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Take On Payments, a blog sponsored by the Retail Payments Risk Forum of the Federal Reserve Bank of Atlanta, is intended to foster dialogue on emerging risks in retail payment systems and enhance collaborative efforts to improve risk detection and mitigation. We encourage your active participation in Take on Payments and look forward to collaborating with you.

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September 7, 2021

Happy 50th Birthday, ATM

I am an old ATM (automated teller machine) guy, having managed a small network early in my banking career in the 1970s. That was when ATMs first began making their appearance on the walls of banking offices as a way to extend banking convenience to customers. During my years as a management consultant, I was fortunate to have been involved in the formation of several statewide ATM networks that evolved into regional, national, and international debit (ATM and debit POS) networks. Now that the ATM in the United States has passed its 50th birthday, what has it become and what does the future hold for it?

While the ATM has always been primarily a cash dispenser, there were efforts over the early years to introduce new functionality to generate additional revenue. Several banks unsuccessfully attempted to use it to sell postage stamps or transit fare cards. They realized that these types of alternative products required frequent resupply visits, which drove up servicing costs. Another marketing effort included selling advertisements on the back of transaction receipts, but since most receipts ended up in the ATM’s trash can, this, too was short-lived.

The introduction of a Windows operating system with its graphical capability opened a new range of functionality, with on-screen advertising now being played during previous "Please Wait" static instruction screens. Some ATM operators experimented with selling concert and other local event tickets. Such efforts were quickly abandoned when customers wanting quick access to their cash were forced to wait for minutes behind someone deciding on the best seat selection.

A major change in the ATM landscape took place in 1996, when Congress expressly excluded ATMs from being considered branches and eliminated geographical restrictions. Not only did this change create a major expansion of bank-owned, off-premise ATMs, but it also created the opportunity for independent ATM deployers to place ATMs in retail locations. Today, ATMs/cash dispensers owned and operated by nonfinancial institutions represent more than 60 percent of the machines in the United States.

ATMs have played a vital role during the COVID-19 pandemic in maintaining banking services for consumers while banking offices were closed or operating with reduced hours or staffing levels. Many ATMs use imaging for check and cash deposits. Reported usage has increased significantly. With all the successes and failures throughout the ATM’s history, one thing has been consistent for 50 years: the cash dispensers. They are and have always been an excellent tool to handle that functionality 50 years after their introduction. Talk about standing up to the test of time!

So, what is next for the ATM? The Consortium for Next Gen ATMsOff-site link, representing more than 400 companies in 55 countries, has been working for the last five years to develop a globally interoperative software platform for APIs (for application programming interface) for the ATM to support additional functionality such as interactive teller sessions and cardless and contactless transaction support. Our readers have seen previous posts documenting the reduced usage of cash, especially by millennials. The ATM industry is looking to explore new avenues of service and revenue to offset reduced transaction volume.

Are there any additional functions you would like to see at your ATM? We would enjoy hearing your perspective on the ATM’s future.