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Contactless at the ATM: The need for standards and interoperability
August 8, 2013 by David Tente — Executive Director, USA, ATM Industry Association
"What about mobile and contactless at the ATM?" It doesn't take long before most conversations about the future of the ATM channel generate this question.
Mobile and contactless just seem like they should fit together perfectly with consumer demand for an increasingly convenient and technologically advanced experience at one of our favorite self-service touch points.
And yet, deployment of these form factors at ATMs remains sluggish, to say the least. The harsh reality may be that without open standards for implementation and vastly improved interoperability, neither will catch on any time soon.
The roots of NFC technology go back to the 1980s, but the first NFC cards weren't issued until about 2005, followed in 2006 by the first NFC capable mobile phone. Despite much enthusiasm and many optimistic predictions about the acceptance of contactless, only a handful of ATM operators globally have deployed the technology.
And generally speaking, that functionality is then only available to customers of the deploying financial institution. In regions where the issuer, the acquirer, and the operator are usually the same entity, interoperability may be less of an issue. But in the U.S., and increasingly in other regions as well, interoperability becomes a huge issue.
In the contact card world (both mag stripe and EMV), consumers have high expectations that any branded card will work at almost all ATMs.
Until consumers are confident that they can have the same expectations for mobile and contactless ATM transactions, demand for that option is not going to materialize. And that applies equally to all variations of contactless — cards, mobile, EMV, and even QR codes.
To date, the only thing that all contactless ATM implementations have in common is that they are all different.
The underlying technologies are the same and subject to a specific ISO/IEC standard. But there are no standards for implementations. As a result, the "standard" spec is implemented differently from operator to operator, closing the door on interoperability.
Another issue that works to deflate interest in NFC at the ATM is the requirement for use of a PIN. Low value retail transactions can be quick and easy with NFC, because no PIN or signature is required.
Typically, any cash withdrawal at an ATM will necessitate the use of a PIN — whether it be the customer's assigned PIN or the one-time variety. In either case, the convenience gap between NFC and other contactless and contact transactions is reduced.
The salient point in all this is that open, non-proprietary implementation standards and assurances of interoperability are necessary before real growth in contactless deployment and consumer acceptance can be achieved.
There are a number ways in which this can happen. A single large operator can implement a forward-thinking solution that becomes a de-facto standard.
A group of operators can collaborate to create a solution that provides users with interoperability throughout a defined region; which then grows organically, as well as externally.
Or an industry open standards group such as ANSI X9 takes on the challenge. It matters less how this happens, than that it does happen.
Meanwhile, both card issuers and ATM operators will face somewhat of a dilemma. A recent Gartner study forecast that only 2 percent of global payments in 2013 will be contactless.
So, do banks begin issuing contactless cards without the hardware to support them? Do ATM operators upgrade their card readers to support contactless? Both are costly propositions and, today, at least a little bit risky.
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About David Tente
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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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