August 8, 2013
The latest trend in the mobile wallet solution is the introduction of Mobile Cash Access (MCA) solution. MCA provides a payment platform for ATM users to withdraw cash through their smartphones, instead of their credit or debit cards. MCA is a latest initiative in the mobile wallet space formed through the partnership of Diebold (DBD) and mobile wallet provider Paydiant.
MCA solution claims to tackle mobile wallet adoption obstacles by countering concerns such as security and hardware needs. MCA doesn’t need any special hardware to be installed and as the solutions is completely cardless, the threat of card skimming at ATM terminals is completely eliminated. Wintrust Financial Corporation is piloting this solution in partnership with FIS (FIS), Paydiant and Diebold.
The cardless MCA solution operates on a cooperative interaction model between a user and the ATM. A user pre-stages cash withdrawals on his/her smartphone device and walks into an ATM. At the ATM, the user authenticates himself by scanning a unique QR code that signals the ATM to dispense cash via an encrypted connection to the cloud.
The Chief Innovation Officer Frank Natoli stated 'As mobile technology proliferates, financial institutions are looking to Diebold for advice on what mobile wallets mean for their businesses. Diebold brings a longstanding security philosophy and its own digital expertise to the partnership with Paydiant to offer banks and credit unions the technology consumers are looking for - a bridge from digital currency to physical cash. A bank-branded mobile wallet enables our clients to serve their consumers directly, as opposed to allowing third-party brands to capture the mobile share of a consumer's wallet.'
Natoli also stated 'Mobile wallets, like plastic credit cards 50 years ago, will become an everyday functionality for consumers. Diebold's partnership with Paydiant is a step toward creating a mobile wallet ecosystem that offers convenience and security to consumers directly from their financial institutions.'
LTP View: It will be interesting to note the acceptance and usage of the MCA solution. Though the solution offers cardless transactions, the problem remains with the acceptance by the users and the financial institutions. The users may experience large scale problems during the authentication of the QR code at the ATM kiosk due to malfunctioning or the downtime of the host server. The users may also face situations where they are left cashless if the smartphone is inaccessible due to battery related issues or phone theft. To adopt this technology, financial institutions may have to replace the existing ATM machines in most of their kiosk leading to increase in switching costs. Considering the current economy which is still on a recovery path, the question that the financial institutions’ need to ask themselves is if they’re even in a position to make such a switch and bear the upfront costs. If the answer is yes, introduction of MCA would see a rise in revenue of ATM kiosk manufacturers.
In terms of applications MCA can be not only be used at ATM’s for cash withdrawal purposes but also at retail establishments for everyday purchases.