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Your smartphone will start replacing your debit card at ATMs this year
The steady takeover by contactless payment services like Android Pay and Apple Pay scored a major victory today, with several major U.S. banks confirming they will be introducing contactless ATMs in 2016. These kinds of contactless ATMs have been around for a while – Spain has had them since 2011 and Australia introduced the first EMV chip ATM a year ago – but these will be the first in the U.S. market.
According to TechCrunch and Wired, Bank of America, Chase and Wells Fargo have all committed to employing NFC-equipped ATMs this year. Bank of America will have the new ATMS out in late February “at select ATMs in Silicon Valley, San Francisco, Charlotte, New York and Boston, followed by a broader roll out to customers mid-year”. Wells Fargo and Chase will follow suit later in the year.
The good news for those that aren’t exactly pumped for Android Pay ATMs is that the new cash points will still fully support traditional card-based transactions, although the banks are pretty clear about why that process should be phased out sooner rather than later.
“A couple of years before launch, we started to see a need to solve authentication at the ATM. ATM card technology is 35 years old. It hasn’t evolved much. It’s at risk for fraud,” said BMO exec Doug Peacock. Canada introduced contactless ATMs last year, although the system required generating a unique QR code on your phone to be scanned at the ATM – not exactly “tap and cash”. The main hurdle for fully contactless systems is the need to replace costly ATM hardware.
In the U.S., Chase will be rolling the new cardless service out in two phases, the first of which will employ a similarly clunky solution to BMO. Chase customers will be asked to authenticate on their device through Chase’s mobile banking app to generate a temporary seven-digit PIN. This number can then be keyed into the ATM to bypass the need for a card. The second phase of the plan – in the latter half of 2016 – will see the introduction of the NFC-equipped ATMs.
When these contactless ATMs are fully deployed across the country, skimming fraud will plummet. Without a physical card to skim, cracking the banking information of a contactless system then falls back on encryption and biometric security. Not all banks will support fingerprint recognition at the get-go, but some will and this kind of security measure will become the norm as fingerprint scanners become more widespread.
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The U.S. is not typically an early adopter of new banking systems though, with chip-and PIN technology commonplace in Europe for many years. The U.S. is still only slowly adopting EMV chip-only cards and contactless systems will likely take several more years to filter out to smaller banks and encompass all ATMs nationwide. But contactless systems are definitely the future. Considering the ATM is a 1960s idea, it’s about time it got a refresh for the modern age.
Will you use an NFC-equipped ATM? What kind of problems do you see cropping up?