Tranax Technologies Inc., an ATM manufacturer that sells machines to independent sales organizations, has filed for Chapter 7 voluntary bankruptcy, citing debts of $1 million to $10 million. Tranax said its assets equal its estimated liabilities.

The Hayward, Calif.-based company filed June 11 in United States Bankruptcy Court for the Northern District of California in Oakland. In its bankruptcy filing, obtained by ATMmarketplace.com, Tranax listed 13 creditors, including Hyosung Corp. of America.

Tranax’s bankruptcy filing occurred less than a month after U.S. District Court Judge Vaughn R. Walker entered a judgment May 25, ordering Tranax to pay Hyosung America Inc. and its parent company, Nautilus Hyosung Inc., $5.01 million plus daily interest of $1,742.52 until Tranax pays its debt. Nautilus Hyosung had to wait 14 days from that date before taking action to seize property to satisfy Walker’s ruling. Walker issued his ruling May 6.

As noted in our earlier post, there may be more to the bankruptcy than first appears:

In 2008 Tranax was acquired by Hantle USA. This year, the company announced that Hantle would take over ATM marketing, while Tranax would focus on kiosks, scanners and ATM components. Hyosung is now suing Hantle USA, alleging that Hantle USA has taken over many of Tranax’s assets, making it difficult for Hyosung to collect the judgment.

Chapter 7 means Tranax will be shut down and its remaining assets sold off to satisfy creditors, including Nautilus Hyosung. But while the Tranax name will go away, Tranax’s line of ATMs and ATM products will continue to be sold and developed under the Hantle brand.

However, if Nautilus Hyosung persuades a court that Hantle improperly transferred assets out of Tranax in order to avoid paying Nautilus the $5 million court award, then Hantle USA or its parent could be on the hook for the money.

In any event, a name associated with the explosive growth of the non-bank ATM industry is going down in a lawsuit-inspired bankruptcy.

The case stemmed from the contract dispute between Hyosung and Tranax that led to Hyosung dropping Tranax as it’s U.S. distributor and Tranax becoming an ATM manufacturer in its own right.

Starting in 1998, Tranax was the U.S. distributor for Hyosung ATMs. Then in 2006, Hyosung discovered that Tranax was substituting another manufacturer’s cash dispensers in some Hyosung models. Hyosung suspended shipment of the models in question; Tranax responded by suspending payment on all outstanding invoices.

Hyosung ended Tranax’s distribution contract in January 2007 and filed an arbitration grievance over the unpaid invoices later that year, alleging Tranax had breached the terms of its distribution contract.

In February, the arbitration panel ruled in Hyosung’s favor and ordered Tranax to pay the full amount of the unpaid bills, plus interest. On Wednesday, a federal court upheld the ruling.

Tranax did win one small victory: it had long sold Hyosung ATMs using the “Mini-Bank” trademark, and the arbitration panel ruled that Tranax owned that trademark. So Hyosung has stopped using the term in its advertising.

The story isn’t over yet. In 2008 Tranax was acquired by Hantle USA. This year, the company announced that Hantle would take over ATM marketing, while Tranax would focus on kiosks, scanners and ATM components. Hyosung is now suing Hantle USA, alleging that Hantle USA has taken over many of Tranax’s assets, making it difficult for Hyosung to collect the judgement.

Stay tuned.

Whether you think he’s truly the inventor of the ATM depends a little bit on how you define “ATM.” The machine he invented bears little resemblance to modern ATMs:

The first automatic teller machine, now known as ATMs, was installed at a branch of Barclays Plc in a north London suburb on June 27, 1967.

Plastic bank cards had not been invented yet, so Shepherd-Barron’s machine used special checks that were chemically coded. Customers placed the checks in a drawer, and after entering a personal identification number, a second drawer would spring open with a 10 pound note.

Two years later, a completely different machine, invented by a completely different person, was installed at a bank in Manhattan. That machine was the first modern ATM, and all subsequent models were patterned after it, not Shepherd-Barron’s machine.

Shepherd-Barron also claims credit for inventing four-digit Personal Indentification Numbers (PINs):

Shepherd-Barron originally planned to make personal identification numbers six digits long, but cut the number to four after his wife Caroline complained that six was too many.

“Over the kitchen table, she said she could only remember four figures, so because of her, four figures became the world standard,” he told the BBC.

As with many world-changing inventions, the ATM was an idea being worked on by several different people at the same time. Barron’s machine came first, but because of the cumbersome interface, didn’t catch on. It was a company named Docutel, selling a machine invented by an American named Don Wetzel, who produced the first commercially successful ATM.

But both men can claim credit for an idea that launched a financial revolution. There are now nearly 2 million ATMs installed worldwide. And it all a little over 40 years ago today, in the minds of a Scotsman and a Texan.

The amendment is not dead — Harkin could try to bring it up again, either with this bill or with a different bill later on in the session. But at this point it seems unlikely to be part of the current bill.

Meanwhile, here are a few more people speaking up to oppose the amendment.

From a letter in the Des Moines (IA) Register:

I have to tell you, Sen. Tom Harkin, how disappointed I am with your proposed 50 cents maximum per ATM withdrawal fees. I’m a small-business owner in the ATM business, not a bank, but a hard-working, tax-paying U.S. and Iowa citizen.

It is an absolutely ridiculous statement that ATM withdrawals cost us a mere 36 cents, Senator Harkin. I have quite a few ATMs and drive more than 1,800 miles per week. I have the cost of gas, a vehicle, the cost of the ATMs, the interest for the cash in the ATMs, etc. I pay my locations between 50 cents and $1.50 per withdrawal as I lease the space in the locations.

Is Congress going to stop the person who charges $2.29 for a cup of coffee versus the store that charges 99 cents? Is Congress going to put a cap on Nike shoes when a merchant charges more than $200 for a pair of shoes that cost him $65, but the demand is there, so he can charge what he wants?

The biggest difference is my ATMs have a screen that asks the customer if they agree to the charges. If not, they hit cancel.

— Jeff “Ole” Olson, Guttenberg

And the Cato Institute resurrects a paper from 1998, the last time a senator (in that case, Republican Al D’Amato of New York) proposed capping surcharges:

Consumers have the ability to obtain money from their bank accounts without paying a surcharge. ATM surcharges allow banks and other ATM operators to deploy machines in more convenient locations than might otherwise be possible. Customers who are unwilling to pay a surcharge incur the cost of inconvenience, while those who value the convenience more than the cost of the fee have the option of paying for it. Senator D’Amato, Rep. Bernie Sanders (I-Vt.)–Congress’s self-proclaimed socialist–and numerous consumer groups have formed an unlikely coalition to put an end to ATM surcharges. If successful, that campaign would limit the options of consumers, since there would be no means to support the more convenient ATM machines. Prohibiting ATM surcharges would only harm consumers by slowing the expansion of ATMs and reducing the number of ATMs currently deployed without making anyone better off.

The 1998 effort failed, which is why you find privately-owned ATMs all over the place, complementing the bank-owned ATM networks. It looks like the latest effort will fail, too — which is good for consumers and good for business.

Since 1990, the lowly ATM has moved from being little more than an adjunct to a credit union or bank’s branch structure to being a significant part of customer service strategy and the average retail landscape today, industry executives said.

“In 1990, ATMs were like extensions of bank [or credit union] branches so most ATMs were located at, or close, to branches,” explained Michael Lee, CEO of the ATM Industry Association, an international organization that represents ATM manufacturers and deployers. There were only about 85,000 to 150,000 machines in those days, and they were virtually all tied to bank or credit union branches.

As we’ve noted before, loosening restrictions on ATMs is what drove the explosion in ATM usage:

“The big revolution in the U.S. ATM in this time period was the introduction of surcharging in 1996,” Lee said. The surcharge fee paid by consumers using an ATM not belonging to their bank increased from zero in 1996 to an average of roughly $1.50 in 2003, he added, citing the Federal Reserve. “The fee allowed ATM owners to take ATMs to nonbank areas in the retail sector, closer to where consumers live, work and shop. The fee provided the economic stimulus for the huge growth of the retail ATM.”

And oddly, the explosion of competing retail ATMs helped drive the development of credit union and bank ATM networks. Once people began to see ATMs as a normal part of their financial lives, two things happened: They demanded more and better access to them, and they became more open to using ATMs for a wider range of financial transactions.

Which is why ATMs today do everything from dispensing cash to taking deposits to selling stamps and insurance. 20 years ago, few people would have trusted a machine with such transactions. Today, they don’t think twice about it.

ATM Marketplace rounds up the year’s best and worst stories of the ATM industry. The highlights:

NCR Corp.’s move to Atlanta…. It signifies NCR’s commitment to bringing the manufacture of its ATM line back in-house to the United States. It means an end to so much outsourcing, and that’s a good thing for the industry and the end-user, i.e., NCR’s financial-institution customers.

The rebranding of TRM Corp. to Access to Money, following TRM’s April 2008 acquisition of Access to Money…. Let’s face it. TRM was struggling, and had been for quite some time. Frankly, I don’t know how the company was able to keep itself afloat for so long. By taking on the Access to Money name, the one-time ATM giant is able to take another shot at greatness.

Diebold Inc.’s focus on integrated services. 2010 will mark a year of continual ATM replacement and upgrade, as banks [migrate] to automated ATM deposits, cash recycling and mobile-device interaction. Once those upgrades [are done], the replacement cycle won’t occur quite so frequently…. What that means for ATM manufacturers such as Diebold is that solely relying on products for revenue … is corporate suicide. [But] bankers can’t afford to service these ATMs, nor do they want to. They’d much rather rely on the experts, and that’s where outsourced, integrated services come in.

Canada’s nearly complete migration to EMV. Will the United States ever get the clue? Canada’s completion of the migration to the Europay, MasterCard, Visa standard, which admittedly will take a few more years, is going to rock the United States card market. The advanced security of chip-and-PIN technology already is pushing more fraud to the United States, where the feeble and inferior magnetic stripe still reigns.

And their vote for the worst event of 2009? The collapse of the merger between Triton and Nautilus Hyosung.

If these two companies had joined forces, they would have created a powerhouse in the retail ATM space. Triton, a dominant and well-respected brand in the United States, and Nautilus, which is pushing to make a stronghold in the U.S. retail and financial markets — the companies could have made some waves. But concerns about an industry monopoly by the Department of Justice led the two entities to sever their ties and call off the $63 million deal.

But the deal was abandoned for a reason: the merger would probably have killed off ATM manufacturer Tranax, which is why the DOJ had monopoly concerns. Thus we would have gone from three big manufacturers of retail ATMs to one. That wouldn’t have been good for anybody, least of all ATM owners and customers.

And with the merger talks out of the way Triton has move aggressively forward with competitive plans, moving its headquarters, releasing new models and licensing a new ATM communication standard.

All in all an eventful but generally positive year for the industry — a minor miracle given the rough economic climate. With the economy apparently on the mend, there’s reason to believe that 2010 will end on a much happier note.

The board of the UK Payments Council, the body for setting payment strategy in Britain, agreed on Wednesday to set a target date of October 31, 2018 for winding up the check clearing system. The board is largely made up of Britain’s leading banks.

“There are many more efficient ways of making payments than by paper in the 21st century, and the time is ripe for the economy as a whole to reap the benefits of its replacement,” Paul Smee, the council chief executive, said in a statement.

Britain is actually a bit of a laggard in this regard:

Checks have all but disappeared in high-tech countries like Sweden and Norway and their use is under review in Ireland, South Africa and Australia, Frederick at the council said.

And finally, a bit of historical trivia:

The oldest surviving check in Britain was written in 1659, according to the council and made out for 400 pounds (equivalent to around 42,000 pounds today). It was signed by Nicholas Vanacker, made payable to a Mr Delboe and drawn on Messrs Morris and Clayton, scriveners and bankers of the City of London.

Here in Minnesota, we’ve just gotten about 6 inches of snow — the first major snowfall of the season. Roads last night and tonight were slippery and slow-going, with a lot of school closings and people deciding to work from home rather than try to get into the office.

So it’s a perfect day to relay the story of how a blizzard saved the ATM industry.

In 1977, after investing hundreds of millions of dollars in ATM technology research and development, Citibank decided to install machines across all of New York City. But at first, they were not very popular. The technology was confusing to first-time users, the machines were not always accurate (they sometimes dispensed the wrong amount of money), and they were impersonal. I was told that customers who used ATM machines were so frustrated that many closed their accounts.

The ATM may never have been an instant hit if it weren’t for a natural disaster.

January 1978 will always be remembered for a blizzard that dumped as much as four feet of snow in the Northeast. In New York City, nearly two feet of snow brought the city to a halt. Banks didn’t open. Instead, people got their money from supermarkets. But most of those quickly ran out of money.

This created a massive ‘pain’.

Where did people turn? The ATMs. It is estimated that during the storms, use of the machines increased by over 20%. Soon after, Citibank started running TV ads showing people trudging through the snow drifts in New York City. That’s when the company introduced their wildly popular slogan, “The Citi Never Sleeps.” This was the real birth of the automated teller machine.

The story also appeared, in slightly different format, in a 2004 issue of Fortune magazine.

Here are some pictures from New York City showing what the storm left behind. The image at the top of this post is from this collection.

Given the likelihood of snowstorms (and the many other situations where people need money but the banks are closed), the rise of the ATM was almost inevitable. But we have 17 inches of snow to thank for the ATM exploding in popularity when and where it did.

Navy Federal Credit Union, based in Virginia, is the largest credit union in the world, serving 3 million members. But what really sets it apart is its customer base: membership is only open to people who work for the Department of Defense.

That means a lot of soldiers, sailors and Marines are members. And that leads to some unique situations.

Last month, Navy Federal installed an ATM at Camp Lemonnier — a small outpost in Djibouti that is the center of U.S. efforts to deal with Somali pirates operating off of the Horn of Africa. (It’s the red dot on the map above).

The credit union said it took two years to work through the tangle of technical and regulatory issues involved in putting an ATM in such a remote place.

But in some places, ATMs have more exotic choices.

Here in Minnesota, we have a large Hmong population. It’s a legacy of the Vietnam War, where many Hmong fought on the American side in Laos and then faced retribution after the war ended. Tens of thousands came here as refugees, and Minneapolis is now home to one of the largest Hmong communities in the United States.

Which means Minnesotans occasionally encounter machines like this. “Hmoob”, it turns out, is a variant spelling of Hmong. You can dig through the complex linguistic reasons yourself, but it’s basically an effort to represent a tonal language (where the pitch used to pronounce a word changes the meaning of the word) in English. So it’s spelled “Hmoob”, but pronounced “Hmong.”

Then, of course, there are the ATMs in London that speak Cockney rhyming slang.

But the real winner comes out of Africa, where it’s not uncommon to encounter a bewildering variety of national and tribal languages, not to mention choices catering to tourists. Take this South African machine, for instance. South Africa has 11 official languages, and this machine offers eight of them, including Afrikaans, English, SeSotho and isiZulu.

Read the comments on the link for examples of other multiple-language machines in Canada, the United States, Europe and the Caribbean. Machines in the Dutch half of St. Martin, for example, not only offer multiple languages — they can give you your cash in dollars, euros or Dutch guilders.