Two fairly large banks, Wintrust Financial and BMO Harris Bank, recently made headlines by deploying cardless technology across their ATM fleets. Wintrust deployed the technology in 190 ATMs, while BMO Harris launched the technology in 750 machines, with plans to add another 150 by June.
Is this a sign that other financial institutions should start budgeting for cardless ATMs? Probably not.
How It Works
Cardless ATM technology, at least as deployed by these two banks, is fairly straightforward. Within the bank's mobile app, the consumers "stages" a cash withdrawal – that is, sets up the transaction, including the amount – prior to arriving at the ATM. Upon arrival at the ATM, the consumer presses a "mobile cash" button on the machine. This causes the ATM screen to display a QR code. The consumer then scans that QR code using a scanner that's built into the bank's mobile app—and out pops the cash. A transaction receipt is delivered electronically.
Benefits of Cardless ATMs
Proponents of this new technology point to two primary benefits.
For one, cardless ATM transactions are much faster, reportedly taking anywhere from eight to 15 seconds. This contrasts with an estimated 45 seconds for even the most skillful ATM fingers. However, the biggest draw for this technology is the security aspect.
Card skimming has become a billion-dollar business in the United States. Using a variety of nefarious means, fraudsters capture the magstripe information from the back of a traditional ATM or debit card, acquire the consumer's PIN credentials, and they're off to the races.
On the other hand, with no physical cards in play, there can be no card skimming. Even if a thief were to steal a consumer's smartphone, he would need both the phone's PIN and the consumer's mobile banking credentials in order to perpetrate any kind of ATM-related fraud. Cardless proponents also point out that a consumer will notice a missing smartphone much more quickly than they'll notice a missing ATM card.
So Why Not?
Remember that 15-second ATM transaction? That only accounts for time at the actual machine—not the time spent staging the transaction. It remains to be seen whether consumers will embrace the idea of turning an ATM transaction into a two-step process. And when you add those two steps together, a cardless ATM transaction likely takes longer than a traditional withdrawal.
Also, while cardless ATMs can reduce card-skimming fraud, isn't EMV supposed to do that, too? And isn't EMV being mandated by Visa and MasterCard for deployment later this year? That would appear to make EMV the must-have technology, at least in the short term, thereby relegating cardless ATMs to the nice-to-have category for the foreseeable future.
Finally, BMO (Bank of Montreal) decided to pilot cardless ATMs in the US because of this country's unusually high reliance on cash compared to other nations. This too is likely to change over time as various mobile payment technologies take hold. For most financial institutions, the smart budget dollars probably aren't being put toward cardless ATMs.
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