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ATMs & Mobile Devices – a Game Changer for Person-to-Person Payments

Strategically Speaking
Jul 24, 2013

Author: Paul Miniutti,  

Let’s first absorb a few fun facts about cash.

Tom Harper, president of the ATM Industry Association:

“In our research we’ve found that cash use is actually growing in the United States and around the world, 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.”

The Consumer Payments Research Center’s “Survey of Consumer Payment Choice”:

“Cash is still the most familiar and frequently used payment type.  Although cash transactions 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”

The Federal Reserve Bank:

“Cash makes up nearly 29 percent of consumer transactions.  Overall, the U.S. consumers use $1.2 trillion in cash each year.” - July, 2013:

“The amount of U.S. paper currency in circulation reached an all-time high of $1.19 trillion last month. ”

Now, let’s add a few fun facts about mobile device usage:

Pew Research Centers - Pew Internet: Mobile

  • 56% of American adults own a smartphone.
    • 44% of these have done some form of online banking.
    • 34% own a tablet.

Federal Reserve Bulletin – September 2012

  • 63% of unbanked consumers have a mobile phone.
  • 91% of underbanked consumers have a mobile phone.

ATM Cash Management

Mobile meets the ATM

It is not by accident that all of the major ATM manufacturers have either announced or are currently deploying ATMs with some sort of mobile integration that allows for card-less authentication to get cash. Also emerging is the ability to process Person-to-Person payments. Diebold, for example, has demonstrated functionality which allows a customer to set up a pre-staged 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. Wincor Nixdorf has demonstrated similar functionality.

Think of the nearly 60 million unbanked U.S. residents that now would be able to easily get cash from an ATM. Imagine being able to essentially send an email or text to get physical cash to someone anywhere in the world. Think of all the times small cash payments are made, even by the banked: 

  • Paying the babysitter (who does not have a credit, debit or prepaid card – but does have a smart phone). 
  • Getting cash to your child at an ATM somewhere in the world – right now.
  • Selling something on eBay - for cash.
  • Making an ad hoc charitable donation.

And on, and on ...

According to David Alertazzi of the Aite Group, this functionality is more easily deployed within the financial institution’s ATM infrastructure. “The challenges for Independent ATM Deployers (IADs) will be greater.”  This means that as the technology matures, FIs should see an increase in ATM usage, while the challenges for the IAD industry to stay competitive and profitable continue to grow.

With the integration of mobile technology a new paradigm for ATM withdrawals is emerging that has the potential to dramatically increase FI ATM usage.

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