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ATMs, mobile and Bitcoin converged

Where are we going with the convergence of virtual currency, ATMs and mobile payments? A session at this year's ATM & Mobile Innovation Summit considered the question.

September 24, 2014 by Suzanne Cluckey — Owner, Suzanne Cluckey Communications

In the time since last year's ATM & Mobile Innovation Summit, the financial services world has welcomed (perhaps "acknowledged the inevitability of" is more apt) a new convergence — that of ATMs, mobile payments and virtual currencies, namely Bitcoin.

In the span of 12 months, Bitcoin ATMs, terminals that dispense cryptocurrency to a smartphone-based virtual wallet, have gone live in countries on every inhabited continent.

Currently such machines number in the low hundreds, but as businesses (most recently PayPal) warm up to the potential of Bitcoin transactions, and manufacturers ramp up their production of Bitcoin ATMs, the number of installations will certainly grow.

So. Where are we going with the convergence of virtual currency, ATMs and mobile payments? The opening session of this year's summit took its title from this question and brought together four executives to address it.

Moderating the panel discussion was Marisa Mann, director of client delivery at Solstice Mobile, a mobile-first digital product development firm.

Panelists included:

Bryan Krohn, CFO at BitPay, the leading payment processor for accepting Bitcoin payments;
George Peabody, senior director at Glenbrook, a payments industry strategy consulting and research firm; and
Simon Gentry, a director at the London-based PR firm MWW and an advisor to the ATM Industry Association and NCR on regulatory issues in Europe and the U.K.

MM: What are the opportunities with Bitcoin?

BK: For the first time in history we have a borderless payment system, (a) money system that doesn't have an intermediary — it has no counter-party risk. When you take out the intermediary, you're essentially making the consumer their own bank and business opportunities in that alone are great.

We're already seeing it in peer-to-peer companies Airbnb,Uber, and Fresh Link. They're changing the way consumers are buying goods and services. ... Bitcoin does have its risks, but I think all of those risks can be overcome.

MM: What are the regulators really worried about with Bitcoin?

SG: I think basically and fundamentally, the regulators are worried about the risk to the public of losing their money. At this point I think they feel that the issue is still not resolved. ...

I'm kind of interested, however, in the kind of challenge effect that it has on some of the incumbents — the U.S. dollar, the currency in Europe ... In one sense these are being challenged. And so you have a competition issue emerging at the same time and that's a particularly interesting point, how it feeds into the regulatory environment.

MM: How does this ecosystem work and will it play out in some markets more than others?

GP: We're fortunate in the U.S. regulators are taking a fairly light-handed approach as long as you comply with the existing regulation, you can go ahead and be in this business. ...

We believe that Bitcoin has the largest potential in "Mutt-and-Jeff" payments — [i.e.,] little and big. Little is in the domain of micropayments, because they just don't work using the card rails. ... At the other end is B2B supply chain payments ... you could move large amounts of value within the space of 15 minutes and know it's going to get there.

MM: What is the ATMIA thinking around Bitcoin ATMs?

SG: Potentially it has an interesting upside for ATM operators ... the ATM is a place — one of the junction points — where people can actually turn their Bitcoin into physical currency if that's what they want to do.

... We see around the world the amount of cash in even sophisticated economies. In the U.K., I think we had a 1.3 percent increase in cash use. That's phenomenal when you consider how many various forms and shapes of digital payment tools have been unleashed by the banking industry over the last few years, and yet people love cash.

So what we find is that Bitcoin might easily sit alongside other services which ATMs are able to offer and, indeed, that provides a certain degree of reassurance — to regulators, to politicians, to the public — that there's a kind of "real" side to it.

MM: George, you've used a Bitcoin ATM — what is the user experience like?

GP: It's very easy to use — and, by the way, they charged me about 5 percent of the transaction. In terms of programming and the capabilities, this is not rocket science. It's really straightforward.

And I do know that a lot of regulators would love the use case where you go to the ATM, identify yourself with your EMV card, enter your PIN, and then if you want to buy some Bitcoin at the ATM, all you have to do is display a QR code.

MM: Let's turn now to talk about security and how we can feel more confident as consumers in the security of Bitcoin ...

BK: I would submit that [Internet security] has probably been the single most limiting factor to adoption of Bitcoin, is just security — fearing that if Bitcoin is in my wallet, it's going to be hacked and I'm not going to take that risk. Using a password is no longer appropriate ... I think that crypto-identification is where you really need to go.

MM: Where do you see Bitcoin one to three years from now?

BK: I think in the next year or so you're going to see companies like Amazon and PayPal also getting comfortable with Bitcoin. I think you're going to see Bitcoin become more accessible to the general public through tools like getting some of your net pay in Bitcoin from your payroll provider. ...

And then five years down the road, I think you're going to see smart contracts, the real utility of the protocol being used. Because it's more then a money system, it's more of a payments system.

photo courtesy grannie's kitchen | flickr

About Suzanne Cluckey

Suzanne’s editorial career has spanned three decades and encompassed all B2B and B2C communications formats. Her award-winning work has appeared in trade and consumer media in the United States and internationally.

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ATM Industry Association (ATMIA)

The ATM Industry Association, founded in 1997, is a global non-profit trade association with over 10,500 members in 65 countries. The membership base covers the full range of this worldwide industry comprising over 2.2 million installed ATMs.

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