With deadlines for the next wave of the EMV (Europay, Mastercard and Visa) chip card liability shift set to take effect for ATM network operators on Oct. 1, 2016, for Mastercard branded card ATM transactions, and Oct. 1, 2017, for Visa-branded cards; the race to adapt ATM equipment is on. However, a number of innovative financial industry players are finding ways to navigate beyond EMV's limitations.
In a mid-July 2016 agreement with Payment Alliance International, FIS NYCE Payments Network became the first national payment network to support mobile phone-to-ATM transactions, according to FIS. The partnership connects the FIS Cardless Cash mobile program, which eliminates the need for plastic cards, with PAI's network of 70,000 ATMs located at retailers, gas stations and convenience stores nationwide.
Prior to the collaboration, in early 2015, FIS began rolling out its Cardless Cash program through bank client ATMs by leveraging its preexisting FIS Mobile Banking app. With FIS Cardless Cash, customers can preorder an ATM cash-withdrawal from their mobile banking app for pickup at a nearby ATM. A tokenized, single-use quick response code makes it possible to execute secure ATM transactions, the company said.
"FIS has 36 million mobile banking end-users who are already connected to the brand," said Douglas Brown, Senior Vice President and General Manager of FIS Mobile, noting that the expansion of FIS Cardless Cash through the PAI network was a natural extension for FIS since it gives end users access to cash whenever and wherever they want. For PAI, this marks the third such partnership in the past year. The company also partnered with Fiserv Inc. to develop CardFree Cash, a revised version of Fiserv's Popmoney mobile cash platform. According to PAI, users receive an encrypted token along with an ATM locator, which allows them to retrieve funds at nearly 5,000 ATMs across the United States.
In October 2015, HalCash North America teamed with PAI to launch Pin4, the first independent U.S. cardless cash network not to require an ATM card or bank account, PAI noted. Initially launched in Chicago, Los Angeles, Miami and New York, Pin4's full nationwide rollout is expected to be complete by the end of 2016. According to HalCash, the Pin4 API enables promotion and remittance companies, financial institutions and other businesses to deliver real-time, mobile, cardless cash to customers.
With Pin4, customers can key in four-digit tokenized codes at ATM locations. "What is even more interesting is they are working with insurance companies and other reward/redemption companies that today issue checks for redemption," said Donna Embry, Chief Payments Advisor at PAI. "Instead of issuing large numbers of checks, these companies can text a single-use token, which customers can use to access funds at a PAI ATM."
The number of ATMs in the United States compromised by criminals in 2015 was up 546 percent over the previous year, the highest ever recorded by FICO Card Alert Services, which monitors hundreds of thousands of ATMs nationally. According to FICO, nonbank ATMs were most impacted in 2015, and the average duration for ATM compromises dropped from 36 days in 2014 to 14 days in 2015.
While card skimmers and cameras have been popular tools for ATM fraudsters, compromise techniques are advancing. "The skimmers are getting smarter," Brown said. "They're starting to use techniques called inserts, which goes beyond that superficial skimmer that sits outside the machine. The insert is a physical device that is inserted inside the tracks of the machine. These inserts prey on both EMV and non-EMV cards."
And EMV cards that contain mag stripes fuel the problem. "With the phone-based authentication in Cardless Cash, you don't have that, because we don't even put the card data onto the phone. We don't send your card information from the phone to the machine. The phone speaks to the ATM over a secure cloud path network."
Brown pointed out that another benefit with cardless cash is speed. "Because you can get in and out of an ATM in 11 seconds, there is a lot less physical threat to you," he said. For FIS customers, speedy access to funds is attracting customers. About 10 percent of FIS' early mobile banking adopters with access to Cardless Cash now use it, and that number continues to grow, Brown noted.
According to Embry, cardless ATM technology is highly cost effective. "Nobody has to do anything differently," she said. "It doesn't add to the cost of the machine, there is no hardware or capital cost to change a reader or certify anything, so it won't be onerous for them to have to have this on their machine. It's all upside. We have software available at the manufacturer."
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