The Swedish Bankomat in the early history of the ATM
by Lars Arfvidson
In mid-1967, two different companies introduced cash machines into the market within a week of each other — each without knowledge of the other's plans.
One ATM was from De La Rue/Barclays Bank; the other was the Bankomat from Swedish company Metior. Both systems were offline.
The Metior Company was founded in Malmo by the Swedish companies Securitas and Tetra Pak. The basic technology was derived from building access control that employed a card, PIN and registration. This system was introduced at a fair in Stockholm in 1964 by Securitas.
At the Stockholm fair in the autumn of 1964, Securitas presented a passage-control system based on a personal card plus four-number PIN plus registration. It used a plastic-coated card with punched holes, optically decoded. The card also had codes for validity (area/company/PIN).
The card was inserted in the card reader, and the customer entered the PIN code. If everything was OK, it said "click," and the door or gate could be entered. The passage, the place and the person were registered. This could have been the first passage-control system of its kind in the world.
Looking back at these developments in 1964 from a historical perspective, we can see this as decisive technology for later uses of card-based customer authentication in financial services.
The next step was to use the system on petrol pumps. The Tankomat was introduced in 1965 to allow customers to fill up their vehicle's last tank 24/7 using the same system — credit card plus four-number PIN plus registration.
The Tankomat system was introduced Dec. 10, 1965, at an ESSO station in Tumba, Sweden, south of Stockholm. The customer inserted a coded card into the card reader at the pump and after entering the PIN, was able fill up the tank. Initially, the card reader could only be connected to one pump. The next installation had one card reader and a selection box that served all pumps.
The Tankomat was probably the world's first automated filling station to use card and registration, and might have been the start of unmanned stations.
Following the deployment of the Tankomat, the next logical step for Metior bank note dispensing. The Bankomat was introduced in Sweden in 1967, just after the De la Rue/Barclays machine, on July 6, 1967, at Uppsala Sparbank (savings bank) north of Stockholm.
An agreement with IBM specified access by the Bankomat to a computer interface, but the interface was not ready in time. As a result, this Bankomat started offline. In fact, this was better for us, as most banks in Europe did not have access to a computer network at that time.
Bankomat functionality had been discussed by Metior and various banks. The Bankomat used a credit card plus four-number PIN code plus selection of the amount. The user could opt to receive a quantity of one to five notes. These were stored in a cassette and distributed one at a time. The cassette had a counter that allowed the bank to control the amount. The Bankomat had a memory to ensured only one withdrawal per user per day.
Interestingly, the card had to be taken out of the machine before notes could be dispensed to ensure that users would not forget their card. Today this is standard practice at ATMs.
Through the rest of 1967, there were not many sales of Bankomats, but by the beginning of 1968, there was a sales rush. Many European countries installed one or several machines.
In Switzerland, for example, all the banks got together (for the first time ever!) to see a demonstration of the new technology, which resulted in an order for 30 Bankomats. The banks collaborated to take the machines live on the same day in August 1968.
The Bankomat continued to raise enormous interest within the banking world. Within a year, many European banks had installed one or more of the machines, some on a trial basis. Within the next four years, Bankomats also were installed in the United States and Israel.
The next technical step occurred on May 7, 1968, when the world’s first online ATM was introduced at a savings bank in the city of Malmo. This machine was connected to an IBM 360 via an interface. The Bankomat could also be disconnected from the computer to operate offline.
To prevent counterfeiting, the coded card used a scrambling effect that translated the card reader information differently depending on the hole combinations. The central unit also had a memory for blocked (i.e., fake and lost) cards. The central unit printed all the information on a clear-text printer and on an eight-channel hole printer for computer handling. The ID of the person could now be transferred.
Six months later, an IBM-connected Bankomat was installed in Vienna, Austria. Around this time, the Lloyds/IBM machine deployed a full online device, backed by a system architecture that could support large-scale deployment.
At the end of 1968, the Bankomat could be delivered with another card of the size CR80 (credit card size). The information in the card was still of the optical type, and the card was fed into and out of the Bankomat with a motor.
In August 1969, the Bankomat was delivered with a magnetic card in cooperation with the French company Transac, which also got the license to produce Bankomats in France. Once production relocated to France, more than 1,200 Bankomats were manufactured for the French market. The Transac reader included a mechanism that prevented the card from being withdrawn during the actual transaction.
The PIN code was a function of the information in the card and was unique to the card. The electronic function that made the comparison between the card number and the entered PIN code was called the "comparator." This device was developed with the help of encryption experts and was situated in the safe with the cash cassette.
In 1969, Bankomat came to the United States through a partnership with ADT. Twelve Bankomats were installed — the first on July 3 at Sumitomo Bank in Pleasant Hill, California.
In 1970, the Metior company was sold to Bofors, and then in 1973, to ABB (ASEA), whereupon manufacturing moved to Vasteras, in central Sweden. Finally, the business was sold to Phillips in 1976.
Throughout this pioneering period, a total of more than 2,200 Bankomats were manufactured and delivered, including 12 to the U.S. and 23 to Israel.
The Bankomat’s place in the early history of the ATM is assured.
Lars Arfvidson, was in charge of technical development at Securitas/Metior, the company that created and developed the Bankomat, from 1965 to 1970.