The problem, when it comes to going cardless at an ATM (or really making much in the way of a digital upgrade), isn’t technology.
In a recent conversation between Diebold Nixdorf's Head of Global Business Development Douglas Hartung, Mastercard's SVP of ATM Product Management Dan Goodman and Karen Webster, Hartung said that Diebold has been working with mobile cash at ATMs for the last five years.
“It is not a technology problem,” Hartung said. “The challenge is having solutions that are really scalable. Without a global and standardized way of managing these transactions, they just can’t scale.”
Which, Goodman chimed in, has left mobile ATM use in much the same place that mobile payments at the point of sale (POS) finds itself.
“Said simply, mobile doesn’t always work the same way at different banks’ ATMs, as today there are a lot of interoperability issues that you might see [with] cardless [at] individual banks," he said. "Beyond that, the consumer needs to be convinced that they are getting something more out of changing their habit than swapping out the form factor.”
However, Diebold and Mastercard are hoping to fix both of those issues with a new partnership to trial-run two new ATM products: Cardless ATM (powered by Mastercard) and Mastercard Cash Pick-Up. The two new programs, Hartung said, were accomplished without changing hardware. Instead, they were able to modify the service stack on the self-service channels to tap into Mastercard’s cloud-based infrastructure.
“That means we can connect through our transaction middleware and deliver that access point to Mastercard’s ATM as a service platform that can then provide at-scale globally.”
The goal of Cardless ATM is simple: to make it as easy and predictable for Mastercard holders to take out cash, from any ATM in the world, as easily as they would with their cards. And, Goodman noted, hopefully more easily, since the mobile banking app — apart from being a tool to remove money from an ATM — can also help consumers locate the nearest ATMs, understand the associated transaction costs and stage the transaction on their phone prior to arriving at the ATM.
Moreover, because the transaction is handled through the app, sensitive information is only shared through the Mastercard cloud. Personal identity can be established by biometrics on the consumer’s device, and tokenized card information is sent over the Mastercard network. The fear of card skimming — a popular and ever-evolving, technological form of card fraud — disappears. Those who worry about fraud, skimming and lack of fee transparency at ATMs can now handle those transactions more confidently.
Hartung also noted that the system is designed to give customers a uniform experience that doesn’t trip up over entry-level issues, like which form of mobile communication between the phone and the ATM the consumer specifically wants to use.
“We need the NFC/QR distinction to go away. London is an NFC contactless market; Hong Kong and Southeast Asia favor QR codes," he said. "In West Africa, where smartphone penetration may not be high yet and most people are using feature phones, you need to look into one-time use codes. The technology for binding the mobile to the service endpoint may be market specific, but the underlying service characteristics need to be common in order to scale.”
Instead of trying to pick a horse and bet on it, Diebold and Mastercard are simply betting on them all, and — as much as possible — making their systems agnostic to them. The goal is to align the access and authentication tech to the needs of the current market. As Goodman and Hartung both noted, that’s because, in some markets (particularly developing markets), they aren’t just building an access point to ATMs and the global digital financial markets. They are building the access point.
Cash Pick-Up’s Big Future
Announced last year, the goal of Mastercard Cash Pick-Up is to turn ATM machines into an automated disbursement channel for customers worldwide, even if those customers don’t have bank accounts or debit cards.
As Goodman noted, “There are over two billion unbanked or severely underbanked consumers around the world [who] don’t have access to a bank account or any kind of card. What we are building is a way to receive disbursements and remittances on an ATM or, eventually, even at a POS. And we must find a way that doesn’t require a card, a smartphone or any kind of very sophisticated technology.”
He added that self-service machines, in many ways, represent a strong solution, as they provide consumers with a direct method — using phone technology they likely already have — to receive all kinds of payments.
Those cash off-ramps, Goodman and Hartung both noted, have a bright future as digital on-ramps as well, because they offer an easy access point where customers — with whatever phone technology they possess — can load money into a virtual account the same way they can remove it.
Unlike many other services with similar aims for the developing world, Mastercard and Diebold don’t have to spend vast sums or quantities of time building out an agent network to serve as the cash distribution endpoints. Diebold machines stand in there.
It won’t be an instant process. Trust takes time to build, and adding ATMs to the developing world has challenges, starting with basic ones like providing consistent power to ATMs in environments where electricity is not always a guarantee.
However, Hartung noted, for every infrastructure issue, there is also an innovation to try to mitigate it, such as long-life battery packs or standalone, solar-powered machines.
Moreover, Goodman noted, opportunity ignites opportunity. As more consumers can do more, other innovations build on top of that, because negotiating payments no longer requires constant face-to-face interaction. That builds local communities and economies, which generates greater demand for more stable infrastructure, and makes it easier to operate.
It’s an optimistic vision, but one that has been born out of other markets. Given the right tools to better manage funds, many good ideas come to the forefront.
“I think it will be interesting to see the thousand ideas under a thousand rocks that people will begin to turn over,” Goodman noted.