The History of the ATM Card

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Since the 1970s, these cards have revolutionized the way we think about money.
Since the 1970s, these cards have revolutionized the way we think about money. (Image: atm image by Franc Podgoršek from Fotolia.com)

There is no faster way to access the money in your bank account than an ATM. Chances are that if you open up your wallet, the first thing you will see is your ATM/debit card. Your bank issued that card the day you opened your bank account. It could have come in the mail or, as is the growing trend, you received it that very day. The ATM card isn’t a new concept, though; it's been around since the 1970s.

The ATM

Barclays Bank in the United Kingdom developed and installed the first automatic teller machine in 1967. This cash-dispensing machine did not resemble the ones that you see today. Customers weren't given a plastic card; instead, they received paper vouchers that had a value of £10. The customers would insert the voucher into the machine in exchange for a 10-pound note.

In 1969, Chemical Bank of New York installed the first modern ATM at its Rockville Center office in Long Island. For a complete history of the ATM, please see the Resource section.

The earliest ATMs were developed in the late 1960s.
The earliest ATMs were developed in the late 1960s. (Image: atm image by chrisharvey from Fotolia.com)

The ATM Card

Although the first card-accepting ATM came about in 1969, the first ATM card didn't come about until 1972. In the years between 1969 through 1972, you had to have a credit card to utilize an ATM. City National Bank of Cleveland issued the first ATM cards that allowed you to debit money directly from your bank account. You could only withdraw money from ATMs with these cards. You could not use them to make purchases.

The ATM/Debit Card

The terms "ATM card" and "debit card" are largely interchangeable. The reason you could not make a purchase with your City National Bank debit card wasn’t that the card wouldn’t allow it. The point-of-sale, or POS, technology and infrastructure had yet to be developed. In 1976, grocery chains in Massachusetts, Angelo’s and Starmarket, installed the first known POS systems. Large chain gas stations began testing POS systems in the early 1980s.

The Expansion of Card Usage

Although the usage of the debit card at the POS has not surpassed the credit card as the preferred card medium of exchange, it has made tremendous strides in its commonality. A paper written by Robert M. Hunt of the Federal Reserve of Philadelphia notes that from 1980 to 2000, consumer purchases via debit card rose from zero percent to 12 percent, and purchases made via check fell from 86 percent to 50 percent.

Future Implications

If the recent move by British banks is any indication, the use of debit cards will skyrocket over in the next 10 years. Banks in Great Britain have agreed to stop accepting checks by 2018. They note factors such as the high relative cost of processing checks, coupled with the decline in merchants that accept checks as payment.

Although there is no such plan in the United States, it does underscore the growing trend away from checks and toward debit cards as the preferred method of direct payment.

As debit cards become more prevalent, use of checks continues to decline.
As debit cards become more prevalent, use of checks continues to decline. (Image: check book image by Rob Hill from Fotolia.com)

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