What is an Automated Teller Machine (ATM)?

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 most ATMs. The first ATM
appeared in London in 1967, and in less than 50 years, ATMs had spread around the
globe, securing a presence in every major country and even tiny little island nations such
as Kiribati and the Federated States of Micronesia.

Brief History of the ATM

Banking has been made that simple with the ATM. As quickly as you can order and
receive a burger, you can re-stock your nearly empty wallet, compensate the bank for all
those times you had to pay for goods without money, and/or renew your cellular service.

After a few revolutionary inventions for photography, an American businessman

imagined a machine that could handle personal financial transactions 24/7. The original
version of this invention, put into active operation in 1960, included a camera to keep
track of every time it was used.

A bank in the United Kingdom would introduce printing technology and a security
system to this automated teller machine a few years later. In 1969, an American
engineer further developed it with a magnetic system for recording information.

But it wasn’t until 1977 that the ATM officially became a norm for banking. After New
York City was buried about 1.5 feet deep in snow following a storm, banks were forced
out of activity for several days.

This got citizens thinking how convenient these cash machines could be for handling
financial obligations on their own and at any time, regardless of environmental
conditions. The storm and the ensuing increase of ATM use inspired a new advertising
campaign to show the whole nation how much more realistic and easy banking could be
with this innovated automatic bank.

THE ATM INVENTORS AND THE FACTS

Luther George Simjian
In the late 1930's, Luther George Simjian started building an earlier and not-so-
successful version of an ATM. He did register related patents. He initially came up with
the idea of creating a "hole-in-the-wall machine." It would allow customers to make
financial transactions, without entering the bank. The idea was met with a great deal of
doubt. Starting in 1939, Simjian registered 20 patents related to the device and
persuaded what is now Citicorp to give it a trial. After six months, the bank reported that
there was little demand. Today, as you know, there is a huge demand!

John Shepherd-Barron
John Shepherd-Barron had an idea in the 1960's for a 24/7 cash dispenser. He was
managing director of De La Rue Instruments. De La Rue today manufactures cash
dispensers. There is a De La Rue cash dispenser in 1 out of every 5 ATM machines built.
If you want to say that Shepherd-Barron invented the ATM, then the world's first ATM
was installed outside North London. It was installed in a branch of Barclays Bank in
1967. Later that year, Shepherd-Barron presented his idea to a conference. The
conference consisted of 2,000 US bankers in Miami, this was after the first ATMs had
been installed in England. He spoke to the conference about the new self-service
banking device he developed. On December 31, 2004, John Shepherd-Barron, was
named an OBE, Officer of the Order of the British Empire by the Queen. It was for
"services to banking." Shepherd Barron said: "It was a bit late, but better late than
never." Press releases stated that Shepherd-Barron was the "Inventor of the ATM." But,
was he really the inventor?
Sadly, John Shepherd-Barron passed away, in May of 2010, in Scotland.

James Goodfellow
As a Development engineer with Smiths Industries Ltd, James Goodfellow was given a
project. It was to develop an automatic cash dispenser in 1965. Chubb Lock & Safe Co.
were to provide the secure physical housing. They were also to develop a mechanical
dispenser mechanism. Mr. Goodfellow designed the new system. It consisted of a
machine readable encrypted card, and the machine that read it. To this he added a
numerical keypad. UK Patent No.1,197,183 with a priority date of May 2 1966, covers
this invention. It is also covered by US Patent No.3,905,461 and Patents granted by
many other countries. These Patents list James Goodfellow as inventor, along with the
late A.I.O.Davies, the company General Manager. This US Patent still describes the
basic ATM function almost 40 years later. These Machines were marketed by Chubb
LTD. They were installed nationwide in the UK during the late 60s and early 70s. You
can read "Who Invented the ATM? Part 2 here: ATM inventor James Goodfellow's story
on ATMmachine.com. "
Thanks goes out to Mr. Goodfellow for giving us his permission.
(Update: In 2006, James Goodfellow was selected by the Queen to be awarded an OBE
for his services. He was awarded this as patentee of the Personal Identification Number
(PIN), and for his service to banking.
Don Wetzel
In 1968, according to a NMAH interview, Don Wetzel, says he was the Vice President of
Product Planning at Docutel. The company that developed automated baggage-handling
equipment. He applied for a patent on an ATM machine. He said there were two other
inventors listed on the patent. They were Tom Barnes, a mechanical engineer. George
Chastain, an electrical engineer. It took five million dollars to develop their ATM
according to Mr. Wetzel. If you want say that Wetzel and company invented the ATM,
then you might want to read the next paragraph.

John D. White
John D. White told ATMmachine.com that his work started in 1968. He told us that he
installed the first ATM at Rockville Center, LI for the then Chemical Bank in August
1973. His design was patented on May 9, 1973 for the Docutel Corporation and was filed
on July 29, 1970. The machine was a "Credit Card Automatic Currency Dispenser". Mr.
White provided copies of his patent to ATMmachine.com. We reviewed them. It does
indeed state that the inventor of the machine was John D. White and Kenneth
Goldstein. The assignee on the patent was the Docutel Corporation. This is very
convincing evidence. It appears that it was White and not Wetzel who received the
patent. There is also a statement in the patent that supports the idea of the modern
ATM.
"Both the original code and the updated code are scrambled in accordance with a
changing key", which is what happens today. ATM's are programmed with security keys
and the code changes. Today they must be 3DES certified. It is encrypted ( scrambled)
to prevent fraudulent access to credit card and ATM debit numbers. This occurs
between the machine, the bank, and the network processor. In the form of data
transmissions. We would like to thank Mr. White for contacting us. And for sharing all
of the documentation. The patent drawings he gave us look very much like the free
standing ATM that is sold on ATMmachine.com today.

Jairus Larson
Jairus Larson told ATMmachine.com he did not invent the ATM. But, as far as he is
aware, he developed the first 'on-line' ATM. This would be Diebold's "550". The first
ATM's were all 'off-line' versions (referred to in the past as 'stand-alone'). Meaning they
did not have any means to communicate with the bank network. Today's ATMs are "on-
line". On-line in the sense that they communicate with the bank's computer system. Mr.
Larson was kind enough to give us his account of how this happened in the early 1970's.
John Adrian Shepherd-Barron, OBE was a British inventor, who led the team that installed
the first cash machine, sometimes referred to as the automated teller machine or ATM.
Wikipedia

Born: 23 June 1925, Shillong, India

Died: 15 May 2010, Inverness, United Kingdom

Parents: Wilfred Shepherd-Barron

Known for: Inventing the cash machine (ATM)

Education: University of Cambridge, Trinity College, Cambridge, University of Edinburgh

Donald C. Wetzel is an American businessman known for holding the USA patent to the
automatic teller machine. Born in New Orleans, Louisiana he graduated from Jesuit High
School and got a B.Sc. in foreign trade from Loyola University New Orleans. Wikipedia

Born: 8 June 1921 (age 97 years), New Orleans, Louisiana, United States

Education: Jesuit High School

Awards: IEEE Simon Ramo Medal

How ATM Works?
There is hardly a machine that is more ubiquitous in this day and age than the
automated teller machine (ATM). It is something we rely on in a pinch and it is
something that makes modern personal finances an easy thing to manage. But ATMs are
relatively complex in how they work and how they physically operate.

Because the purpose of ATMs is to dispense money, it makes sense that they would be
subject to stringent regulations in both how they operate and the software that is used.
Unlike many other products, owners of retail and other locations cannot directly control
or operate their ATMs unless they have a sponsoring agreement with what is called an
ATM deployer. They also need a sponsoring agreement with a switching company as
well as a bank or financial institution of some kind.

ATMs are essentially basic computers but with additional ATM parts that allow for
specific functions, allowing the software that is running on the computer to carry out the
functions. They can break or malfunction just like any other computer. Since there are
so many specialized functions in an ATM, there needs to be a readily available source of
approved ATM spare parts for maintenance.
Parts of Automated Teller Machine and Its
Function

Card Reader. This reads account information that is stored on a magnetic strip, the
one that you always see on credit and debit cards. The data retrieved is passed on to a
host processor, which in turn is able to interpret the information and retrieve the
customer’s account information.

Keypad. This allows customers to input the information they need to give. It lets them
input their personal identification or pin code, select what type of transaction they want
to make, and generally communicate with the ATM software.

Display screen. Like any computer, this allows customers to see each step of the
process or transaction they are doing.

Speaker. This allows the customer to hear when keys are being pressed on the keypad,
but it may also allow for additional voice features on certain ATMs.

Receipt printer. Although much of the process of an ATM is digital, printed receipts
are requested by many or most ATM customers. This ATM part makes this possible.

Cash dispenser. The main purpose of an ATM is for a customer to acquire cash, so of
course this is the most important part. The cash dispenser is a pivotal part and a part
that is highly sophisticated.
Advantages and Disadvantages of Automated
Teller Machine
Advantages

 You can withdraw cash at any time, day or night. The banks don’t need to be open.
 ATMs offer the convenience of multiple locations. You can withdraw cash at any bank
that is part of the system to which your ATM card is linked.
 Your ATM card is protected by a PIN, keeping your money safe.
 You don’t need to fill out withdrawal and deposit slips as is required at the bank.
 ATMs are faster than going to the bank—no long lines.
 You can withdraw cash at ATMs in foreign countries.

Disadvantages

 ATM may be off-line (system down).

 You may forget your PIN number.
 Risk of robbery when you leave the ATM.
 The ATM can break down or run out of cash.
 Fees charged to use ATMs of other banks can become expensive.