In recent years, contactless payments like Apple Pay, Android Pay and Samsung Pay have really taken off, with more retailers being added to the list of those that accept the NFC payments every day. Soon, your local ATM machine may be joining the ranks of contactless transactions, and your plastic ATM card may become obsolete.
On May 20, Bank of America (BofA) announced it will become the first major North American bank to launch a broad rollout of cardless ATM machines in the United States. The bank said it will have 5,000 cardless ATMs that work via the Android Pay smartphone app in place by the end of 2016. There are currently 2,400 cardless ATM’s nationwide.
The Bank of America cardless ATMs work in much the same way contactless payments with a credit card do – the ATM or debit card is uploaded to the smartphone’s digital wallet. When a customer wishes to make a transaction, the BofA ATM card is selected in the digital wallet, the phone is held up to the contactless card reader and the ATM is activated. If the customer wants to withdraw cash, he or she can then enter his or her password/PIN number. Because there is no physical card to insert into the machine and the password is only entered after the smartphone app activates the ATM, cardless ATMs are much safer and not as vulnerable to skimming like traditional ATMs. Additionally, no card information is stored on the phone for thieves to access if the phone is lost or stolen, and the bank’s app can be remotely deleted if necessary. BofA’s cardless ATMs will also allow customers to make credit card payments and cash checks from the machines, too.
Of course, with BofA introducing cardless ATMs, it’s just a matter of time before other banks follow suit, and just like with credit and payment cards, the obsolescence of the ATM card is sure to come not long after. The various Pays on our smartphones are gradually replacing physical credit cards, making our wallets thinner and our credit data safer. The information passed between the phone and the ATM is encrypted, just like information that passes between a smartphone and an NFC payment terminal in a retail or restaurant setting. The transaction’s metadata disappears once it is complete, making it impossible to be reused for nefarious purposes. While this process is very safe, an additional layer of security can be added to the mix if a customer has biometric fingerprint identification on his or her smartphone.
Many experts, like Jerimy Saldivar, vice president of electronic banking at Bellingham, Washington-based People’s Bank, believe cardless ATMs “a great way to introduce our customers to thinking of their smart phones as payments devices.” They believe the cardless ATMs will help increase the numbers of consumers who use the various Pay apps on their smartphones to pay for goods and services by enabling them to see their phones as financial devices. Hari Gopalkrishnan, client facing platforms technology CIO for Bank of America Merrill Lynch, says the decision to install the cardless ATMs came from the realization that smartphones are the future of banking. “We’ve been looking at what our customers are doing, and they’ve increasingly adopted using their mobile devices for everything,” he said. “We started to see an evolution and felt it was a compelling experience to offer our clients the chance not to have to carry a card around…It comes down to us wanting to be where our customers are. If they’re using a certain [digital] wallet and that’s how they manage their financials, we want to be there. When customers forego their debit card for their smart phones, it’s likely to give everyone an advantage.”