As payment forms evolve, so do ATMs

Between credit cards, debit cards, Apple Pay and Venmo, the need for cash is on the decline — and so is the ATM. And yet North American and European banks aren’t necessarily decreasing ATM production or removing the machines. Some banks, including Wells Fargo and Chase Bank, are instead recreating the ATM.

A new article in Smithsonian Magazine by Linda Rodriguez McRobbie explores the history and evolution of the ATM, from a “cash vending machine” in the 1960s to what may become a mini-branch in the next few years. While a few different companies were working to create the first ATM in the mid 20th century, Barclay’s released the first official cash dispenser in 1967. In 1969 ATMs made their debut in Japan and New York City.

The first ATMs used different technologies to determine who a customer was, from magnetic stripes to pin numbers to a token that would later be sent back to the customer. The reasons so many banks invested so heavily in ATMs also differed by country. In the U.K., ATMs allowed banks to close on Saturdays, something banking unions had been pushing. In the U.S., ATMs were used to bring down labor costs, and the banking industry used the machines to compete with the growing retail sector in the 1970s. At that time department stores cashed checks, and banks could use ATMs as a new toy to attract customers. Now, ATMs can be found nearly everywhere, including two stationed in Antarctica.

But a decline in cash due to a rise in card transactions as well as new methods of paying — think Square or Bitcoin — bring down the need for ATMs. McRobbie notes that while 17 percent of bank customers in America used an ATM to manage their account in 2009, now only 11 percent do.

But, cash is still the most used form of payment, even if the value of each transaction is falling. And cash isn’t going to disappear anytime soon, meaning ATMs are far from obsolete. In countries beyond North America and Europe, ATM use is actually on the rise.

To prepare for the decline of cash, banks are instead creating new abilities for ATMs. Some Bank of America ATMs have a two-way video screen for a “teller assist” feature, so customers can speak with a teller through an ATM. Wells Fargo has created “mini-branches,” including ATMs that can provide $1 and $5 bills and deposit entire stacks or checks. With these new ATMs, banks are able to cut back on labor costs, as well as narrow down the role tellers play in banking. At the recent Consumer Electronic Show in Las Vegas, one of the biggest ATM manufacturers, Diebold, debuted a new ATM that would connect to a smartphone, eliminating the need for an ATM card entirely. Though a debit card-less ATM is still in the making, don’t say goodbye to the traditional cash machine quite yet.