in the world, regardless of bank affiliation. It also allowed banks to place ATMs in more areas, including shopping centers, sports arenas and even on cruise ships. Throughout the 1970s and 1980s, interbank networks like Cirrus and Plus were created to authorize transactions between banks.