Payments

White Label champion Paydiant obtains Patent for ATM Transactions, via Smartphones

How many of us have forgotten to pick up the card from the ATM slot after transaction? How many of us have forgotten to carry the card itself when cash was most needed? Ok, lets cut the chase, we all know the above issues. We also know what happens when your card gets sucked in the ATM machine, or the machine freezes and gives us a hard time retrieving the card. Paydiant, announced the grant of a new patent from the U.S Patent and Trademark Office (USPTO) on 21st January, 2014 that enables users with a smartphone to conduct transactions seamlessly at ATMs.

Paydiant was founded in 2010 by 3 entrepreneurs –  Kevin Laracey (Ex Venture partner at Sigma Partners, also cofounder and CEO eDocs), Joe Paratore (Ex VP of engineering and technical services, eDocs,  joined m-Qube and later Verisign after its acquisition) and Chris Gardner (was CMO atExtendMedia and later joined m-Qube and Verisign).

In February 2011, Northbridge Venture Partners and General Catalyst Partners invested a total of $7.6 million in the company. In addition to the first two, Stage 1 Ventures and Sands Capital Ventures also invested in Paydiant in 2012. On 9th September 2013 they received their 3rd round of funding at $15 million to take their total to 34.6 million.

This video gives you an overview of Paydiant’s Cardless Cash access:

About Paydiant’s solution:

  • Paydiant’s solution allows users to get cash by just scanning a QR code displayed on the ATM with their mobile. 
  • The company says that their solution also increases security by eliminating the risks associated with card skimming and PIN theft at the ATM. 
  • An ATM code or token is obtained by a mobile device and used to associate an end user and their payment accounts to a transaction at an ATM. 
  • Users can stage cash withdrawals earlier on via mobile, and then identify themselves at the ATM later. 
  • This is done by scanning the QR code (specific to the transaction) which signals the ATM to dole out cash through an encrypted link to the cloud. 
  • Paydiant’s technology also works with a number of payment enabling technologies, including QR codes and Bluetooth Low Energy (BLE). 

“The process is also faster than accessing an ATM via debit or credit card — about 9 seconds compared to 20 seconds on average,” said Paydiant Co-Founder, Chris Gardner.  "For consumers, it adds convenience and security, and it's a huge win for banks. It's yet another sticky feature in their mobile banking app," along with features such as remote check deposit and peer-to-peer payments,” he added.

"As mobile technology proliferates, banks are looking for new ways to leverage that touchpoint with their customers -- and it goes way beyond making payments," said Kevin Laracey, Co-Founder of Paydiant. "This patent describes a more convenient and secure way for consumers to conduct a very common interaction with their banks. It adds value for the consumer, extends the bank's relationship with their customers and encourages customer loyalty. That's the real opportunity in mobile,” he added.

Paydiant is not the first to venture into this space. So who are the other players?

Diebold Inc.

In October 2013, Diebold Inc., announced that it is making a contactless card reader available at all financial institutions globally. The solution claims to leverage NFC technology at the ATM, enabling the user interface to read smartphones with NFC and contactless media such as payment cards, tags, stickers etc.

Existing Opteva ATMs can be upgraded with the Diebold contactless card reader. It works with both dip and motorized magnetic stripe card readers to enable an alternate method for transactions. The contactless card contains a chip or processor which can communicate and exchange information with a reader. When the card is placed next to the contactless reader, it is detected through NFC technology.

FIS

FIS, announced in October 2013, that users will be able to withdraw money from an ATM through a mobile app. The banks who have anchored this service are – BMO Harris, (Chicago), City National (Los Angeles) and Wintrust (Illinois). They plan to roll this service at most of the ATMs by end of 2014.

This solution enables users to transact through their smartphones before heading to an ATM and later obtain an eReceipt on their devices for the transaction. The app needs to be open on the user’s smartphone when he arrives at the ATM to withdraw cash. The user then scans a QR code on the ATM screen. This proves that the user is physically present at the ATM and the machine dispenses cash.

Chiraag Patel

Chiraag Patel is a Senior Reporting Analyst and the Editor of Bitcoin and Virtual Currency channels at Lets Talk Payments. He is an engineer with deep interest in MMORPG, Virtual Banking, Game Currency and Virtual Cash. Chiraag enjoys Reading& Blogging with focus on New Innovation, Technology & Startups in the Payments Space.

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