March 27, 2015
Consumers and merchants alike, within the payments arena, are entering an era full of technological reformation. From online banking, to the impending widespread replacement of traditional debit/credit cards with contactless-enabled smartphones, it seems the necessity of those plastic cards we’ve all been trained to hold so dearly is dying down. A recent innovation entering this space is the implementation of cardless ATMs. Banks outside the U.S. have already begun adopting technology, and it’s slowly but surely making its way to the U.S.
Wintrust Financial, a Chicago-based regional bank, recently implemented software that enables cardless usage in 200 ATMs in the Chicago area. The software is powered by the fintech powerhouse FIS, based in Jacksonville, Florida. The process for usage is simple: First, the specified banking app has to be downloaded by the user, after which the user simply signs in using the bank’s login. From here, whenever the user wishes to withdraw money from an enabled ATM, he simply has to select an amount within the app, tap the cardless option on the enabled ATM, scan the QR code displayed on the screen, and there you have it - the money is dispensed, without any fumbling for cards or wallets. It is also important to mention that the first steps, the queuing-up of the money before actually approaching the ATM, can be done ahead of time (i.e. while waiting in line for the ATM).
The pros of this technology far outweigh its cons, which in fact also ails its predecessors. Security wise, plastic cards are vulnerable to a multitude of breaches, including, but not limited to, card skimming and easy loss. When the transaction is being handled by the smartphone, a PIN number is still needed, and the phone never leaves the consumer’s hands, making it far less likely to be left behind or lost at the ATM. Smartphones are also, well, smart. The software powering this technology has a much greater chance for easy evolution than plastic cards do.
So if this technology is so great, why aren’t we seeing wider implementation? One reason may be that banks are currently too busy trying to keep up with other, more imminent payments innovations. With the deadline for EMV adoption coming closer, and the high consumer demand for Apple Pay support, financial institutions already have their hands full.
FIS isn’t the only company developing cardless solutions—NCR Corporation, based in Duluth, Georgia, is currently testing similar technologies. This technology has already seen widespread implementation outside the U.S. Many Australian banks, such as the Commonwealth Bank of Australia, have seen favorable acceptance of this technology. BMO Harris Bank has also begun implementation in multiple locations, such as Arizona and Chicago, while Las Vegas is getting a taste of the innovation through the efforts of City National Bank. The Bank of Montreal in Canada has also begun using cardless ATMs. This technology is bound to see a large increase in U.S. usage in the coming years.