For readers who might be worried about "skimming" devices on automated teller machines after seeing my story yesterday on the increase in such scams in Charlotte, there is ATM technology available that could fight back.
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| Ed O'Brien |
"It's in the early stages," said Ed O’Brien, a banking analyst for Maynard, Mass.-based Mercator Advisory Group.
Financial institutions are paying close attention to what other firms are doing before deploying the technology, O'Brien said.
"Everyone's watching everyone else," he said. "I think in the next probably year to two we'll see a lot more increased availability."
Cardless ATMs allow customers to conduct transactions without having to insert their cards into the machines. In theory, the absence of a card should reduce skimming, which involves criminals placing devices on ATMs to steal account data when consumers slip their debit or credit cards into the card reader.
One form of the technology works with smartphones. The phones scan a "quick response," or QR, code on an ATM, enabling a transaction to occur.
O’Brien said he's heard of roughly a dozen financial institutions who are either making that technology available, or expected to soon, in the U.S. He said one of those is ATM maker Diebold, which last year announced that Diebold Federal Credit Union would pilot the world's first ATM without a card reader or PIN pad.
O’Brien said he's heard of a couple of dozen other firms that are testing QR code technology, with plans to possibly offer it to customers by the end of this year.
Of course, not all ATMs are owned by banks. Some are owned by independent operators. O'Brien said it seems that only banks and credit unions are currently interested in putting the QR code technology in their ATMs, since the technology is tied into mobile-banking.
Bank of America and Wells Fargo are likely among the banks testing it, but "they've been very close to the vest" with their plans, he said.
Wells Fargo spokesman Josh Dunn said the San Francisco-based lender is "constantly evaluating ways to improve our customer’s ATM experience," but the bank has no comment regarding cardless technology at this point.
Bank of America spokeswoman Tara Burke said the Charlotte-based bank is watching changing consumer behavior "and will adapt to it." Bank of America is always looking at new technologies to make banking easier for its customers, she said.
Another type of ATM technology, which relies on biometric data such as fingerprints, is not yet being widely deployed as testing continues, O'Brien said. An ATM equipped with that technology could scan a customer's fingerprint to verify their identity.
O'Brien said he's not sure when consumers will start seeing broad use of biometric technology on ATMs.
"I know that the capabilities are available on some new-generation ATMs," he said. "The manufacturers are demoing those capabilities."
Skimming, which is also known to occur at gas pumps, is the most common type of cybercrime in the Charlotte region and is on the rise in the region, according to the U.S. Secret Service. That comes at a time when banks are reporting rising use of ATMs as they outfit them with more capabilities.
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8 comments:
O'Brine's photograph sure did add a lot to this story. NOT
God forbid we ask banks to be on the cutting edge. Their risk adverse mentality has resulted in the continued usage of antiquated technology that enables more fraud.
The writer clearly has talked to banks, but It's worth noting that the vast majority of ATMs in this country are not operated by banks or credit unions. Most of the ATMS, and most of the transactions that are driven to the processing networks (the rule makers in the ATM world) are handled by non-bank owned ATMS. That's significant.
A bank views an ATM as a marketing tool and cost reduction tool: a means to avoid payroll and associated costs, as well as brick and mortar costs. In that context, the added cost of new devices is relatively minor.
Most ATMs, though, are operated not as cost reduction tools, but as profit centers. In that context new technologies are less likely to be introduced until the old technology is depreciated. Since there have been two major technology upgrade requirements within the last 30 months for all ATMS, there will be immense amounts of pushback against any near term hardware changes.
And, of course, the EMV standard is already requiring card issuing institutions to spend a significant amount to replace old style cards with EMV compliant cards. In addition processors have just gone through major changes to their operations as a reuslt of the EMV standard roll in. Neither is anxious to do it again before the amortization of those costs is complete.
A complete shift to cardless ATMS is, as a result, a VERY long way off.
Thanks, Anonymous 11:14 a.m., for bringing up independent ATM operators. Certainly, not all ATMs are owned and operated by banks and credit unions.
People can easily bypass ATM's by using the variety of stores to get their money. An added advantage to this method is also bypassing ATM fess.
Mark
Anonymous 11:14 a.m., I wanted to point out that I added a graf to my story about independently-owned ATMs because of your comment. Thanks, again, for that.
It is not at all that good. Going by more mobility now days, if you happen to lose the mobile, we are not only losing our mobile but also our money at bank and ability to get 24/7 loans. Technology grows one step but threat multiplies into many step. It will be more easy for robbers! They can now just target mobile phones.
Provided that a realistic measure of inflation adjustment is used,well this will indicate whether the market is falling or rising in purchasing power terms.
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