ATMs and mobile wallets: Bumping down the road to ubiquity
Does anyone these days even look at those little network brand decals on an ATM before whipping out a debit card to get cash? Probably not.
Over the past 20 years, ATM operators and networks have collaborated diligently — and successfully — to break down ATM network silos and ensure that just about any bankcard will work in just about any ATM in just about any location.
Now it appears they might be headed for déjà vu all over again — this time with mobile wallets.
In a pre-conference workshop last week at ATMIA US 2016, experts addressed trends and issues related to cardless cash transactions at the ATM, which are becoming increasingly available, if not increasingly uniform.
In the first half of the workshop, Lori Breitzke, manager at E&S Consulting, Donna Embry, chief payments officer at Payment Alliance International, and Peter Quadagno, president and CEO of Quadagno & Associates teed up the discussion with a review of the difference among major-brand mobile wallets — and the standard-setting process that presumably will occur as dominant players emerge.
Breitzke led off with a look at the recent upsurge in adoption of cardless ATM capability among American banks:
“In 2013, a small financial institution in Illinois announced that they were going to start implementing cardless ATMs. In 2015, we had BMO Harris Bank say they were going be using technology with a QR code.
“And this year, we’ve had two of our largest financial institutions — one being Chase and the other being BofA — announce that they were also going to support cardless ATMs. … So a lot of activity going on there.”
There’s also plenty of activity going on with the pays — Visa, MasterCard Amex, Android Pay, Apple Pay, Chase Pay, CurrentC, Level Up, Pay Pal, Samsung Pay, Wamart Pay and countless others — now clamoring for consumer — and card issuer — adoption.
Breitzke highlighted a few of the more recognizable Pays, explaining their operation and fee structure.
Apple Pay — “Everybody talks about Apple, right?”
Introduced in the U.S. in October 2014, this first major Pay has spent time since launching its way into Europe and now, China, where media reports said that 7 million iPhone6 users uploaded cards to the wallet within two days.
By Apple’s most recently updated count, 1,043 U.S. issuing banks participate in Apple Pay, as well as BJ’s and Kohl’s closed-loop schemes. Each must give up around five basis points for Apple Pay transactions — either online or at brick and mortar stores equipped with NFC-enabled point-of-sale devices. All transactions are tokenized by Apple.
To date, just 75 major merchants accept Apple Pay, with 23 more “coming soon” according to the Apple website.
Samsung Pay — “They’re in this to sell phones.”
“Samsung has told me point blank that they’re not in this to make money,” Quadagno told workshop attendees. “They’re going to use the technology to make things convenient for you so that you’ll like the phone and you’ll go buy the next Samsung phone.
Breitzke said that, unlike Apple Pay, which uses NFC to interact with a POS terminal, Samsung uses magnetic secure transmission, which emulates the audible signal generated by the mag stripe when it is read at the POS. The user simply holds the phone within an inch of the terminal to transmit an encrypted signal, thereby ensuring securit.
“And the way that they did it, literally 90 percent of the point of sale devices can accept it,” Breitzke said. “In some cases, the merchants themselves aren’t even aware that
Embry said that its unclear whether the technology will make its way to ATMs. “The interesting thing when you talk about anybody at Apple or Samsung or Google or any of those, they’re thinking, ‘Well this isn’t for cash. This is for point-of-sale purchases.’ So we really have a lot of work to do to convince them that cash is a market that they want to cultivate.”
Android Pay — “It’s like Google 5.0, there have been so many iterations of it.”
Like Samsung Pay, Android Pay came to market at the end of 2015. Unlike Samsung Pay, it follows the Apple model of operation, requiring an NFC-enabled POS device.
Unlike Apple Pay, security is handled via the use of a PIN on the phone’s lock screen that requires a PIN, Breitzke said. The user can designate a default card for purchases, so there’s no need to even open an app to pay.
It’s offered by 64 retail chains, according to the Android website, or as both Android Pay and Apple Pay prefer to put it, “over one million stores.” And it claims 48 participating FIs — well short of Apple Pay’s 1,043.
Chase Pay — “They think they’re going to have 50 percent of the market.”
According to Embry, “Chase pretty much touts that one of every two consumers has a Chase account.”
Also, she said, with the introduction of Chase Pay, the FI is rolling out multicurrency dispensing to its fleet, a sort of “back to the future” move, considering that the ATM industry abandoned multicurrency dispensing years ago due to the expense and logistics required.
Breitzke said that Chase Pay would be using “a kind of on-us transaction. It wouldn’t use the network for your Chase Pay app.”
Four different Pays.
Four different operating models.
And one word to remember, Embry said: Ubiquity.
“They’re cool, they’re fun, they’re nice to do,” she said of the new crop of mobile payment tools, “but if you don’t figure out how to make it ubiquitous, you’re never going to have a mass marketers product. And that’s the real name of the game — how you take it to ubiquity.”
Five panelists would take up this question in the second half of the workshop. ATM Marketplace will sum up their insights in a feature on March 10.