Withdraw cash at an ATM not through your card but through your smartphone

Recently, we spoke about Diebold’s cardless ATM initiative that leverages NFC technology at ATMs to allow contactless transactions. Going a step further financial services giant FIS, announced last week 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. Let us simplify how this works?

  • 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.

A number of large banks and smaller institutions have already shown interest according to FIS.

Video here depicts the way transactions are made with a cardless ATM machine.

Doug Brown, General manager & Sr. V.P at FIS Mobile says Consumers continue to look for innovative new ways to engage with their financial institutions via mobile devices. At the same time, they demand additional security to keep their information safe. He added Information from Cardless Cash Access is maintained in the cloud, so card data cannot be accessed if the consumer's phone is lost or stolen -- making withdrawals faster, safer, more secure.'

It takes less than 9 seconds for transactions via Cardless ATM using FIS technology according to Mary Monahan, Javelin Strategy & Research. This is a stark improvement to Traditional ATM withdrawals which require at least 30 to 40 seconds. She also believes that using a phone prevents skimming, where fraudsters set up cameras on ATMs to capture your PIN and card number. The thief would require a user’s passcode, bank account information and PIN number to login even if his device was stolen.

Connectivity however could be an issue for the adoption of this technology. Without cell phone service in a certain area, the user cannot withdraw cash through his smartphone. If this happens often, users could abandon the service. FIS claims that it is working on an ‘offline mode’ that would enable withdrawals for users irrespective of the connectivity.

Other players operating in the field include Diebold, NCR and Korean based Hyosung. Competition is also faced by big banks such as JP Morgan Chase and Bank of America Corp. Diebold recently announced the introduction of a contactless card reader that enables the user interface to read smartphones with NFC and contactless media like payment cards, tags, stickers etc.

LTP View: The solution offered by FIS goes a step further in enabling both contactless and cardless transaction at ATMs. Although the cardless scheme offers greater security, connectivity issues could be a major concern for this technology. Another challenge is the low battery life of smartphones. If the phone’s battery died during, before or after a transaction, the user could face cash retrieval problems.