Blog

Cardless ATM tests underway

May 27, 2014 by Jim Ghiglieri — Senior Vice President, Corporate Communications, SHAZAM

ATM innovation is an ongoing process and, of late, we’ve seen a number of new features come about as a result of developing technologies. Two examples are video conferencing with tellers and email ATM receipts; another is contactless ATM transactions.

Powering much of the contactless innovation is near field communication, which is finding its way into the hardware of more mobile devices. When enabled with NFC, these devices can more easily ― and potentially more securely — communicate with other technology in close proximity.

By downloading a mobile wallet app from their financial institution, ATM customers with NFC devices can withdraw money with a few clicks of their smartphone. So called “cardless ATMs” allow consumers to choose the amount they want to withdraw on the app rather than typing it into an ATM keypad, arguably enhancing the security of an ATM transaction.

Diebold Federal Credit Union currently is testing a cardless ATM that relies exclusively on mobile authentication. Pre-registered customers scan a QR code at the ATM via their smartphone.

Authentication occurs as the ATM sends a one-time use password to the customer’s mobile phone. The customer then enters the passcode into the ATM via a touchscreen keyboard. Not using a card eliminates the possibility of fraudsters using a skimming device to steal sensitive card data. This process is also designed to eliminate shoulder surfing.

The Mobile Cash Access wallet app, which gives customers the option of pre-staging cash withdrawals on their phone, is also being tested. This app allows users to select which account they want to withdraw from and the amount of the withdrawal prior to heading to the ATM. The receipt is then sent through the app, rather than being printed at the ATM.

Interestingly, these cardless ATMs will still offer PIN pads and card readers, keeping them accessible to a larger segment of consumers.

Cardless ATMs are just the latest in a long list of innovations that allow FIs to meet the needs of their changing customers. As these needs continue to evolve and become increasingly tech-related, community banks and credit unions will want to stretch their product development plans to align appropriately.