New ATMs allow Triangle customers to use smartphones to get cash

A new breed of ATMs that let bank customers to use their smartphones to obtain cash – and which also hold out the promise of enhanced security – is starting to crop up in the Triangle.

▪ Bank of America recently rolled out 11 “cardless” ATMs, which don’t require swiping a debit card, at a half-dozen locations across the Triangle. Nationwide, the bank has 2,400 of the devices in place and plans to expand to 8,000 by year’s end, including in the Triangle.

▪ Wells Fargo announced last month that it expects more than 40 percent of its ATMs nationwide will be cardless by the end of the year. The bank expects its cardless ATMs to pop up in North Carolina this fall.

▪ PNC Bank plans to make cardless ATMs available early next year but isn’t yet releasing any details, said spokeswoman Cynthia Montgomery.

▪ And, over at BB&T, spokesman David White said that the bank has “started to consider our alternatives for mobile device ATM access.”

“We’re seeing more and more of our customers using mobile phones for many aspects of their lives,” said BofA spokeswoman Betty Riess. “We want to deliver new products and services that meet our customers’ needs.”

Nationwide, there are “probably four or five dozen” banks that have already launched cardless ATMs or are poised to do so, compared with a handful that introduced the service last year, said Ed O’Brien, director of banking channels at bank consulting firm Mercator Advisory Group.

“These rollouts are happening faster than we would have thought a year and a half ago,” added O’Brien, who said that banks with the latest generation of ATMs can adapt their devices to cardless machines with a software upgrade. The cardless machines also work with debit cards.

Looking toward the future, O’Brien sees cardless ATMs as “the beginning of the convergence of mobile banking and ATMs.” He envisions the industry adding more features to the new ATMs, such as the ability to pay bills or digitally transfer money to someone else.

BofA customers who want to use the bank’s new cardless ATMs – which are identified by a special symbol – must upload their debit card to a digital wallet app on their smartphones. From then on, they can select the debit card on their phone, swipe it over a special ATM reader to activate the device, then enter their PIN number as usual.

Neither BofA nor Wells Fargo is charging for the cardless ATM service.

It remains to be seen how popular cardless ATMs will be, but industry insiders say the technology should be appealing to consumers who increasingly are turning to mobile banking.

Positive feedback

The latest nationwide survey from the Federal Reserve found that 43 percent of mobile phone owners with a bank account used mobile banking in 2015, up from 39 percent in 2014 and 33 percent in 2013.

“Wells Fargo customers use all of our channels – everything from mobile to phone to stores to ATMs – to manage their finances,” Jonathan Velline, Wells Fargo’s head of ATM and store strategy, wrote in an email. “But mobile continues to be critically important, and it’s become the primary way in which millions of our customers interact with us daily and 20 or more times per month.”

A new report by Javelin Strategy & Research found that 57 percent of customers that tried cardless ATMs provided by one bank did so more than once.

“It shows the overall experience is resonating with consumers,” said Emmett Higdon, Javelin’s director of mobile and co-author of the report.

BofA reports that its cardless ATMs have received positive feedback from customers.

“It’s early in the rollout,” Riess said. “But based on what we have seen, we expect it to be a popular feature.”

Potentially safer

Because some cardless ATMs allow consumers to enter information in advance, it makes withdrawing the cash at the ATM faster and potentially safer, Higdon said.

“When you get to the ATM, all you’re doing is authenticating yourself, and out comes the cash,” he said. That speed also offers greater security, reducing the time that consumers are vulnerable to being mugged while getting cash.

“The more you can actually reduce the time you are standing there at the ATM, the better,” Higdon said.

In addition, cardless ATMs eliminate the opportunity for “skimming,” which involves thieves placing an electronic device on the machines that grab information from a debit card’s magnetic strip and use it to create counterfeit cards. With a cardless ATM, “there’s no magnetic strip to skim,” O’Brien said.

Although O’Brien is convinced that cardless ATMs should be “much more secure than magnetic stripe (debit) cards overall,” he recognizes that no technology is invulnerable.

“You build a 10-foot wall, and the fraudsters (develop) an 11-foot ladder,” O’Brien said.

Higdon believes that the appeal of cardless ATMs will be broad enough to spur greater adoption of mobile wallets, which let consumers make purchases with a smartphone.

“The technology of cardless ATM transactions makes perfect sense,” Higdon said. “It’s a natural transition for consumers. … I see cardless cash almost as training wheels for consumer use of mobile wallets.”

This story was originally published June 24, 2016 at 1:07 PM with the headline "New ATMs allow Triangle customers to use smartphones to get cash."