Archive for the ‘history’ Category

Mischa Weisz, 1956-2009

Monday, October 5th, 2009

Mischa Weisz

Mischa Weisz, the founder of Canada’s largest third-party transaction processor, died Oct. 2 in Toronto. He was 53.

Weisz was born in Barrie, Ontario in 1956. In 1976 he went to work for the Hamilton-Wentworth credit union, where he worked for 15 years before founding his own consulting company, Intertec Solutions, in 1991.

In 1996, Canada changed its laws to allow non-bank ownership of ATMs. Weisz saw an opportunity and founded TNS-Smart Networks to provide transaction-processing services to those independent ATM operators. The company prospered, and today is Canada’s largest processor of non-bank ATM transactions, handling nearly $6 billion worth of transactions each year.

In September 2007, Weisz was diagnosed with late-stage pancreatic cancer, and given 6 months to live. He continued working, however, and remained chairman of TNS up until April 2009, when the company was sold to NRT Technology Corp.

Weisz started a blog to chronicle his battle with cancer, and an associated website with other details of his life.

Weisz had a long history of philanthropy. Most recently, he donated $500,000 to help build a new YMCA facility in Hamilton and establish an endowment fund for the Y’s community-outreach programs.

He is survived by his parents, wife, brother and children. Services are scheduled for tomorrow.

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The talking ATM turns 10

Wednesday, September 30th, 2009

On Oct. 1, 1999, the country’s first talking ATM opened for business at San Francisco City Hall. It was the 13th such machine in the entire world.

Ron Boutte has been blind since since he was 10, but he’s an old pro at using ATM machines. Boutte reads the Braille on the keypads and has memorized the sequence of buttons to press.

But cash is not always at Boutte’s fingertips. Unable to see the screen, the 44-year-old cannot tell if the machine is out of order or if an error occurs.

But for Boutte and other blind and visually impaired residents of San Francisco, a solution has arrived. The first talking ATM in the nation is now in the city treasurer and tax collector’s office in City Hall.

It can be found by following a talking sign, an infrared control that tells users where they are. The voice gets clearer as the person gets closer to the destination.

At the ATM, audio instructions come through a headset. A voice repeats which keys have been punched and will notify the customer when the transaction is completed or if it fails.

The machine was a modified Diebold built by T-Base Communications, which had built the other 12 talkers for the Royal Bank of Canada. It arrived after years of lobbying by California advocates for the blind, and came a few months after banking giant Wells Fargo announced plans to install talking ATMs throughout California. As blind advocate Lainey Feingold explains:

Blind community advocates laid the groundwork for talking ATMs in the 1980s and early 1990s, with important policy work on federal legislation and regulations. These advocates made strides with the banking industry, as well as by serving on standard-setting committees. Banks were first contacted using structured negotiations in the mid-1990s; by 1999, all of these efforts resulted in the first installed talking ATMs in the United States.

Three months before the first talking ATM was installed in the United States, Wells Fargo and the California Council of the Blind (CCB) announced a historic plan to install talking ATMs throughout the state.

One month after San Francisco’s talking ATM was up and running, CCB announced that Citibank had installed five talking ATMs in California. The announcement was the result of an agreement that CCB and individual CCB members had reached with the bank.

When 20 talking ATMs were installed at Wells Fargo locations in April 2000, Wells became the U.S. bank with the most talking ATMs in the country.

Bank of America was the first bank in the country to agree to install talking ATMs in more than one state. In March 2000, it announced a deal with CCB to develop a plan to install talking ATMs in California and Florida and said it would work out a plan for the rest of the country the following year.

In 2002, Citibank announced that it had installed the first talking ATMs in New York, and Wells Fargo announced state-wide plans for talking ATMs in Iowa.

Today, of course, nearly all ATMs can talk, and most are able to offer instructions in multiple languages. As with many such innovations, it turns out that talking ATMs are useful to everyone, not just blind people. Many ATMs use voice commands to get transactions started, reducing confusion and wasted time. Voices can make the ATM experience more enjoyable and interactive, saying “please” and “thank you” as the customer makes choices. Hearing the instructions also serves as a double-check to reading them, reducing errors.

And it all started with one machine in a government office in California, 10 years ago.

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Friday fun: Bless this ATM

Friday, September 25th, 2009

A duilian-equipped ATM in Lhasa, Tibet.

Tibet, where new technology meets old traditions. ATMs are a relatively recent arrival in Tibet. In the capital of Lhasa, one bank — perhaps in a bid to build trust in the new machines — placed duilians on either side of their terminal.

Duilians are a traditional Chinese form of blessing, going back at least 1,000 years. It consists of two lines of poetry, one on each side of an opening, written with the goal of “few words but deep meaning.” A library’s duilian might reference books, learning, wisdom or poetry. A private home might have a duilian that bestows blessings on visitors.

The tradition is slightly different in Tibet. Instead of characters, the duilian is an image. But the intent is similar: in this case, to bless the transactions moving through the ATM.

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Surcharges built U.S. ATM industry

Friday, September 4th, 2009

Why are ATMs everywhere in the United States and extremely scarce in India?

In a word, surcharges.

There are other factors, of course. ATMs have been in use in the United States far longer, for one thing. But surcharges help explain why there are just 40,000 ATMs in India (a country of 1.15 billion people), while America’s 305 million people have access to 395,000 ATMs.

That’s the conclusion of a recent article in India’s Economic Times.

In India, government regulations mostly prevent banks from imposing surcharges on non-customers, and the surcharges they do allow are tiny: about 10 cents per transaction. Indian transaction networks do pay ATM owners a small usage fee on each transaction, but it’s not a significant money-maker.

That means there’s no financial incentive for banks to greatly expand their networks, and absolutely no opening for non-bank ATMs — the kind you find in convenience stores, gas stations and restaurants.

The early history of ATMs in the United States was similar.

In the U.S., ATMs were first deployed in proprietary networks by banks, usable only by that bank’s customers. As in India, the banks eventually developed regional and nationwide transaction networks to expand the number of machines their customers could use. As in India, the network paid each bank a small usage fee each time someone used that bank’s ATMs.

In India the government bans surcharges. In the United States, there was no government regulation. Instead it was the processing networks that banned surcharges, because they made money based on the number of transactions, and they feared surcharges would cut ATM usage. So ATMs remained limited in number, generally attached to bank branches.

But by the 1990s, two forces were leading a campaign in favor of surcharges: Banks with large numbers of ATMs (who were essentially subsidizing smaller banks by providing free access to their machines), and independent operators that wanted to put ATMs in non-bank locations. They carried the day, and the processing networks dropped their prohibitions against surcharging.

The decision caused a certain amount of uproar, and led to proposals in Congress to ban surcharges. But they went nowhere. The only thing regulators require is that surcharges be prominently displayed, and users given the option of canceling a transaction rather than pay a surcharge.

And good thing. Because over the next 10 years, the number of ATMs in the United States soared from 150,000 to 395,000. An entire industry of non-bank ATMs — smaller and cheaper than their expensive bank cousins — has sprung up, adding competition and innovation to the mix. Further, proprietary networks are a thing of the past: nearly all ATMs accept all cards, regardless of issuer. The result is unparalleled convenience for consumers, where banking is something you can do any time, anywhere. People recognize that the surcharge is a convenience fee, and are willing to pay it when convenience is important to them.

So take a moment to appreciate the lowly surcharge, the fee that built an industry and changed the face of American banking.

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40 years ago today, the ATM was born

Wednesday, September 2nd, 2009

The first Chemical Bank ATM.

It’s hard to imagine a world without ATMs. They’re everywhere, and they perform an ever-growing array of services that add convenience while reducing costs.

But in the scheme of things, they haven’t been around that long. Today the ATM celebrates its 40th birthday.

The world’s first ATM opened for business on Sept. 2, 1969, in Rockville Centre, N.Y. — the product of a company you’ve never heard of and an engineer who never profited from the invention.

In 1968, the Texas company Docutel had tasked employee Don Wetzel to come up with a new product. The company made baggage-handling equipment and it was looking to develop another terminal of some kind.

After six months of traveling the country searching for ideas without much luck, Wetzel was off on yet another trip. He needed cash. So on his lunch break, Wetzel trekked 15 miles from his Irving, Texas, office to his Dallas bank and waited in a long line of Friday customers.

“I was standing there and thinking, ‘This is terrible. I just want to get some money,’” Wetzel, 80, said in an interview last week. “It’s a very simple transaction. And it struck me that the teller mostly does very simple transactions — they give you cash, cash a check, give you your balance. I thought, ‘We could build a machine that could do that.’”

Thus was born the nation’s first ATM.

Don Wetzel, inventor of the ATM

That first machine cost $4 million to develop, and only dispensed cash. There were problems with weatherization (that first ATM went out of service for a few days after rain got inside and fried the innards). There were problems finding a manufacturer for the cards — some of the first cards with a magnetic stripe to hold account information. The hardware was bug-prone. It had to overcome resistance from bankers, who thought (wrongly, it turned out) that their customers preferred the face-to-face service of human tellers.

There are now 1.7 million ATMs worldwide, and it has changed the culture of banking.

“Everyone wants things fast and more convenient, and we were at the beginning of that,” Wetzel said. “It has affected the way that we live. That’s become the mentality of people: ‘I want it now.’”

As for Wetzel, he’s now 80 and uses a cash machine once a week — but his wife has never used one.

And while he had a successful career, he didn’t get rich off of ATMs.

Wetzel said people who learn that he developed the nation’s first ATM assume he found fame and fortune. He did receive some accolades, including special recognition from the U.S. Smithsonian Institution. But these days he leads a relatively quiet life as a Dallas retiree.

And he never got rich from the ATM — the machine was owned by the company. “In truth, all that it did was I got to keep my job,” Wetzel said.

For an exhaustive biography and interview with Wetzel, click here.

So what happened to Docutel? It couldn’t keep up with the industry it started.

Bob Heckman, who joined Docutel in 1973 as vice president of sales and marketing, described the original Docutel ATM as “very electromechanical in nature — lots of belts and pulleys, gears and levers, all taking the card into the ATM, moving the money into the customer’s hand and printing a receipt.

“The ATMs were slow and at times a little noisy. The message screen was actually a cylinder with pre-printed messages on it such as, ‘Insert Card,’ ‘Take Money,’ etc. They were also very bulky and hard to install.”

Docutel turned out to be better at sales and marketing than technology development. So the company peaked in 1974 and slowly declined after that, according to Del Tonguette, a former client.

The eventual failure of Docutel — it didn’t last out the 1980s — may go back to many different factors. Ironically, marketing may have played a role. Rather than staying aggressive, Docutel was content to rest on its steel-plated laurels.

The many bugs in the early machines were a hindrance, especially since it took Docutel a long time to work them out. Tonguette believes Docutel’s proprietary approach to magnetic stripe technology probably contributed to the company’s demise as well.

“Technically, on the magnetic stripe back in those days you had a superstripe; there were three tracks in it,” he said. “Today you only look at track two — it’s a narrow stripe. Back in those days, it was half an inch or more wide.”

Tonguette said the top track on a card’s magnetic stripe was for use by the airline industry, the middle track was reserved for on-line use — “although no one used that for years” — and the third stripe was for off line use.

“Docutel, and this might have contributed to this eventual decline, didn’t use stripe three,” Tonguette explained. “They used what they called the Docutel Stripe, and it was in-between stripes two and three. Like Apple when they came up with the Macintosh, they kept it kind of secret and to themselves rather than make it like IBM. You could only use (that stripe) in a Docutel machine. As the industry grew, that became a hindrance.”

Price was a factor too. An ATM’s cost varied from $24,000 to $35,000, with up to $10,000 more for installation. Most ATM manufacturers also charged a monthly service fee of $130 to $350. Additional costs for supplies and internal processing for off-line machines could amount to another $800 a month (if on-line, it was only about $300).

By comparison, the average wage of a teller at that time was about $900 a month plus benefits.

When larger, better-capitalized competitors — IBM, NCR — entered the market, Docutel couldn’t keep up. In 1982 it merged with an Italian company, Olivetti, and disappeared from the scene.

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