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ATMIA: ATM essential; ATM card optional

Maybe it's not the demise of cash we should be talking about, but rather of plastic.

March 1, 2012 by Suzanne Cluckey — Owner, Suzanne Cluckey Communications

Jason Kuhn, director of ATM product development for Payment Alliance International, kicked off his ATMIA conference workshop, Long Live the ATM: With or Without Traditional Plastic, with a personal anecdote:

When he was a kid, he said, his parents had played in a country music band. They had cut only one album, which Kuhn had kept one copy of for years. After a long distance move, he decided it would be wise to have the album framed for safekeeping and display. As he rolled the vinyl disk out of its sleeve, it occurred to him that his daughter probably had never seen an LP, so he called her into the room to see the record. "She took a look at the disk and said "Oh my gosh, that's huge! How many gigs does it hold?"

Kuhn went on to say that some in the ATM industry were concerned that within a few more generations, cash would be as rare as 33-1/3 record albums. "Everybody's asking, if we've got all these new ways of payment, what's going to happen to the ATM?" Kuhn said. His answer to that question: nothing … and all sorts of things.

ATMs would continue to dispense cash for the foreseeable future but would be adding an increasing array of additional services, Kuhn said, many of which would assimilate advancing mobile technology with increasingly sophisticated ATM designs, perhaps someday eliminating the need for plastic cards entirely. His presentation gave a fly-by view of three emerging mobile/ATM opportunities:

On-target marketing — this approach draws upon the phone's SMS capabilities to open up consumer targeting opportunities to merchants. A user-friendly back-end software program allows participating merchants to develop and launch their own targeted campaigns that offer ATM users special deals, rewards and loyalty sign-ups right at the terminal. Up to seven merchants can buy display space on an ATM screen that comes up while the customer waits for a transaction to process. Participating merchants can offer incentives ranging from c-store deals to amusement park discounts to instant loyalty rewards sign-up (rewarded with an instant coupon) for the popular coffee shop around the corner from the ATM.

QR codes — these could provide time-saving convenience to a customer who needs cash in a hurry … or one who simply wants the extra peace of mind that comes with enhanced card and PIN privacy. From any location that provides wireless mobile access, the bank customer can prestage an ATM cash transaction using a mobile app downloaded from the bank. The customer simply logs into this app, selects "mobile withdrawal" from the menu and designates a withdrawal amount.

The user drives to the closest and most convenient ATM, pulls into the drive-through and selects "mobile withdrawal" from the ATM touchscreen. Up pops a screen displaying that machine's unique QR code, photographs with the smartphone. The ATM uses the smartphone credentials, to confirm the user's identity, the system begins a lightning speed matchup that pairs the prestaged transaction with the pending transaction stored in the cloud. Within a few seconds, the match is confirmed and approved and the cash is dispensed to the customer. As with on-target marketing the program is implemented through a back-end software add-on, which is compatible with any machine that uses Windows CE. The program also requires a monitor with a high enough resolution to provide a crisp QR image.

Tokenization was the final mobile+ATM opportunity Kuhn introduced to the audience. This service starts with secure enrollment via mobile or Internet. Once the ATM has this identifying data, the user can send highly secure encrypted directions for the machine to perform certain money-moving operations. For example, Kuhn said, "say my teenaged son is at the mall with friends and they decide to see a movie, but my son doesn't have enough money. He calls home and asks me to bring him ticket money." Without tokenization, Kuhn said, the answer would be, "That's too bad because I'm watching the football game and I am not getting up to bring you money."

But with tokenization Kuhn said that — without getting up from his chair — he could swipe his debit card on computer peripheral card reader, then from the computer screen select the dollar amount he wants to send to his son. This would generate a single-use, disposable account number and PIN that Kuhn could forward to his son. Then at the mall ATM, Kuhn's son could enter the account number and PIN, wait a few seconds for verification, get the cash — "I designated an amount and he can't take out any more than that," Kuhn said — and head off to the movies. Nobody's afternoon plans get kiboshed.

In addition to teenaged boys, tokenization could be a huge benefit to online providers of financial services, Kuhn said. "Tokenization now allows online payday lenders to compete with brick-and-mortar establishments by enabling real-time loan disbursements," he said.

Wrapping up his presentation, Kuhn told conference-goers that payment methods might have changed over the past few decades as consumers' preference shifted from "paper" to plastic, but cash remained a vital payment option for U.S. consumers. And as long as this was the case ATMs would remain a vital means for obtaining cash. "If a cashless society is in our future," he said, "It's a long way off yet."

For more on this topic, visit our mobile banking research center.

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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