After decades of swiping cards at ATMs, consumers may find the idea of a "cardless" ATM impossible at first glance; after all, how do you withdraw cash or make transactions without a card to access your bank account? But as technologies improve and banks recognize debit and ATM cards as a weak link in the fight against identity theft, the largest corporations are moving to replace the familiar act of swiping cards with quicker and safer alternatives. These new options are housed in mobile apps and technology, enabling consumers to bank through their phones and other mobile devices.
NFC: Tap and Go
Near Field Communication (NFC) technology, a system of wireless communication based on magnetic induction, serves as the basis for the most popular of the cardless methods. Simply by holding a device close to a sensor on the ATM, a user can transmit all the information needed to verify their identity and access accounts.
Not only does NFC save users time and hassle, it's also a much harder nut to crack for identity thieves, who have an easier time stealing financial information from physically swiped cards. Thieves have come up with highly detailed replicas of swiping terminals, which they install on legitimate ATMs in order to intercept the information from a customer's physical card. Wireless transactions make it harder to use such "sniffers" to steal data.
NFC is the same technology behind "tap-and-pay" services like Apple Pay, Android Pay and Samsung Pay, where you can complete retail transactions with a simple tap or wave of your device. Banks like Chase and Bank of America are now moving to bring the same function to their ATMs, but there are some other systems that banks are implementing to provide users with a cardless experience.
QR and Verification Codes
Because NFC requires the installation of additional hardware, it will be some time before banks provide cardless service at every ATM, especially with tens of thousands of machines spread across the country. In the meantime, some banks are implementing software-based solutions that work through their mobile apps.
For instance, BMO Harris has implemented a program called Mobile Cash in which ATMs produce on-screen QR codes --essentially square barcodes --that a user can scan using a smartphone camera and the bank's mobile app. From there, the app allows users to choose how much money the ATM should dispense. Other banks, like Chase, are using a similar process, but with numerical verification codes that the bank's system texts to the user's phone and which the user then dials into the ATM.
These verification programs are nowhere near as convenient as simply touching two devices together, but they still offer more security than swiping a physical card. Because new codes are generated for each transaction, it's far more difficult for a third party to obtain sensitive account information.
Cardless ATMs: Looking Ahead
The advantages provided by cardless transactions are too great for banks to ignore. Cybersecurity takes up a greater share of time and resources at financial institutions each year, and it makes sense for banks to invest in a system that can improve the security of their retail banking products. Expect to see more and more cardless ATM options in the coming years, whether they use NFC hardware or a software-based verification system.
Of course, if you're banking with a smaller institution, it may take a longer time before you gain access to this new technology, since banks with smaller customers have fewer resources to invest and a smaller client base to worry about. If access to newer, more secure banking features is an immediate priority for you, consider starting the search for a new checking account.