Cardless cash transactions: the future of ATMs?

We all have days where we don’t remember important things like keys or wallets. Recently I had one of those days. I had run out of the house in a rush and, at lunch, I realised I had forgotten my purse.

Not a big problem, I hear you say - we have Apple Pay now after all! However, as my local supermarket didn’t accept contactless payments, it proved to be a problem (it has since gone contactless – phew!). Luckily, I was with a lovely colleague of mine, who paid for my goods, otherwise I would’ve had to go without… or so I thought. What hadn’t even crossed my mind was the cardless cash (or ‘emergency cash’) service my bank offers – whereby I log into my mobile banking app and can withdraw funds from selected ATMs using just a code.

According to Mapa Research, Natwest’s emergency cash feature was one of the main reasons the bank’s Android app was recently named the top banking app in the UK. It is a feature a number of UK bank’s offer, but for many mobile banking customers who simply log on to check balances and move money around, they don’t even think about the additional features provided. Although FIs send emails to notify customers of updates to the app and provide tips on how to get the most out of the app, if it is not a feature that is used regularly, customers often forget about it – even if it is a function that could really benefit them.

Whilst some FIs in Russia have been offering cardless cash transactions since 2012 and since 2015 in Egypt, cardless cash transactions have gained a lot more attention from FIs around the globe in recent months – and not simply from an emergency cash viewpoint. Providing this feature, whether tapping a mobile phone on an ATM or using a cash-by-code service from internet or mobile banking, is seen as beneficial to both the FI and the consumer: it offers a competitive advantage for the FI, is considered more user friendly and somewhat safer for the customer than a standard ATM transaction by many in the industry, and allows third-party access to funds.

Competitive advantage: Yes, I had forgotten I could withdraw cash from an ATM using my mobile banking app that day, however, I did have the option to do so. My colleague (mentioned above) recently received a phone call from her bank – they thought her bank card had been compromised. As her bank does not offer cardless cash transactions from ATMs, she was faced with two options whilst waiting for a new card to arrive – both of which were somewhat frustrating: to keep sending her husband money to withdraw, or to go to a branch and withdraw some cash to tide her over. Although an unusual situation to be in, this could tip someone’s decision to switch banks, especially someone who works in the payments industry and therefore knows all about cardless ATM transactions (or even instant issuance and how quickly she could actually receive a new card) if her bank offered the service.

Increased customer experience and security: Firstly, a customer doesn’t have to have their card on them to withdraw cash (win!). By setting up the transaction in advance, it can reduce the time spent at the ATM – not only could this improve customer experience (if they are in a rush), but it could also make them feel more physically secure. It also helps to fight against card trapping and skimming – if a card is not being inserted into the ATM, it cannot be compromised, especially as your card details are not held on your phone.

P2P payments: Another compelling benefit of cardless ATM transactions – specifically cash-by-code transactions - is the opportunity for customers to initiate P2P payments. Customers can set up the transaction using their banking app, and send the code to friends, family, etc. for them to withdraw the funds from an ATM.

Of course, there are always going to be customers that ask why they would carry out a cardless ATM transaction when they have their card, or those that believe that there is no need to invest in the ATM as ‘cash is dying’ (FYI - I am firmly planted in the ‘not dying’ camp – see earlier blog if you want to know my thoughts). However, for security reasons, or simply because you forget your card one day, the option of being able to withdraw cash is surely a huge benefit – especially in the UK where there is an ATM on every corner. And whilst consumers are moving more to electronic payments, there is still a need for cash – it gives consumers a sense of security and control - and when there is no way of accessing it, it can make consumers panic. According to RBR, ATM withdrawals are rising globally – ATM users made 99 billion cash withdrawals worldwide in 2015 – so to not invest in the technology seems like a sure-fire way of limiting your customer base.

That said, without the correct promotion of features available to them, customers will always automatically revert to the default model when things don’t go according to plan – as seen above when I had forgotten the service was available to me. Therefore, if they are going to update their ATM offerings to include cardless cash withdrawals, an FI needs to have a robust marketing strategy in place to ensure that their investment is not wasted.