NEW YORK (MainStreet) — Wave your phone in front of the right ATM and - abracadabra - it will spit out cash in the amount you requested. No plastic card required. That sounds futuristic, but it is happening now for customers of Chicago-based regional bank Wintrust Financial where some 200 ATMs will be modified to handless, cardless cash transactions.
Wintrust had been in tests of cardless ATM withdrawals since mid 2013, but it decided to pull the trigger and make the service available broadly.
It may be first, but it won’t long be alone. The vendor - fintech powerhouse FIS out of Jacksonville, Fla. - said it has “a dozen more banks in the rollout queue,” according to senior vice president Doug Brown.
Already, a number of banks in Australia have embraced cardless ATM cash. It is coming to America and, very probably, it will start winning wide notice before the year is out.
Questions: Do you want it? Do you need it? Does it work?
As for the last, it definitely works. FIS has run many pilots on the technology. So has its competitor, big ATM maker NCR in Duluth, Ga. For its part, NCR has also run a number of pilots, and “it works,” said Robert Johnston, an NCR marketing director. NCR has announced no sales of the technology.
The way the FIS technology works is straightforward. Inside his mobile banking apps, the consumer “queues up” - that is, stages - the transaction he wants. That’s basically a matter of picking an amount. Then he goes to an ATM - it has to be one that is cardless ready, and very few are - and taps the screen. The ATM displays a QR code and the consumer scans the QR code inside the mobile banking app. The money then spits out.
Sounds clunky? Actually it is the opposite. According to FIS’s Brown, a cardless withdrawal will take around eight seconds. A traditional withdrawal takes maybe six times longer, according to FIS’s count. Admittedly, that is still under a minute, but when you are standing in sub-freezing rain in a Chicago winter, those extra seconds are painful.
The next logical question is about the security of cardless withdrawal and the answer - at least from the advocates - is that it is more secure than traditional plastic card withdrawals. In a white paper, Javelin Strategy + Research analyst Mary Monahan recapped the cardless advantages. Cards, she said, are susceptible to “skimming” - plastic readers attached to ATMs capture the data on the magnetic stripe so the card can be copied. Additionally, she said, consumers are a lot more likely to quickly detect a lost or stolen phone than a lost or stolen ATM card. What’s more, she noted, staging the ATM withdrawal requires inputting a PIN, which is much the same security afforded with plastic.
A last security point. Cards are dumb plastic. Even the so-called EMV, aka chip and PIN, cards that are about to rain into our mailboxes as issuers race to comply with an October 2015 deadline set by Mastercard and Visa (non-compliers face a so-called liability shift where they will eat fraud related losses) are still loads dumber than a smartphone.
So cardless ATM withdrawals have security, smarts and speed on their side. Why aren’t they at every bank? Analyst Bob Meara at consulting firm Celent said he does not see cardless ATM transactions at the top of the to-do lists at many banks this year. They just have more pressing issues, such as that EMV deadline and also scrambling to deal with Apple Pay and other mobile payment offerings.
Gil Mermelstein, a banking expert with consulting firm West Monroe Partners, said he personally likes the cardless ATM cash idea - but he also said “it won’t take off short-term -- maybe in five to ten years.”
Many analysts are adamant that cardless ATM withdrawals are definitely going to happen because they are a natural evolution of our relationship with our phones. Now that Apple Pay - and to a lesser extent Google Wallet, Square, and PayPal - have let us see that smartphones and money go together, the idea of using a phone, instead of old-fashioned plastic, to withdraw cash from an ATM seems an inevitability. It just is not likely to happen at a bank near you anytime soon.
If you want it, you need to go to it and, right now, that means accessing one of the cardless Wintrust ATMs around Chicago.
—Written by Robert McGarvey for MainStreet