The History of Money: How the Humble Bank Card Changed the WorldBank
cards – both ATM and debit cards – have changed the way that people bank, as well as the way they spend their money. But where did the idea come from?
In the Old Days
Years ago if you wanted to deposit to or withdraw money from your bank account you had to wait for the bank to open at nine (remembering that they close at three) and go to a physical branch and interact with a teller. When shopping if you did not want to use cash you may have been able to write a cheque but if the merchant didn’t take them you were out of luck! Then, as the Swinging Sixties dawned the first bank cards started to appear and banking has never been the same again!
The History of Bank Cards – The ATM Card
Although there is some debate over exactly how bank cards came to be – as in who invented what first – the basic timeline breaks down as follows:
1960 – The first predecessor of an ATM machine was revealed at a New York branch of First National City Bank (which is Citibank today). The machine made it possible for customers to pay their utility bills and get a receipt when there was no teller on duty.
1967 – Lloyds of London debuted the very first cash dispenser at a London branch. The machine was very different to today’s ATMs. In order to use it, customers had to insert paper vouchers that they purchased from tellers during business hours.
1968– Barclays Bank debuted – in the UK – the very first plastic card that could be used to withdraw cash from a machine, Barclaycash. The problem was that the pre-coded cards had to be purchased from a teller in advance and they were designed for single use only – the machine “ate them” once you had withdrawn all the cash. What is considered the first ATM machine was invented by one John Shepherd- Barron, the happy chappy in the picture above.
1969 Chemical Bank debuted the very first “magnastripe” reusable bank card “cash machine”, created by a company called Docutel” with the ad slogan “On September 3, 1969, our branch will open its doors at 9:00 a.m. and we’ll never close again!”
1974 – After 2,000+ Docutel machines had been installed at banks around the world the first online, connected ATM machine debuted in New York and served as the basis for the ATM machines we use all over the world today.
How Does an ATM Machine Work?
These days we are all very used to the idea of using a bank card to withdraw cash and of course, now ATM machines are found almost everywhere – petrol stations, supermarkets, even at the beach – so one is never really far away. Have you ever wondered though exactly how these machines work?
These days the ATM machine is very much like a regular credit card processing machine – it reads the information encoded on the magnetic strip in an ATM card and then once the information it needs has been input by the cardholder (PIN, requested cash amount etc) the machine connects with the payment processing center to confirm that there is sufficient money in the account for the transaction to complete.
Most people understand this, but the part that some do not is how the machine “knows” how much money to is the right amount, in other words how it counts the bills. The counting is actually performed by an “electric eye” that counts the bills as well as a sensor that measures thickness – so that two bills “stuck together” are not dispensed.
Bank Cards – ATM vs Debit Cards
In the 1980s credit card use was at an all-time high and the idea of using a paper check to pay for anything was already becoming rather outdated. Not everyone had a credit card though – or even wanted one. They were looking for more convenience from their banks though and as a response the first debit cards were introduced. Again, Barclays were the first, and the rest of the world followed suit.
A debit card is an ATM card with extra functionality as it can also be used in the place of a credit card in many instances. Debit cards are branded with the logos of one of the major credit card companies – most commonly Mastercard or VISA. A debit card basically has three separate functions. Its first is that it can be used to withdraw cash from ATM machines in the same way that people have become so familiar with.
Its second is to act as a sort of electronic check – by inputting their pin number cardholders can pay for purchases with their card and the money is instantly deducted from their account and the transaction is complete. At many debit card terminals people have the option to get “cash back” which can be advantageous as the fees involved to do so are far lower than ATM fees.
Lastly, a debit card can be used as a credit card. The transaction is processed in the same way as a credit card transaction is but the funds are taken from those in a bank account rather than from a credit line. The transaction then takes 24-72 hours to process.
Which one should you use when? A debit card is usually the best option as you are spending your own money and not racking up debt. However, a debit card does not build your credit rating, a credit card does. And everyone wants a better/good credit score don’t they?
One idea? Use a credit card to pay for a few ‘regular’ purchases you would usually use your debit card for. Your weekly shop perhaps. Then take that cash and pay your credit card off right away. Doing so will do good things for your credit score and you still won’t be in debt, so it’s a win-win situation all around.
Whilst credit cards are a popular way of gaining access to money quickly, not everyone has one or can obtain one due to their credit score, but don’t worry, if you ever get into an emergency situation and need help, consider a payday loan with LoanPig