Author(s): Raghu Gopal
Last week, Chase, one of the largest banks in the US, announced that its customers no longer need a physical debit card as the financial giant has rolled out near-field communications (NFC) to most of its 16,000 automated teller machines in its US network.
To use the cardless ATM service, customers need to link their Chase accounts with one of several popular mobile wallet services, namely Apple Pay, Google Pay or Samsung Pay. After this step, customers only need to start the wallet app, wave it in front of the machine and enter their PIN.
According to its annual report, JPMorgan Chase offers at least one type of service to 61 million households, so it already has some sort of connection to half of the US. With its NFC-enabled ATMs, Chase is bringing a huge level of exposure to the top mobile payment services.
Chase will keenly promote its cardless service, pushing more people to sign up for one of the three major mobile wallet services. Other major banks in the US, like Bank of America and Wells Fargo, have also debuted similar mobile-connected capabilities.
ATMs started being introduced in many markets about 50 years ago and are considered a major innovation in the consumer banking sector, offering customers near-instant access to their money without the need for direct interaction with bank employees. But physical cards have several flaws, as they can easily be lost or compromised, and the cost of replacement can be a significant burden for banks.
Still, going cardless doesn't necessarily spell a cashless society, at least not in the near term. In the UK, banks have been investing to introduce innovative features to their ATMs, in an effort to keep up with people's dependency on smartphones, and to bring more of their banking services online.
Barclays, for example, has equipped its machines with contactless technology, allowing customers to take out cash using its mobile app for Android smartphones. The company is also experimenting with another hot topic in tech: biometrics (see, for example, Biometrics Are in the Cards). It's betting on machines that scan a user's unique finger-vein pattern to identify them and grant access to their account without having to enter a card or PIN.
As traditional banks continue to harness the latest technologies to help fuel innovation, we expect the trend of phone-based withdrawals to be a windfall for Apple, Google and Samsung, giving consumers another reason to begin using their mobile wallet services.