ATM-mobile interoperability: Who’s responsible for what?
At the recent ATMIA US 2016 conference, a panel of experts waded into the weeds with a detailed discussion of topics surrounding — and in some cases, standing in the way of — mobile wallet transactions at the ATM.
We’ve condensed this information-packed two-hour conversation and Q&A into a few well-spoken words from speakers (at left) and audience members.
Paul: One of the things I think is the challenge in the industry is that there’s islands of P2P. … If you’re part of those families then you get that access. But then to jump across to another island you lose that.
So I think there needs to be interoperability, basically, for this to become truly ubiquitous. There’s part of the Fed faster payments initiative that I think might help to solve some of that or provide some railroad tracks, if you will.
On tokens and tokenization
Jeff: When you have a phone that’s been tokenized [for use with a mobile wallet such as Apple Pay], the first six digits — the BIN number of the card — still identifies the issuer, but the PAN that’s associated — the full 16-digit PAN — is not the PAN that the issuers know the customer by.
So the only way for them to know who that customer is for it to be detokenized, to go through a token service. And that doesn’t exist for a network transaction today. EMVCo is responsible for that specification and we’re hopeful that they’ll issue one by the end of the calendar year.
Paul: There’s a practicality of the situation as well … Who owns the PAN? Ultimately, that PAN is used by any network that’s on that card, any brand on that card.
And so now we start saying if you’re going to tokenize that transaction, is an issuer really going to want to use three tokenization services or they going to use one only? And if they only use one, there might be a network rule that points to which one to use, and in that case it could create a situation where you can have a network that has to go to its competitor when the transaction is coming its way to get the tokenized PAN put into the real PAN so that the issuer can actually work on it.
On the problem of siloed networks
Paul: [W]e’ve moved away from networks cooperating with each other on an interoperable basis. They may give themselves lipservice on that cooperation but to actually do it is getting hard.
Instead, I think that networks that have market share are looking to use the new technology to increase their market share as opposed to figuring out a way to make things interoperable from a technology standpoint and let the market participants determine market share.
Jeff: I think it’s very difficult when you’re looking from the standpoint of a pure non-financial ATM provider: How do you make a case for enabling a network to handle tokenized, contactless, however [the cardless transaction is done] when you don’t know if the consumers that really need it use your ATMs?
So, yes, there needs to be a way to handle these transactions, but I don’t think we’re going to have the demand to do it from a network perspective for quite some time.
Audience Member: [B]ut what about the credit union down the street? They’re 100 percent dependent upon the networks and the networks aren’t giving them solutions.
Jeff: If the solution you’re talking about is talking about is tokenization, it’s not the network that has to provide that, it’s EMVCo that has to provide the format for the transactions to be processed. … And it’s not that we don’t want that spec. It’s just that it’s going to take time to get it.
On the business case
Audience Member: Why would an ATM owner move towards this and increase the cost of cash?
Bob: It’s all about the consumer. You want the consumer to use your device. If the consumer wants to use their phone, are they going to come to your device or not? That’s really the par of it. … Around mobile, it’s about whether there’s an opportunity to do something more or more volume at your store.
Jeff: But if your plan is, “If I build it, will they come?” — it’s going to be a long time before you have so many people that want to use their phone that they’ll walk away from your ATM if you don’t have [mobile functionality].
On the consumer experience
Bob: If you’ve never taken your smartphone and tried to put a wallet on it and tried to understand the experience, that’s probably the best learning exercise you can have right now about mobile.
If you haven’t done that, do it and you will learn a lot about the digitization process, you will learn a reasonable amount about how this whole process works and what’s the user experience. It takes the mystery out of the wallet concept.
Bruce: We’re in the very early phases of enabling the ATM segment for mobile payments, so there’s still a lot of runway to figure things out. But don’t miss the fact that the iPhone is real, the other manufacturers and their wallets are real. … There’s a lot of specifications that need to be worked out and then how it becomes ubiquitous is still unclear. So you’re really in the information-gathering phase, the understanding phase, and staying on top of it …[E]veryone is focused on where do I need to be now, where do I need to be in five years? But my phone still rings off the hook for EMV. And I suspect that if everyone raised their hands, EMV is still the topic of the day, especially in the ATM channel.
So just recognize that [mobile] is kind of the new frontier, but EMV is real right now, and there’s a lot of work that needs to be done.