Author(s): Raghu Gopal
The classic ATM card is now becoming part of the digital wallet.
A growing number of banks have been supporting the use of smartphones to withdraw cash from an ATM, thanks to the inclusion of near field communication (NFC) technology in handsets. Coupled with biometrics, there's more than a level of convenience here: there's a new level of security.
Although mobile payment services such as Apple Pay were expected to grab share of credit and debit card transactions made at the point of sale, uptake has been positive but limited. For many consumers, mobile payment is a big solution to a small problem. But the more the functionality gets embedded into mobile wallets, the greater the likelihood that it will succeed. Now the combination of ATM cards and smartphones is providing consumers with another reason to migrate to the mobile payment world. It's a slow shift, but one that's reaching critical mass as the capable devices become common and consumers become tech savvy.
While in some countries such as Spain banks have been eager to introduce NFC-based banking services to customers, in the US they have been slow to adopt it. But this is changing. Perhaps for fear of losing out, US banks are now very publicly touting trials and full-out implementations.
While the infrastructure is still being built out and the number of ATMs supporting cardless transactions remains small, things are off to an encouraging start. Three major US banks, Bank of America, Chase and Wells Fargo, have been working on rolling out support of phone-based ATM transactions among other mobile banking services. These banks have initiated a process to support NFC cardless transactions by the end of 2017.
Banks' entry into cardless ATMs comes as a small but growing number of Americans use their smartphones to send money to one another and to make purchases using mobile wallet apps such as Apple Pay, Android Pay and Samsung Pay. There's certainly some irony in the fact that mobile wallets, which are intended to replace cash transactions, are now also being used to enable them. Cash is far from dead, meaning that there's a chance to stuff more functions into smartphones.
Banks have been encouraging customers to be more digital for the simple fact that digital transactions are less expensive. With the three major banks in the US rolling out smartphone-based ATM transactions, more features will be built into the ATM infrastructure. Smartphones are becoming cash cards — an encouraging development for mobile payments.