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Posted October 29, 2015

cardless

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Financial institutions are rolling out their cardless ATM solutions as a new way to connect customers with their cash. It’s convenient, easy, and secure—just the type of banking experience today’s consumers have come to expect.

A mobile cash transaction works like this: a bank customer initiates a cash withdrawal through their mobile banking app by selecting the bank account and entering a dollar amount in the app’s mobile cash feature. When they arrive at an enabled ATM, they open the mobile cash feature in their app and scan a QR code at the ATM screen reader. Their cash is dispensed, and they’re on their way.

Mobile Cash in Context

Ernst & Young’s 2014 Global Consumer Banking Survey examines the challenges and opportunities faced by financial service providers as technological innovations in the industry shake up the status quo. Customer demands—especially mobile customers’—are driving change, steering organizations to provide what the survey reveals are the top features people are looking for in their day-to-day banking: easy access to branches and ATMs, excellent online banking features, ease of conducting frequent banking transactions, and quick handling of requests.

It’s no surprise that financial services companies are riding the mobile integration trend that’s taking almost every industry by storm. People are using smartphones to manage their finances—and if their primary financial services providers can’t deliver the goods, it’s easy for them to move along. Even still, when it comes to mobile banking features, traditional banks scored lowest when compared with newer marketplace entrants. Mobile telephone services, technology companies such as Google or PayPal, and new banks with cutting-edge technology are offering different capabilities, and fueling what’s becoming their competitive advantage.

The Mobile Cash Difference

What is it that makes contactless, cardless, mobile cash services beyond mobile banking and to the next level? What’s making it a service that helps both consumers and financial institutions alike? Two things: Speed and security.

A Faster Transaction—Without a physical bank card, customers don’t need to provide verification by entering a pin into the ATM keypad. They set up the transaction on their phone, scan their device at ATM, collect their cash, and go. According to BMO Harris, the mobile cash transaction takes 15 seconds versus 45 seconds for a debit-card withdrawal.

Higher Security, Reduced Fraud—According to the May 19, 2015 Wall Street Journal article, Theft of Debit-Card Data From ATMs Soars, FICO data reveals debit-card compromises at ATMs located on bank property jumped 174% from January 1 to April 9, compared with the same period last year, while successful attacks at nonbank machines soared by 317%. The contactless transaction itself is said to be more secure. In addition to the smart phone’s password or digital fingerprint authentication,

  • Banking information is sent to the machine through a secure, encrypted connection
  • Transaction details aren’t stored on the device after cash is dispensed
  • Fraudsters are unable to steal card information without a physical magnetic strip to “skim”
  • The bank can remotely delete their app from a customer’s device if it’s lost or stolen

Banking services have been evolving to keep pace with consumer preferences. While some people still use walk-up or drive-through teller services, many have switched to using self-service ATMs and web portals to manage their banking. Mobile banking has just recently been gaining ground, and now, people can try mobile-initiated, contactless transacting. We will continue following this and all related trends, and look forward to sharing new insights as the marketplace responds to this latest-and-greatest mobile banking innovation.

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Corporate Payments Insights