Author Mark Richards
It is 50 years since the first Automated Teller Machine (ATM) appeared. But does cash have a future? Surely we are moving inexorably towards a cashless society?
The year is 1967: England are the best football team in the world and everyone is going to San Francisco. Yes, with flowers in their hair…
But the real excitement is at a branch of Barclays Bank in Enfield, where – whatever will they think of next? – you are able to get cash from a machine in the wall! The machine’s full title is an Automated Teller Machine, which is being shortened to ATM. Before long there are ATMs in five other towns: Hove, Ipswich, Luton, Southend and Peterborough. The North? Goodness me, no: there were none up there! The people had barely progressed from coloured beads…
The ATM was the brainchild of Scottish inventor John Shepherd-Barron who – quite reasonably – wondered why he could not access his money wherever he was in the world.
“I hit on the idea of a chocolate bar dispenser,” he said. “But replacing chocolate with cash.”
So who was the first person ever to withdraw money from an ATM? Even in 1967 celebrity culture ruled, and the honour fell to actor and comedian Reg Varney of On the Buses fame.
Sadly not everything went according to plan with the early ATMs. When one was installed in Zurich there was a mysterious malfunction. Eventually, it was discovered that wires from a nearby tram line were interfering with the mechanism.
Neither would the early ATMs have passed today’s health and safety standards. Plastic cards had not been invented in 1967 and you, therefore, withdrew money by means of a special ‘cheque’ which was impregnated with carbon 14 – a mildly radioactive isotope of carbon. The ATM detected this and then matched it against your PIN number (which had four digits as Mrs Shepherd-Barron had told her husband she would not be able to remember six…) Was carbon-14 dangerous? Apparently not: “I later worked out that you would have to eat 136,000 cheques for it to have any effect on you,” said our bold inventor. So that’s alright then…
Fast forward 50 years
There are now around 70,000 cash machines/ATMs/hole-in-the-walls throughout the UK and 176m cards that can be used to withdraw cash from them. 94% of UK adults use cash machines and more than half of us use them at least once a week. Cash is used in nearly half of today’s transactions and we withdraw £180bn a year from ATMs.
But does cash really have a future? Surely we are heading towards a cashless society?
After all, cash is expensive to handle and process. It needs to be carried around, paid into or taken out of a bank – and you need to take care of it.
We are all shopping online; the high street is in decline. Even chip and pin looks outdated as the person next to you simply taps her contactless card. Thanks to Uber you do not even need cash for your taxi ride home.
Do people want to use cash?
As far back as 2014 a survey for payments company Worldpay found that six out of 10 young adults would prefer not to use cash at all. When Transport for London banned cash on the buses in 2014 – what would Reg Varney have made of that? – it was widely expected to be greeted with outrage. Yet two years on the company says it has saved £24m in cash-handling costs and queues for buses have improved.
So surely the cashless society is finally arriving? There are now more than 36m contactless cards in our wallets and ApplePay and AndroidPay are continuing the switch away from cash. With more and more retailers ready to accept contactless payment for small items and monthly spending on contactless cards now exceeding £1.5bn surely the days of cash are numbered? With technology moving at an ever faster pace, there seems little chance of Prince William staring out at us from a crumpled fiver.
Or maybe not…
On the 50th anniversary of John Shepherd-Barron’s invention, the chief cashier of the Bank of England has said that cash will remain a part of our lives “for decades.” Victoria Cleland said that the use of cash might be decreasing: but “it remained a part of the Bank’s future plans.” Not only is it used in half of all transactions: it is a store of value – in simple terms, whatever virus is attacking the world’s computers, it cannot attack the £20 note in your pocket.
Raheel Ahmed, head of the customer experience at Barclays – who may have been responsible for painting the Enfield ATM gold to celebrate its 50th birthday – agreed with this.
“Cash remains a crucial part of most people’s daily lives,” he said.
In fact, the future for ATMs looks bright, with research from manufacturer NCR saying that 80% of the transactions we currently do in a bank branch could be completed through a ‘video teller’ in an ATM. Some people may not regard this as good news. It is bad enough standing behind the bloke who has been sent to check his wife’s balance and then has to phone her because he has forgotten her pin. How long will it take him to apply for a car loan at a hole-in-the-wall? Not so much a cashless society as a wet, cold, frustrated society…
The black economy
There is, of course, one other very widespread use of cash. “How much will it be, then?” “You’re probably looking at five hundred, plus VAT. Unless you want to pay in cash…”
Estimates – which are almost certainly underestimates – put the size of the black economy at 10% of UK GDP. In very round terms, that is approximately £200bn. How much would the Chancellor like the £40bn or so of annual tax receipts on that? Six out of ten young people may be fed up with cash as they tap their contactless card at Pret a Manger and pay for Uber on their iPhone – but the two people who really want a cashless society are the Chancellor of the Exchequer and the taxman…