ATMs: Past, Present, and Future

As our society moves forward, technology has played a very important role in helping our everyday lives flow more easily. We have gotten so used to technology being a part of our lives that we seldom question the machinery that makes our world spin more smoothly. Among these, the ATM has enhanced the way we make financial transactions. While some still prefer human interaction over machines, the practicality of ATMs makes all financial transactions much faster and accessible, regardless of place or time. Today, ATMs are practically everywhere, dispensing fast cash to millions of people all over the world. ATM withdrawals continue to be widely popular; however, with their continued use and rising popularity, users have found themselves paying growing fees as the years have gone by.

History of ATMs

The history of ATMs has been debated; with several efforts claiming to have been the first ATM to ever exist, different innovators have established interesting milestones for the development of the famous cash dispensing machine. Efforts previous to the ATM advanced the self-service concept by installing a machine that allowed customers to pay for utilities and receive a receipt; this machine was called a Bankograph. While the Chemical Bank debut is probably the most well-known milestone in American ATM history, the first fast cash dispensing machine was installed and inaugurated in 1967 at a London location Barclays Bank branch. Its inventor, John Shepherd-Barron, named the machine the DACS: De La Rue Automatic Cash System.

John Shepherd-Barron, the Scottish "inventor of the ATM, was born in India on June 23, 1925 and passed at age 84 on May 15, 2010. Awarded the Order of the British Empire in 2005, Mr. Shepherd-Barron worked for a company called De La Rue Instruments. His invention would later carry the company’s name. Shepherd-Barron’s idea indirectly came from working for De La Rue. Surrounded by currency paper – the company printed and distributed most of the material for world printed currency – he found himself unable to cash a check, arriving after the bank had already closed. He then combined the concept of a vending machine with a different product to be dispensed: money. Thus, the ATM was born. Although there were other ATM prototype machines looking to be launched out into the market, Shepherd-Barron’s invention came to be known as the first ATM machine since his was awarded a patent first.

Between 1969 and 1971, the ATMs we use today were born. Chemical Bank installed the first Docuteller machine: a cash dispenser that used magnetic encoded cards much like the ones you have in your wallet. Shortly after that, Docutel introduced the Total Teller: a multi-function bank ATM resembled more closely to current units. It wasn’t until 20 years later that banks began implementing charge fees for ATM use.

As ATMs became more popular and greatly used, banks were no longer the only ones looking to provide this service to customers. In 1994, a Triton stand-alone ATM was installed at a convenience store, and more were to follow. As Cirrus and Plus, MasterCard and Visa networks lifted the bans on ATM surcharges, stand-alone ATMs became a commodity anyone in the retail business could own. In 1996, due to a change in ATM regulations, more locations were able to afford a functioning ATM at their stores and venues, without having to suffer from the operating cost of previous years.

ATM Use

By 2009, Wired magazine estimated there were about 403,000 ATMs in the US alone, with a 1 to 761 ratio of ATMs to U.S. residents. The magazine reported that an average of 239 ATMs were installed per day, around the globe. With these high numbers continuing to rise, it would be safe to say the number of users and fees have probably grown as well. But this may not be the case.

However, the U.S. market has become increasingly more saturated, spreading fees a little too thin for these to continue being profitable. As recently as 2006, reports indicate that Americans have decreased their usage of ATMs. Among some of the reasons for lowered ATM usage, Heather Briganti, a bank administrative vice president in charge of ATM services, lists the following:

• Alternative means of payment, including cash-back and redeemable points at retailers
• User unhappiness due to rising fees; especially those charged to non-members at certain ATMs
• Over-saturated ATM market and escalating fees

Declining usage has led ATM operators to charge higher fees for profit margins, forcing users even further away. However, users are not disregarding ATMs all together; they’re just looking for the ATM networks that work best for them. A continued trend, choosing your bank based only on ATM charge policies and availability is something users continue to do. The more ATMs your bank’s network has, the fewer fees and charges you’ll have to pay. Smaller competitors, like local banks and credit unions, use no or reduced fees to lure customers into opening accounts with them in spite of their significantly smaller network of teller machines.

Current Fees for ATMs

The issue of escalating fees has long existed in the world of ATMs and their users. As the 2011 Checking Account Survey from Bankrate.com revealed, ATM fees have been increasing country wide for over seven years. This constant increase has made the $3 surcharge a common average rather than “uncharted territory.” Though certain areas still enjoy a rather low ATM surcharge fee (starting at a little over $2), experts believe ATM surcharges to be universal and increases are something users may complain about at first, but always end up getting used to as other banks follow suit. Experts also agree that the rise in fees is better understood when contextualized, since it is intrinsically attached to other rises in costs, including:

• Compliance costs
• Operational costs
• Machine upgrade costs

With rising surcharge and ATM usage fees crippling your wallet, experts advise finding alternatives to using ATMs that are not part of your bank’s network. You can plan your withdrawals ahead of time and get your money a few days before needed at a planned location. For the more tech-oriented, make best use of your smartphone and try a banking app. Most renowned banks today have mobile phone applications, as well as web access for you to deal with all of your financial needs without having to use an actual ATM.

When it comes to ATM fees, it is important for you to remember the sometimes overlooked difference between an ATM operator fee and your bank’s fee. The operator’s fee is also known as a surcharge, which currently reaches between $2.40 and $3. Your bank’s ATM fee is what your bank charges you when you use an ATM that is not part of the bank’s network. This fee has stayed at a steady $1.40 or so for some time now. Yet, some banks and ATM service providers can have different rates, so make sure you stay informed of your bank’s fees and how these affect ATM provider fees outside your bank's network.