5 Ways Mobile Technology Will Revolutionize ATMs

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white paper
© 2013 Networld Media Group | Sponsored by atm & mobile executive summit: 2013
The ATM industry faces a rare opportunity to adapt as a mature industry fac-
ing competition from disruptive technologies, including mobile commerce.
Despite the proliferation of e-commerce and mobile banking, cash remains
a significant factor for consumers. Given the growth of cash-accepting
ATMs, the industry is poised at the center of channel convergence in the
mobile era. The channel strategies are developing to take full advantage of
interactivity between consumer-owned devices and ATMs, the leading self-
service channel.
ATMs and mobile digital commerce can leverage technology to improve the
customer experience. ATMs can cost-effectively provide the link between
the digital world and the physical world, where consumers still need to ac-
cess currency.
Financial institutions look at mobile devices as just another channel for
consumer services, in addition to the branch, internet, phone and ATM.
FIs are typically not concerned with ATMs as a standalone revenue stream.
The same is true for mobile banking. It’s a service that an FI must offer to
compete in today’s marketplace.
That’s why banks are taking the lead in converging ATM and mobile chan-
nels, as they have with adopting video banking that marries personal and
self-service technology, according to David Albertazzi, senior analyst with
the Boston-based Aite Group.
Mobile advancements allow for exciting new options at the ATM.
By Gary Wollenhaupt | Contributing writer,
ATMmarketplace.com
SPONSORED BY:
Five Ways Mobile
Technology will
Revolutionize ATMs
2011 2012
Have you used online banking in the past 12 months? 68% 74%
Have you used telephone banking in the past 12 months? 33% 34%
Have you used mobile banking in the past 12 months? 21% 29%
Have you made a mobile payment in the past 12 months? 11% 15%
Source: U.S. Federal Reserve
Banking method

The Impact of Market Turbulence on ATMs
2© 2013 Networld Media Group | Sponsored by atm & mobile executive summit: 2013
“Ultimately banks are looking to combine channels to make it easier for the
customers,” Albertazzi said.
But those in the independent ATM deployer space may face a tougher road
in a mobile-dominant future.
“With IAD ATMs, the transactions that can be performed are more narrow;
they don’t have the bells and whistles like the banks do to offer custom-
ers,” Albertazzi said. “The challenges for IADs will be greater. They need to
come up with better ways to integrate mobile within their offerings.”
The explosion of mobile device usage and the burgeoning mobile payments
scene may leave some wondering if there’s a need for a simple cash-dis-
pensing device when more transactions are shifting to the digital form.
For financial institutions, shifting delivery of some services to mobile de-
vices could cut operational costs, according to Alan Goode, an analyst with
Basingstoke, England-based Juniper Research.
In a report “Mobile — The ATM in your pocket,” Goode wrote, “Data from
the U.S. is already pointing to the fact that there is a slow down in the
physical ATM market and it won’t be changed by the deployment of intelli-
gent mobile ATM solutions that allow mobile users to get statements, make
payments and even top-up mobile prepaid via their mobile phones.”
For IADs, it’s easier to take a wait-and-see approach to new technology.
It’s not enough to simply have the latest cool thing.
“Once there’s a way you can make money by turning a mobile application
or a mobile transaction into a revenue stream, they’re all for it,” said James
Phillips, vice president of sales and marketing for Triton Inc., a Long Beach,
Miss.-based ATM manufacturer.
Although it might seem obvious that the growth of mobile payments would
result in a drop in cash usage, the opposite is true, according to Tom
Harper, president of the ATM Industry Association and publisher of ATM-
marketplace.com and MobilePaymentsToday.com.
“In our research we’ve found that cash use is actually growing in the United
States and around the world,” Harper said. “And it’s not just growing, but
growing at an increasing rate. Just a few years ago it was increasing at 3
to 4 percent. Last year it increased 6 percent. And with mobile payments
exploding, it’s almost counterintuitive.”
In fact, the Consumer Payments Research Center’s “Survey of Consumer
Payment Choice” shows that cash is still the most familiar and frequently
“Ultimately banks are
looking to combine
channels to make it
easier for the customers”
— David Albertazzi, senior analyst with the
Boston-based Aite Group.

used payment type. Although cash transaction amounts have gotten
smaller over time, the frequency of cash usage and the average amount
of cash in use are rising in the U.S. population overall.
Research from the Federal Reserve Bank found that cash makes up nearly
29 percent of consumer transactions. Overall, U.S. consumers use $1.2
trillion in cash each year.
This mini-guide, distributed without cost by ATMmarketplace.com and
MobilePaymentsToday.com, media properties of Networld Media Group,
outlines five ways that the ATM industry can respond to mobile technology.
Prestaging and the mobile device
Major ATM manufacturers have already announced technology that inte-
grates mobile devices with ATM functionality. In effect, the mobile device re-
produces an ATM’s keypad and monitor and its ability to authenticate users.
Prestaging an ATM transaction on a mobile device leverages that fact. But
is it a real way to make ATMs safer or faster, or is it a technology solution
ahead of the marketplace?
Manufacturers are taking different approaches. For instance, the device
may incorporate GPS technology to ensure the physical location of the
mobile device. Also, systems may trigger a transaction with a bar code
or a number sequence.
The goal is the same: to provide a cardless, simple-to-use way to get cash
at the ATM.
ATM industry giant NCR Inc. has developed software that lets bank custom-
ers conduct cash withdrawals using their mobile devices without the need
for an ATM card. The customer uses an app on his mobile device that’s
linked to his bank account. The customer enters a password on the mobile
device to initiate the transaction and elects the account and amount of cash
to be withdrawn. A QR code appears on the screen of the ATM. The cus-
tomer scans the code with the phone and the ATM dispenses the cash.
Consumers don’t have to use a card or enter their ATM PIN, and they
receive cash within 10 seconds. An e-receipt for the transaction is sent
automatically to the customer’s email address.
This process would allow customers access to cash from their accounts
without the need for a payments card. If a person fully adopts a mobile
wallet, then he could leave his cards at home and still have access to cash
with the mobile device.

Wincor Nixdorf has developed its own mobile application, which allows a
bank customer to prestage a cash withdrawal on a smartphone. The app
also uses a QR code as a token to confirm the transaction. Also, the app
can show the way to the nearest ATM that supports the mobile cash app.
In contrast to NCR’s solution, Wincor Nixdorf’s app displays the QR code
on the smartphone, and the ATM must be equipped to read the code. A
transaction PIN can be entered as an additional security feature. The QR
code can be stored in the Passbook app in an Apple iOS device, or in
Wincor Nixdorf’s PC/E Mobile Cash app. Also, Android devices can support
near-field communication interaction instead of the QR code.
The app replaces the function of the ATM keyboard, which could allow for
faster service at ATMs with long queues. At an airport or amusement park,
a user could prepare the transaction while waiting in line and then complete
the withdrawal simply by scanning the QR code.
Diebold has debuted its solution for cardless withdrawals. The preregis-
tered user integrates the mobile device by scanning a QR code on the ATM
screen. This step connects the ATM with the mobile device and authenti-
cates the user via the QR code without the use of an ATM card.
When the devices sync, a transaction screen appears on the mobile device,
where the customer selects the withdrawal amount. The ATM then sends
a one-time numerical code to the customer’s device, which the customer
enters on the ATM screen to authenticate the transaction and receive cash.
The cardless transactions reduce consumer security risks related to lost or
stolen cards, as well as the opportunity for skimming. Privacy is enhanced
when users input transaction details on the smartphone screen rather than
2011 2012
Checked an account balance or recent transactions 90% 87%
Transferred money between two accounts 42% 53%
Downloaded your bank's mobile banking app 48% 49%
Received a text message alert from your bank 33% 29%
Made a bill payment using banking website or app 26% 27%
Located the closest in-network ATM for your bank 21% 24%
Deposited a check using mobile phone camera 11% 21%
Mobile transaction
Using your mobile phone, have you done any
of the following in the past 12 months?
The goal is the same
to provide a cardless,
simple-to-use way to get
cash at the ATM.

the ATM screen. In addition, the one-time authentication code expires im-
mediately after completion of a transaction.
Banks are getting in on the action directly. Royal Bank of Scotland has
rolled out a mobile device app that allows customers to withdraw money
at its ATMs without a card.
To request cash, the user opens the password-protected app and taps the
screen to reveal a six-digit, single-use password to be entered at the ATM.
The code is valid for a limited period of time at any one of 8,000 RBS-,
NatWest- or Tesco-branded ATMs in the U.K.
At the moment, the customer service benefits for FIs seem obvious, but
the question remains whether IADs will adopt the prestaging technology
anytime soon.
“We don’t see the IADs coming to the manufacturers asking us to support
this because there’s not a big revenue stream in it for them,” Triton’s
Phillips said.
Contactless transactions and ATMs
The migration to the EMV standard will also entail migration to near-field
communication at the POS and at the ATM. Ubiquity of NFC in the North
American market is still many years down the road, but ATM deployers are
preparing for that change.
NFC could be ready for prime time soon. Emerging technology forecasting
and analysis firm ABI Research expects shipments of NFC-enabled devices
to skyrocket from 102 million in 2012 to 1.95 billion in 2017. The future of
NFC in Apple iOS devices is uncertain at this point, but the debut of an
iPhone with NFC capability should speed up consumer acceptance.
“Thinking further ahead, this kind of contactless technology at both ATMs
and point-of-sale terminals may mean the end of plastic cards in a decade
or two,” Mike Lee, CEO of ATMIA, wrote BankNews.com.
NFC could be another link between mobile devices and ATMs. NFC could
supplant the QR code or the one-time-use PIN in ATM authentication
protocols. That would eliminate the step of reading a code with a phone
or entering digits for identification.
Atlanta-based SunTrust Banks ($178 billion) has upgraded its fleet of NCR
ATMs to units that can communicate with near-field-communication-
enabled smartphones and accommodate international chip-and-PIN
security protocols.
“Thinking further ahead,
this kind of contactless
technology at both ATMs
and point-of-sale terminals
may mean the end of
plastic cards in a decade
or two”
— Mike Lee, CEO of ATMIA, BankNews.com

The upgraded ATMs will allow SunTrust customers to use smartphones
as an authentication device. Mobile authentication, in which people wave
a mobile phone near the NFC-enabled ATM to identify themselves, has
proven a popular method to access ATMs in Asia. SunTrust managers said
they will retrofit existing ATMs to accept mobile authentication as an option.
ATMs and the unbanked
The unbanked and underbanked sectors, representing nearly 60 million
U.S. residents, have traditionally been served by a variety of alternative
financial services providers, including check-cashing stores, money-transfer
services and alternative credit sources.
With a smartphone, consumers carry a virtual bank in their pockets. The re-
sult is that the unbanked (whether by choice or by necessity) have options
for many financial services without the need for a bank. However, they may
still need ATMs.
Prepaid card providers could offer mobile-enabled ATM transactions —
although they’re not on the market just yet — to give users of the prepaid
cards the same access to cash enjoyed by customers with traditional bank-
ing relationships.
ATMs provide the unbanked access to the cash stored on the network-
branded prepaid cards that are as common as bank-branded debit or credit
cards. Prepaid cards such as Green Dot, widely available in convenience
and discount stores, give the unbanked customer access to the financial
system via ATMs and point-of-sale transactions.
Technology now exists for ATMs to dispense prepaid cards from a multicas-
sette ATM, loaded with the desired value. In concert with a cash-accepting
ATM, an operator dispensing network-branded prepaid cards could offer an
end-to-end transaction via the ATM rather than at a retailer’s cash wrap.
Unbanked/underbanked
Unbanked Underbanked
U.S. consumers 9.50% 9.90%
Have access to a mobile phone? 59% 90%
If yes, is mobile phone a smartphone? 50% 56%
The unbanked have
options for many financial
services without the need
for a bank, but they may
still need ATMs.

For instance, a family could load a balance at the ATM on prepaid cards
for their children, who can then withdraw smaller amounts of cash as the
need arises or use the prepaid card for POS payments. If the prepaid card
provider offered the service, they could then use mobile devices to interact
with ATMs the same way a bank customer would.
As a reflection of the still-evolving nature of the ATM/mobile convergence,
Houston, Texas-based PreCash is testing FlipMoney, a digital wallet app
linked to a prepaid debit card designed for people without bank accounts.
The app allows users to deposit checks and pay bills on the mobile device
and use the prepaid debit card to interact with ATMs and POS terminals.
Expanded ATM services
There’s more to consider than a direct relationship between ATMs and mo-
bile devices. Mobile is changing the entire banking landscape, meaning that
more transactions are being done by mobile devices. That hits deployers’
margins. The answer may be in moving beyond cash dispensing to offer
new services and sources of revenue such as ticketing, loading prepaid
cards, content downloads, device-charging services and a host of other
possibilities such as buying prepaid phone minutes or money orders. For
instance, international travelers could order foreign currency online and
then use the mobile device to authenticate a transaction at an airport ATM
to pick up the cash.
In many markets outside the United States, ATMs offer an array of expand-
ed services that provide a revenue stream in addition to interchange and
surcharge fees. In South Africa, Standard Bank offers purchase of prepaid
airtime for cell phones via its ATM fleet.
Tickets for entertainment venues and transportation have been offered by
ATMs in some locations, as an expanded transaction and additional rev-
enue stream for IADs.
In the U.S., a number of entities have tested general-purpose reloadable
card purchases at the ATM.
“The deployers are mainly trying to find out how to increase ATM usage,”
Albertazzi said. “The card sales have been very small, but the opportunity
for prepaid is growing.”
Triton has beta-tested a nondenominated gift card that allows the user to
set the amount of the gift card available from an ATM. That’s a way for IADs
to avoid prepurchasing gift-card stock in specific denominations.

Technology is making direct personal payments easier. Diebold has
demoed a process for person-to-person payments using mobile and ATM
interactivity. A customer can set up a prestaged transaction that authorizes
access to cash to a third party. The customer inputs the payment amount
and recipient’s contact information, which can be selected directly from his
or her contact list. The recipient then receives a one-time code he can use
at an ATM or branch to receive money.
This functionality could bridge the last gap for electronic payments, the
need for cash for small transactions between regular people. Paying a baby
sitter, buying Girl Scout cookies, or sending cash to a child who decided to
go to the movies could become much easier with the third-party transaction
via the ATM.
In April 2012 Burlingame, Calif.-based Nexxo Financial Corporation de-
moed its K3000 “Bank-in-a-Box,” an ATM hybrid that allows consumers to
cash checks, buy money orders, load prepaid cards, pay bills, send money,
top up phone minutes and withdraw cash all at one machine — and all
without a bank account.
Nexxo offers users a Mobile MoneyStation app to access their accounts.
A user can deposit a check using the check reader on the machine and
then access the money via the mobile app to pay bills or transfer money.
Expanded ATM/mobile capabilities
Mobile devices have radically altered consumers’ expectations of what
technology can deliver to them. They expect services well beyond simply
dispensing cash. FIs could lead the way in providing mobile technology
that offers advanced services as well as ATMs that can do everything from
dispensing cash to processing loans.
Many FIs, some large IADs such as Cardtronics and surcharge-free net-
works such as MoneyPass from Elan Financial Services, offer mobile apps
that locate ATMs in the network. But that’s simply a wayfinding utility, not a
channel integration.
With the right strategies and technologies, consumers could come to see
their mobile phones as ATMs in their pockets or purses. But there are limits
to how much the majority of consumers will risk in adopting technologies
connected to their wallets. Consumers will want to be able to conduct an
ATM transaction regardless of device or app.
“If a transaction is going to be successful, it has to be ubiquitous across all
platforms,” Phillips said. “The first time a user goes to a machine expecting
A customer can set up
a prestaged transaction
that authorizes access to
cash to a third party. The
recipient receives a one-
time code he can use at
an ATM or branch to
receive money.

to do a transaction and this machine doesn’t support it, they start to lose
faith in being able to do that transaction at an ATM.”
Standard Bank in South Africa launched a “Pay Your Way” service for
person-to-person mobile payments. This solution is almost as flexible as
cash from an ATM because it does not require preloading the payee into
the system. A payment can be handled in an impromptu fashion, like with-
drawing cash from an ATM.
In the U.S., many true peer-to-peer payments are still handled with cash,
such as splitting a check in a restaurant or buying castoffs at a garage sale.
The truly impromptu payment may be the last great frontier for cash, until
the mobile payments infrastructure supports widely accepted secure pay-
ments standards.
“The ability to simply pay a person without having all their bank information
and just an email account is going to be one of the solutions that affect the
use of cash the greatest,” Albertazzi said.
One question in the market is how strongly will U.S. consumers use ad-
vanced ATMs. Will customers use ATMs to download music or ring tones,
or charge their mobile devices? And what would that mean for the core
cash-withdrawal function of the standard retail ATM?
“People expect ATMs to dispense cash, and you don’t want to do other
things at a machine that will inhibit somebody from getting cash, certainly in
the IAD world where they make money off every transaction,” Phillips said.
ATM manufacturers, especially in the retail space, are reluctant to get too
far ahead of the marketplace. They’d rather let the FIs invest in creating the
technology and consumer demand first, and then adapt ATMs to serve the
customer base.
“Nobody wants to spend money on research and development and have to
scrap it and start over,” Phillips said.
In the future, the ATM could become the hub linking the bank and the
branch to the consumer, using existing payment rails. The gamut of devic-
es, from smartphones and tablets to desktop terminals to automated stand-
alone kiosks, could use the ATM to deliver cash and other transactions.
The distinction between an in-person and online consumer is blurring, so
the bank of the future will be a multichannel, multifunction and multidevice
environment, with self-service channels simply a part of the entire range of
transaction types.
“If a transaction is going
to be successful, it has
to be ubiquitous across
all platforms”

Is your bank ready for mobile/
ATM convergence? At this event,
you will learn what mobile + ATM
technologies and business models
are working now and in the near
future, how customers are reacting,
how to protect from cyber threats,
where payments regulation is
heading, and more.
What’s hot in mobile right now (and what’s coming)
How to prepare for and protect from cyber threats
How banks are integrating their atm & mobile channels
Major regulatory issues coming our way
What’s a bank to do with the cashless society?
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5 Ways Mobile Technology Will Revolutionize ATMs

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