I live in Australia, so this might not apply worldwide, but here, when withdrawing money, the ATM will give me back my bank card, then several seconds later the cash comes out.
This typically leads to forgetting to take the cash, especially when my mind is elsewhere.
Given that I put the card into the machine, aren't I less likely to forget to wait for it? Wouldn't it make more sense to wait until I take the cash, then output my card?
I found an article that explains this.
Apparently, in Argentina, ATMs give cash before the card, resulting in a large amount of people leaving their cards behind. See http://uxmovement.com/thinking/preventing-user-errors-in-automated-teller-machines/ - unfortunately there are no references cited so I'm unsure how true this is.
To me, however, it would make more sense if your card was returned to you before entering your PIN.
As Jørn explains, it comes down to when the user considers the task completed. You're at the ATM to get cash, you're more likely to remain at the ATM until you receive your cash.
Unfortunately there aren't many real references to help answer this question. UXMovement has an article which Tass references in their answer, which makes some good points about the task flow of using ATMs. In summary:
Another resource is Nudge blog's article which argues along similar lines, further highlighting the issue of achieving objectives and abandoning the task flow due to a feeling of "mission accomplished".
This exact questioned is actually answered! This questioned is an example of a Forcing Function described in the book Design of Everyday Things by Donald A. Norman
Forcing Function Defined
Forcing functions are a form of physical constraint: situations in which the actions are constrained so that failure at one stage prevents the next step from happening. Starting a car has a forcing function associated with it—you must put the ignition key into the ignition switch. Some time ago, the button that activated the starter motor was separate from the ignition key, so that it was possible to attempt to start the car without the keys; the error was made frequently. In most modern automobiles, the starter switch is activated by turning the key—an effective forcing function that makes you use the key to do the operation.
Using a bank or credit card to withdraw money from an automatic teller machine, then walking off without the card. This was a frequent enough error that many machines now have a forcing function: you must remove the card before the money will be delivered. Of course, you then can walk off without your money, but this is less likely than forgetting the card because money is the goal of using the machine. The possibility exists so the forcing function isn’t perfect.
ATM as a Forcing Function
Forcing functions are the extreme case of strong constraints that make it easy to discover erroneous behavior. Not every situation allows such strong constraints to operate, but the general principle can be extended to a wide variety of situations. In the field of safety engineering, forcing functions show up under other names, in particular as specialized methods for the prevention of accidents. Three such methods are interlocks, lockins, and lockouts.
The Three Types of Forcing Functions
An interlock forces operations to take place in proper sequence (figure 5.4). Microwave ovens and television sets use interlocks as forcing functions to prevent people from opening the door of the oven or taking off the back of the television set without first turning off the electric power: the interlock disconnects the power the instant the door is opened or the back removed. The pin on a fire extinguisher or hand grenade and the safety on a rifle are other examples of interlocks; these forcing functions prevent the accidental use of the devices.
A lockin keeps an operation active, preventing someone from prematurely stopping it. The sad stories of those who turn off word processors without first saving their work could be avoided with the use of a lockin. Suppose the on-off switch were a “soft” switch, not really disconnecting the power, but sending a signal to the program to quit, checking that all files had been saved, and then, after all the appropriate housekeeping operations had been completed, turning off the power. (Of course, a normal power switch should also exist as an override for special situations or for when a software problem causes the soft switch to fail.)
A lockout device is one that prevents someone from entering a place that is dangerous, or prevents an event from occurring. A good example of a lockout occurs in stairways of public buildings, at least in the United States (figure 5.5). In cases of fire, people have a tendency to flee in panic, down the stairs, down, down, down, past the ground floor and into the basement, where they are trapped. The solution (required by the fire laws) is not to allow simple passage from the ground floor to the basement.
The ATM is a Lockout Forcing Function.
Well its a human behavior that we never forget to take the money :).
When we step into an ATM our primary task is to take the cash. So we are always in a mindset where we are trying to understand how much do I want to take out and what denomination will I get. In this phase we are all thinking about the CASH. The Card is just a medium to authenticate the transaction.
Now on the other hand, losing a card can be more dangerous than losing cash.
There is plenty of research to support the theory when we have only one task to complete we have very minimum chances to forget that. As such when we go to ATM our primary task is to take the cash and hence we generally don't forget that. That is the reason, we get CASH at last and we get the card back before we take the cash and leave the ATM booth.
Most likely because it costs something to a bank if you forget your card. While it costs them nothing if you forget your cash. This feature is not designed for users but for banks.
The excuse that "many people forget their cards" is not credible - just as many people probably forget their cash, except you'll never hear about it since there's nowhere they can go to complain.
Edit:
To anwer some of the comments - if you lose your card, the bank is reponsible for any illegal transaction:
If you report a debit card missing before it is used, you are not responsible for any unauthorized withdrawals.
Your liability is limited to $50 if you report the loss within two business days after you realize your debit card is missing and to $500 if you report the loss after two but before 60 days.
This is why, if you lose your card, it's a much bigger problem for the bank, not for you. If you forget $100 at the ATM, it's lost and you have no option. If you lose your card, at most you will lose $50, or nothing if you report it immediately.
Because the "mental model" of the user is that receiving the cash is the end of the transaction. That's the walkaway point; risking leaving the card in the ATM. Banks and users therefore had to spend much time, effort, and costs in replacing cards.
The "cash last" model helps us navigate a virtual, electronic world just like we can add items to an ecommerce shopping card without having first created an account replicates the experience of a real world bricks and mortar world of adding items into your cart without having to show a passport at the store's entrance first...:)
I don't believe it's universally adopted through (been to some banks/countries where card is last).
In the UK, we used to give the cash before the card about 20 years ago (IIRC) and I have distinct memories of people being called back to ATM's by the next user because they had forgotten their card as something that happened on more than a few occasions when I was present.
This is because the cash is the thing the user was looking to get, so is the entire purpose of the interaction. Once cash has been received, it is very easy to subconsciously feel that the interaction is over.
Since the switch, I have only ever left cash in the machine once, and that was when I got distracted by a phone call at just the wrong moment. I don't hear of people leaving their cards behind very often these days (and when they do, it's as the result of a scam being run), and I certainly don't hear stories of people leaving money in the machine very often. I don't have any stats to back that up as anything more than annecdotal evidence though.
