The article by J.-L. Dorier in On the Teaching of Linear Algebra suggests the answer to your question will be different for the UK and for continental Europe:
In an attempt to answer your question more directly, I have searched for early University text books that introduce matrix multiplication. It was introduced in the context of the theory of determinants, to write the product of two determinants as a single determinant, in the text Corso di Analisi Algebrica from 1886. This is part 1 of the course, called "Introductory theories", so it may well have been intended for undergraduates.
