Banque Internationale à Luxembourg (BIL) has partnered with Diebold, a U.S.-based ATM solutions provider, to launch a bank transaction solution that enables users to withdraw cash from any of the more than 100 ATMs in BIL’s network by using a smartphone instead of a bankcard. In this type of transaction, through a procedure known as prestaging, users select the account from which to withdraw cash as well as the amount of cash to be withdrawn in advance of the smartphone’s interaction with the ATM machine. Consumers scan a QR code at the ATM to authenticate the transaction. Through an encrypted cloud connection, the scanning of the code signals the ATM to dispense cash. Person-to-person transfers are also available through the smartphone solution. The account owner generates an eight-digit code, which is validated via the cloud, and then sends the code to another user to make a one-time withdrawal of the predetermined amount of cash.
Mobile devices have altered the ways in which consumers conduct financial activities, especially, in emerging nations but also in developed countries. The devices have also encouraged a new mindset among users regarding what technology can do. This recently launched partnership between BIL and Diebold demonstrates one of the newest trends in mobile wallet solutions for consumers—the ability to withdraw cash from a bank’s ATM by using a smartphone. This phenomenon also shows that the unbanked in developed countries are of a different demographic than in emerging ones. For example, this technology can enable a parent to provide cash remotely to a child who may not have a bank account, which illustrates that in developed nations a mobile wallet is likely to be more of a means of providing cash than a substitute for cash as in developing countries.
Additionally, supporters of cardless ATM cash withdrawals tout various benefits including customer convenience and speedier transactions. The players in this partnership also claim that this method improves security, as smartphone cash withdrawals from an ATM reduce skimming risks at the machine, and the loss of an ATM card is no longer a concern. However, smartphones can be lost or hacked, and it would behoove all involved parties including mobile device manufacturers, ATM manufacturers and financial institutions to create solutions to counter such threats. While financial institutions and ATM manufacturers may be the driver of this movement, mobile operators are bound to receive some revenue, at least through connectivity charges for now, and in the future perhaps through fees received in helping to bridge other types of transactions that are conducted through ATM and mobile device interactions.