Automated Teller Machines (2024)

The automated teller machine, or ATM, is such a complicated piece of technology that it does not have a single inventor. Instead, the ATMs we use today are an amalgam of several different inventions. Some of these proto-ATMs dispensed cash but did not accept deposits, for example, while others accepted deposits but did not dispense cash. Today’s ATMs are sophisticated computers that can do almost anything a human bank teller can, and have ushered in a new era of self-service in banking.

The Early Days of Automated Banking

Many experts believe that the first automated banking machine was the creation of an American inventor and businessman named Luther Simjian. Simjian held patents on all kinds of things–including an army flight simulator, a color x-ray machine, a self-focusing camera, an exercise bicycle and a teleprompter–but he was best known for his work on the Bankograph, a machine that could accept cash or check deposits at any hour of the day or night.

Did you know? Even extremely remote areas are serviced by ATMs–there are two in Antarctica.

In 1960, Simjian managed to persuade a New York City bank to take a few of his automatic-deposit machines. So that customers could trust that they would see their money again, there was a microfilm camera inside the Bankograph that took a snapshot of every deposit. Customers received a copy of the photo as their receipt. Still, the Bankograph did not catch on. “The only people using the machines were prostitutes and gamblers who didn’t want to deal with tellers face to face,” Simjian explained, and there were not enough of them to make the machines a worthwhile investment.

The Advent of the ATM

By the end of the 1960s, however, times were changing, and a broader segment of the population–more comfortable with the idea of self-service and more willing to trust unfamiliar technologies–was willing to give automated banking a try.

In 1967, a Scottish inventor named John Shepherd-Barron was sitting in the bathtub when he had a flash of genius: If vending machines could dispense chocolate bars, why couldn’t they dispense cash? Barclays, a London bank, loved the idea, and Shepherd-Barron’s first ATM was installed in a branch on Enfield High Street not long afterward. Unlike modern ATMs, Shepherd-Barron’s did not use plastic cards. Instead, it used paper vouchers printed with radioactive ink so that the machine could read them. The customer entered an identification code and took her cash–a maximum of £10 at a time.

The first automated banking machine in the U.S. was devised by a Dallas engineer and former professional baseball player named Donald Wetzel. Wetzel’s machine used plastic cards like the ones we use today. (Instead of radioactive ink, the cards stored account information in magnetic strips.) In September 1969, a Chemical Bank branch on Long Island installed the first of Wetzel’s machines.

The Spread of ATMs

By 1970, dozens of U.S. banks had jumped on the ATM bandwagon. To introduce this new machine to consumers, banks used all kinds of advertising tricks. For example, to get the attention of female customers, a bank in Columbus, Ohio, sponsored a six-hour Paul Newman movie marathon on a local television channel. Every 25 minutes during the movies, commercials for the bank touted the advantages of its new cash-dispensing machine.

However, it took a corporate gamble and a blizzard for the ATM to win the confidence of American consumers. In 1977, the chairman of Citibank took a huge risk, spending more than $100 million to install ATMs all over New York City. That investment paid off the following January when a huge blizzard hit New York, dumping 17 inches of snow on the city. Banks were closed for days; meanwhile, ATM use increased by 20 percent. Within days, Citibank had launched its by-now-familiar “The Citi Never Sleeps” ad campaign. Posters and billboards showed customers trudging through snow to get to Citibank ATMs.

After that, almost every one of the country’s banks followed Citi’s lead. The era of the ATM was underway.

ATMs Today

Today, there are almost 2 million ATMs around the globe. Although use of the machines has declined in recent years, likely because more people make purchases using credit and debit cards instead of cash, the ATM continues to have a place in modern culture. Today’s machines sell everything from airline tickets to movie tickets to medicine.

Automated Teller Machines (2024)


Automated Teller Machines? ›

ATMS, or automated teller machines, are banking outlets where you can withdraw cash without going into a branch of their bank. Some ATMs only dispense cash, while others allow transactions such as check deposits or balance transfers.

What are automated teller machines of banks? ›

An automated teller machine (ATM) is an electronic telecommunications device that enables customers of financial institutions to perform financial transactions, such as cash withdrawals, deposits, funds transfers, balance inquiries or account information inquiries, at any time and without the need for direct ...

What is an ATM example? ›

ATM stands for Automated Teller Machine which is a self-service banking outlet. You can withdraw money, check your balance, or even transfer funds at an ATM. Different banks provide their ATM services by installing cash machines in different parts of the country.

What's the difference between an ATM and a cash machine? ›

ATM stands for “Automated Teller Machine”, also commonly known as a “cash machine”, “cash dispenser”, “cashpoint” or “hole-in-the-wall”.

What will replace ATMs? ›

The pandemic sped that process up, and in its place brought remote banking options in the form of video teller machines (VTMs) or interactive teller machines (ITMs). These have all the features of a regular ATM, but they provide a video link to a human teller who can walk the user through any complex transactions.

Is there a fee for using an ATM? ›

Most banks and credit unions have a network of ATMs that offer free access to your money. But if you go outside of the network, a fee may be imposed, including: ATM operator fee. Also known as the surcharge, an operator fee is charged by the ATM owner to noncustomers using its ATMs.

What are the three types of ATM? ›

ATMs can be categorized into the following labels:

Orange Label ATMs: Share transactions. Yellow Label ATMs: e-commerce transactions. Green Label ATMs: Agricultural transactions. White Label ATMs: Owned by TATA Group.

What are the pros and cons of ATMs? ›

Advantages And Disadvantages
24X7 operations.Runs out of cash sometimes.
Multiple locations (ATMs operated by other banks can also be used).High fees in case of withdrawal from another bank's ATM.
2 more rows

Who puts money in ATM machines? ›

Obviously, ATMs at banks will be refilled by the bank itself. However, for standalone ATMs, there are a few different options when it comes to the responsibility of refilling the machine. If a business is the outright owner of its ATM, they have the option of refilling the machine on their own.

How do ATMs make money? ›

Passive Income: ATMs generate revenue through transaction fees, offering a passive income stream once operational.

How does ATM connect with bank? ›

In short, an ATM machine is a computer with a mechanical dispenser for cash that is connected to an ATM transaction processor through the internet or phone line. The ATM Transaction processor is able to connect to the ATM networks and, through these networks, to your bank.

Is an ATM the same as an automated teller machine? ›

An automated teller machine (ATM) is an electronic banking outlet that allows customers to complete basic transactions without the aid of a branch representative or teller. Anyone with a credit card or debit card can access cash at most ATMs, either in the U.S. or other countries.

What does CD stand for in ATM? ›

italki - What's the difference between Cash Dispensers (CDs) and Automated Teller Machines (ATMs)?

How much money can you withdraw from a bank teller? ›

Unless your bank has set a withdrawal limit of its own, you are free to take as much out of your bank account as you would like. It is, after all, your money. Here's the catch: If you withdraw $10,000 or more, it will trigger federal reporting requirements.

Which is better, using a bank teller or an ATM? ›

Speed: ATMs are typically faster than bank tellers since you don't have to wait in line and can complete transactions quickly. Privacy: ATMs offer a level of privacy that bank tellers may not, especially if you need to perform sensitive transactions like withdrawing large amounts of cash.

When many of a bank's customers use its automatic teller machine? ›

Many of a bank's customers use its automatic teller machine to transact business after normal banking hours. During the early evening hours in the summer months, customers arrive at a certain location at the rate of one every other minute. This can be modeled using a Poisson distribution.

What are the benefits of ATM to banks? ›

The main advantage of ATMs is that they are self-service counters and do not require an extensive workforce, provided the number of locations they are in. However, digitalization has paved the way for internet banking, and customers only have to use ATMs when they need liquid cash.

Why are automated teller machines important? ›

These machines allow you to undergo self-serviced transactions without the help of an actual teller and without having to visit the bank branch. Automated teller machines or ATMs allow many transactions, including cash withdrawals, cash deposits, and fund transfers.

What system do bank tellers use? ›

A teller system is the integrated hardware and software used for retail or wholesale banking transactions, most systems communicate with a core banking system or mainframe over a secured network.


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