How contactless ATMs are helping banking customers feel safer at the branch

Published October 12, 2020

 

A lot has changed since John Sheppard-Barron, the man credited for inventing the modern ATM machine in 1967, saw a chocolate bar dispenser and decided people should be able to get money that way, too. With the rise of debit cards and electronic banking the demand for cash has diminished, but ATMs are evolving to do much more.

Flash forward 53 years to 2020 with the world experiencing a pandemic; the technology that enabled the use of ATMs—entering a pin number—is more rapidly being replaced by contactless transactions. Already heading in that direction, finding new ways to minimize contact during everyday transactions is increasingly important to consumers during the pandemic for hygiene factors.

While contactless adoption and use in stores and restaurants is more obvious, it’s actually not a new concept in banking. In fact, contactless at the ATM was first introduced by ANZ with NCR back in 2014; and today there are around 1.3 million contactless-enabled ATMs in the world.

And it’s on the increase. According to RBR’s Global ATM Market and Forecasts to 2025 study, the number of ATMs offering cardless cash withdrawals has increased 26 percent in 2019 – 16 percent in the U.S. alone. And the number of ATMs offering Near Field Card (NFC) readers rose by 86 percent globally.

Many large banks are now onboard with contactless transactions at the ATM with their own different approaches. Bank of America  has contactless readers that enable their customers to use mobile payments like Apple Pay at their ATMs for safety and to reduce card-skimming fraud (the US wrestles with one of the highest levels of card skimming in the world). And recently CaixaBank in Spain unveiled new ATMs with facial recognition technology and the only time their customers have to physically touch their ATM is when they need to select the amount of money they want to withdraw. 

 

How do contactless ATMs work?

New technologies are eliminating the need for consumers to put their physical card into the ATM card reader. Instead, they can rely on account verification via text message or by using a banking app or other mobile payment app on their mobile device.

While there are a few other ways cardless ATMs function—such as using cardless readers—the two main technologies that enable it are quick response (QR) codes and near-field communication (NFC). 

 

QR Codes

These matrix bar codes that were first invented in 1994 are proving to be a big deal enabling many mobile payments around the world. Now banks can use them to allow contactless transactions at their ATMs. Banking customers can open their banking app, choose “QR cash withdrawal,” enter the amount they want to take out, scan the QR code on the ATM screen and enter their PIN number to receive their cash.

 

Near-field communication (NFC)

Since it was first introduced in 2011, near-field communication’s seemingly simple way of allowing two devices to communicate with each other has been a financial game changer. One of the ways mobile payments have been made possible, NFC is also enabling ATMs to go contactless. Banking customers can choose from multiple mobile payment apps, whether it’s their bank’s app or another type like Apple Pay with their linked bank account, to get their cash. Using their mobile device, they simply tap their phone near a designated reader to receive it.

 

Benefits of contactless ATMs for consumers

1. Contactless enhances customer convenience. Customer convenience, use of smart devices and preferences for contactless in other industries and environments mean consumers expect a similar experience at the ATM. For banking customers, the convenience of having access to their cash if they’ve forgotten, lost or had their debit card stolen is huge. They are also able to send cash to other people and even get paid in cash from their clients (particularly freelancers in the a growing “gig economy”).

2. Faster transactions. Contactless transactions are approximately 25 percent faster than traditional withdrawals. And, as reported by Forbes, that can take the time they spend at the ATM from an average of 40 seconds down to 10 to 15, meeting an increasing demand for fast, easy transactions.

3. Greater security. Card-skimming, a type of credit and debit card fraud that’s been on the rise, is greatly reduced when customers don’t have to insert their card into the ATM. Also, by not having to enter their PIN number in the ATM PIN theft through “shoulder surfing” is also reduced. That’s a big savings for the financial industry considering that, by 2027, global losses from credit card fraud are predicted to reach $40 billion.

4. Access to all your accounts. Even if they have accounts at multiple banks, cardless ATMs gives consumers the ability to access all of their accounts without needing to carry all of their separate cards.  That also helps consumers save money by reducing ATM fees when they can choose an account with an in-network ATM nearby.

 

Benefits of contactless ATMs for FIs

1. Enhancing the mobile channel. As if consumers needed more reason to use their mobile banking apps and digital wallets, getting cash without using a card and in a contactless way certainly gives them more incentive. And when they have more choices in their banking experience customer loyalty grows.

2. Increased number of transactions. Of the financial institutions that have implemented cardless ATMs, it’s been reported that ATM transactions have increased by 10 to 20 percent.

3. Reduced fraud. Banks also benefit from a cardless way their customers interact at their ATMs. Card skimming and “shoulder surfing” are greatly reduced, putting a large dent into billions of annual global losses.

With mobile pay options and digital wallets playing an increasing role in how people use the ATM to access their cash, contactless ATMs can provide the digital, connected experience consumers are looking for, which helps improve customer satisfaction and loyalty. And it goes a long way toward positioning your brand as the modern financial institution who understands today’s consumers—and can deliver what they want. Most importantly, banks can provide their customers with the safety they need now and well into the future.

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