Do you take being able to withdraw cash from an ATM machine 24/7 for granted today? You weren’t always able to enjoy this banking convenience. The automated teller machine (ATM) only came into existence in the 1960s, revolutionizing how consumers could access their cash.
Let’s delve into the fascinating history behind the inception of the world’s first ATM.
Frustration Led to the Spark of an ATM Idea
It may surprise you to learn the ATM owes its existence to one frustrated bank customer.
In the mid-1960s, John Shepherd-Barron worked as an engineer at Barclays bank in the UK. After long days or work on weekends, Shepherd-Barron was often unable to cash checks or withdraw money as the banks shut early.
Shepherd-Barron recounted this annoyance led him to conceive of the ATM: “It struck me there must be a way I could get my own money, anywhere in the world or the UK. I hit upon the idea of a chocolate bar dispenser, but replacing chocolate with cash.”
This creative spark set Shepherd-Barron on the path to collaborating with a banknote manufacturer to build the first cash-dispensing machine.
How Did the First ATM Work?
Shepherd-Barron worked with De La Rue, a major printer of banknotes, to develop the pioneering automated teller machine.
The first ATM incorporated the following key technologies:
Carbon-14 checks – The machine accepted specially made checks printed with carbon-14, a radioactive substance that could be detected. This served as the user verification mechanism.
PIN pad – Customers entered a 6-digit PIN (later shortened to 4 digits) on a keypad to authorize the transaction.
Cash cassette – Notes were stacked and dispensed from a locked cassette inside the machine. It could dispense fixed denominations of £10 banknotes.
Alarm – A built-in alarm would sound upon any unauthorized tampering with the machine.
Illuminated text – Step-by-step instructions were illuminated on the screen to guide users.
This first ATM was called the De La Rue Automatic Cash System, or DACS. The DACS had to miniaturize the components to fit into one machine. For security, it did not store any cash in the machine itself between transactions.
When Was the First ATM Introduced?
The big moment came on June 27, 1967. Barclays unveiled the UK’s first ATM at its Enfield Town branch in north London.
To publicize the launch, Reg Varney, a comic actor well-known to the British public, was invited to become the first ATM customer. As Varney withdrew his £10 cash that day, it marked a major turning point in consumer banking.
This historic ATM survived for many years after, even getting gold-plated for its 50th anniversary. It is currently on display at Barclays’ corporate archives.
How Did ATM Usage Spread?
The rollout of ATMs across Britain accelerated swiftly after the first machines surfaced. By 1968, a hundred DACS cash machines had been installed in the UK.
Within five years, there were over 10,000 ATM units in the country. ATM usage continued its meteoric rise as shown in the table below:
|Year||Number of ATMs in UK|
The idea quickly hopped over the pond. Docutel, an American firm, launched the first U.S. ATM in New York just two years after the UK.
Shepherd-Barron’s ATM sparked a technology revolution that transformed banking globally. Today, there are now over 3.5 million ATMs worldwide, dispensing cash to customers 24/7.
Pioneers Share Tales of Early ATM Days
The individuals who pioneered the ATM have many fascinating anecdotes from the early days.
John Shepherd-Barron recounted how Barclays chose Reg Varney to be the first ATM user:
“We approached Reg Varney from On The Buses. He was the most famous person at the time. We had it all ready, we had a documentary film crew…and he didn’t turn up! So I think Barclays must have had somebody waiting in the wings just in case.”
Shepherd-Barron also shared why he opted for a 4-digit PIN instead of his original 6-digit code:
“My wife said she could never remember that, so I changed it to four digits. And I said to her, ‘You’ve got a one in 10,000 chance of getting it wrong’ and she said, ‘I’ll take that chance.’”
Donald Wetzel, who created the first American ATM, reminisced on user reactions:
“On the second day after we put the Docuteller in, there was a line 10 deep waiting to use it. It was amazing how quickly people took to the machine. They thought it was magic.”
These personal accounts bring the ATM story colorfully to life.
The ATM Legacy – Changing Banking Forever
The advent of the ATM disrupted consumer banking in far-reaching ways:
Accessibility – Customers gained 24/7 access to their cash, unrestricted by bank hours.
Convenience – Cash machines could be sited in remote spots for greater convenience.
Security – Decreased need to physically carry large cash amounts.
Self-service – Allowed direct banking without human tellers.
Interchangeability – Bank networks could share ATMs to benefit customers.
While early ATMs only dispensed cash, today’s machines offer a diverse range of transactions – deposits, bill payments, account transfers, loan applications and more.
The ATM became the flagship for automated self-service banking. Even in today’s digital age, the cash machine remains an essential pillar of banking infrastructure. The next time you use an ATM, think of the UK engineer whose frustration birthed this indispensable innovation.