Cardless ATMs

Coming to a bank or store near you (if it hasn’t already) is the next wave of credit card technology. The funny thing is it is not a credit card. Some ATMs can now interface with a user’s smartphone to withdraw cash. Is this just a fad or does it spell the end of the credit card as we know it?

Near Field Communication (NFC) makes this all possible. A small scanner is placed on the ATM panel and it interfaces with the phone. The user has already downloaded an app from their bank and has received a 6 or 8 digit code that they use to complete the transaction. The user still has to input their PIN number and outside of not placing the card in the slot the process is identical. Experts see this eventually expanding to having the ATM scan a QR code that is generated rather than inputting a code.

Bank of America, JP Morgan Chase and Wells Fargo are at the forefront of this new technology and each expect to have between 12,000 and 15,000 of these ATMs in the market by the end of 2017. Using a smartphone for a transaction was introduced several years ago for small purchases in convenience stores or stadiums and arenas though it has been slow to catch on here in the US. Despite that Wells Fargo completed an upgrade all of its ATMs to use NFC technology at the end of last month.

If this works, and by all indications it will, the credit card as we all know it will go the way of the dodo bird. The smartphone has revolutionized our society for good and for bad and it is only a matter of time until every part of one’s life will go through it. As people, especially the younger generations, become more comfortable with the technology and use it everyday it will become accepted.

This whole venture is not without risk. Criminals will most assuredly adapt and find a way to steal the code the app generates or simply steal their username and password for the app. Once they have access to that all they need is the victim’s PIN since a physical card is no longer necessary. It should come as no surprise that it is already happening. In late 2016 a Cleveland man found that someone had hacked his app and used a new ATM to withdraw money, $3,000 worth of it. He noticed it quickly and it was fortunate that he did. The thieves tried again but this time his account was locked and no money was stolen. After an investigation it was found that he was not the only victim, someone else had lost $7,000. The bank was also not too interested in returning his money to him but that is another story. So while this technology will make skimmers as we know them obsolete it opens up a whole new set of doors for thieves and as with all new technology there will be vulnerabilities that need to be worked out. Just don’t lose your phone!