Once upon a time, most Americans shopped with either cash or a checkbook.
American Express launched its credit card business in 1958, a logical extension of its Travelers Cheques. Also in 1958, BankAmericard issued the first revolving credit card in Fresno, California.
It would be almost another 20 years before President Gerald Ford signed the the Equal Credit Opportunity Act, which prohibited creditor discrimination. That happened in 1974, and until then, banks could could refuse to issue a woman a credit card.
In 1969, before it was illegal for U.S. banks to discriminate against women, Chemical Bank unveiled America’s first automatic teller machine (ATM) in Rockville Centre, New York.
“On September 2, our banks will open at 9 am and never close again.”
According to Smithsonian Magazine, “1969 was a big year for ATMs.” British bank, Midland, opened its first ATM; so did Japan’s Sumitomo Bank.
However, this was two years after a Barclays in the London suburbs began self-serve banking (27 June 1967) with its 24-hour automated cash machine. (They weren’t yet called ATMs.)
Like much disruptive innovation, early ATMs were “technologically all over the place.”
Omron Tateishi’s machine used a magnetic-stripe card; Barclays machine had customers enter a PIN to identify themselves, and checked that number against what was basically a check inserted into the machine.. Then there was the fact that ATM electronics were being forced to work in all-weather conditions, resulting in frequent breakdowns. These early ATMs were big, clunky, unreliable, and not incredibly popular.
In the late 1960s and early 1970s, up to 30 percent of the American population had no bank account. Many were paid in cash each week. If they were paid by check, “department stores like Sears or J.C. Penney’s would happily cash” that check. No charge.
In the U.S., ATM adoption got a big boost from the Supreme Court in 1984. The ruling? “ATMs did not count as branches of banks and therefore were not subject to laws regarding geographic concentration of banks.”
By 2013, there were approximately 420,000 ATMs in the U.S. according to the GAO. At the same time, society was changing.
The New York Times had quoted a prescient Columbus, Ohio, banker in 1973: “The cash dispenser,” he said, “is the Model-T of automated banking.”
He was right but perhaps not for the reasons he foresaw.
The Federal Reserve Bank of San Francisco found that we used cash for only about 19% of our payments in 2020, a drop of 7% since 2018. Payments with credit cards + debit cards? 55% in 2020 v. 51% in 2018.
Perhaps it’s no surprise, then, that the use of ATMs around the world is slowly dropping.
Corporations will always try to reduce labor costs. So as long as people use cash for transactions, the ATM will have a place in our society.
But that’s the question, isn’t it? Will (and if so, when) our culture abandon cash like it long ago abandoned gold?