So, you're a little short on cash. No problem. You pull out your smartphone and tap in the four-digit code to open Your Bank's mobile app. You select the "get cash" option and are prompted to select an amount. You tap, say, $100. That's done.
Now you just need an ATM. You open the ATM locator section of Your Bank's app and ask it to find the nearest ATM for Your Bank. There's one a few blocks away — excellent. You cruise over and pull around to the drive-up ATM. You tap the machine's screen to wake it; it lights up, you aim your smartphone camera at the QR code on the screen and press the green "get cash" button on your mobile. Cha-ching. You grab your cash get on your way.
This was the picture laid out by mobile payments consultant Richard Crone in an all-morning session on day one of the ATMIA US 2012 conference. It was a fitting kick-off for the theme of the conference, "The Power of ATMs" and an appropriate tone-setter for an annual event that fairly vibrated with the energy of innovation — especially technologies that integrated the powers of the smartphone and the state-of-the-art ATM. The industry knows that a marriage of the two is in the making; Crone demonstrated how it might look.
More than merely a vision, though, the Mobile Cash Access program Crone shared with conference-goers is actually a working pilot program launched by Boston-based tech start-up, Paydiant, and FIS, a global provider of banking and payments technologies. Having emerged from stealth mode in late-January, the two are now working to build market acceptance among merchants and financial institutions. And Crone was at ATMIA US to explain why ATM network operators should be early adopters of this mobile solution over all others.
Speaking to a packed room, Crone started the session by repeating his mobile payments mantra, "The one who enrolls is the one who controls." He said that eventually FIs would have to decide whether they wanted to reinforce and empower their own brand with their own mobile payment app or "donate their customers," to other mobile wallet providers such as Google, PayPal and ISIS.
Banks, Crone said, were encouraging customers to use their mobile banking apps to locate ATMs, check account balances, perform various self-service functions and receive offers. "The last thing they want [the customer] to do is to close their app and open up a Google wallet or an Isis wallet or a PayPal wallet right before purchase." Doing so, he said, meant that the FI would lose out on valuable opportunities that were both image and revenue drivers. These opportunities included ad revenues generated before during and after the sale and foreign use fees. "The app puts your brand in their hand," he said. "And what we're trying to do is to connect to the customer before, during and after their transaction."
Throughout his presentation, Crone introduced benefits of the QR-based Paydiant system that he said made it more powerful, profitable and secure than other proposed mobile payment solutions. Some of these included:
- Paydiant MCA is an easily added software program that does not involve the difficulty or expense of installing EMV or NFC receptors in the ATM.
- Unlike mobile wallet set-ups, Paydiant MCA was not subject to carrier fees for secure data storage.
- Also unlike other mobile wallet apps, MCA did not store sensitive cardholder data on the phone or its SIM card — instead data was stored in the cloud.
- Because MCA uses cloud data, it is not subject to signal interception by thieves, a demonstrated weakness of both EMV and NFC.
- MCA offered the ability for consumers to access cash from accounts that were normally "land-locked" (brokerage accounts, PayPal accounts, Web-based bank accounts, for instance). Crone said FIs could approach these providers with an offer to attach them to the MCA system and let them set their own convenience fee at whatever level they wished to control outflows.
- MCA bypasses the sixteen-digit debit card number and makes the bank the credentialer and funding source, eliminating the need to pay Visa/Mastercard interchange fees, including the higher card-not-present fees.
- Between app and QR code usage, the FI is able to collect valuable analytics for the account holder, which can be used to demonstrate effectiveness to advertisers.
- Consumers gain the ability to stage an ATM transaction in the privacy of their home, office or car — there's no pin number to enter at the ATM.
- Unlike EMV and NFC, MCA is not encumbered by fighting among stakeholders — carriers, bankcards, processors — for a piece of the profits. It's ready to go now.
- MCA uses four-factor authentication for maximum security. This includes the unique identity of the phone. So another party should obtain the users PIN, they cannot use it on another phone to access an account. Because information is not stored on the phone, it is not jeopardized by the loss or theft of the phone.
Crone told his audience that they had a choice: to be aggregated by someone else or to be their own aggragators. "If you're aggregated by someone else like Google wallet you get increased spend and new customers, but it comes at a price." The price, he said was the opportunity to advertise, to gain invaluable customer information, to steer the customer's tender choice, to create a new line of business and to influence mobile trigger points, such as locating and check-in.
In a final slide Crone's presented four options to the ATM owner who recognized the inevitability of mobile cash access and mobile payments: Be a market leader, a fast follower, an advocate or a laggard. The provider that reached critical mass first, he said, would ultimately claim the market leader position … and the profits that came with it.
For more on this topic, visit our mobile banking research center.