EMV PCI ATM Industry essential guide

Mobile cash access: Combining mobile with ATMs

"It's the most novel thing anyone will see at the conference."

That's a bold statement, to be sure, but one that Richard Crone makes without a moment's hesitation. Crone is CEO and founder of Crone Consulting LLC, a firm that helps companies convert payments from a cost of business into new revenue-producing lines of business. In the opening session at the ATMIA US conference, not only will Crone present that "most novel thing" — Mobile Cash Access — but he'll also give attendees an opportunity to try out the technology for themselves in simulated ATM transactions and live POS transactions.

In a telephone interview last week, Crone provided a fly-by of his session, "Mobile Payments and Mobile Cash Access: How Smartphones Activate Advanced Functionality at ATMs." The following is a slice of the mobile spectrum he'll address in the session. At the end of three hours, he says, "They will know all the ins and outs of [mobile] … Everyone's been asking where the current stakeholders of ATMs play in mobile payments. And this session will answer that question for them definitively."

Q: What problem does Mobile Cash Access address?

A: Well, if you think about cash access today or really ATM access, it is controlled by a magnetic stripe and pin. It's identifying the personal account number and the personal identification number for the strong authentication of the consumer before they access cash. It could be a chip and pin as well.

The thing that most ATM deployers take completely for granted and don't even think about is that the 16 digits are owned and licensed by Visa and MasterCard … or the other cards — Discover and American express. Every card issuer pays a royalty for the use of those numbers. On top of that every issuer is the merchant of record for cash withdrawal. They're the ones that actually pay the interchange to the network.

Q: Okay, so it solves the problem of paying an ATM interchange fee. How?

A: All right. So here's where mobile cash access comes in. We're actually going to demonstrate for the first time in the marketplace technology (from a company that's in ultra-stealth mode) that will allow you to access the ATM using a mobile smartphone app. It does not require any new hardware on the ATM and it doesn't require the use of Near Field Communications or NFC in the phone. It's a software only approach. And the disruptive aspect of this is that a bank can now use their mobile banking application to open up their ATM and provide not just cash access but a whole list of other advanced functionalities, like tapping into the processing power and the network connectivity and the strong authentication of the mobile application rather than relying on a dumb card.

Q: No bankcard, no interchange fee? Nice.

A: Right. The key here is that you're leveraging the strong authentication of the mobile banking app and the fact that the bank owns the authentication credentials themselves, so that they actually do an "on-us" transaction. They cut the networks out for cash access. The other thing is that they can provide cash access to accounts that would never issue a debit or a credit card and actually bring in a whole new set of customers for using their ATMs.

That is huge because the ultimate utility for a funded account of any kind is cash access. But there's a bunch of accounts that are landlocked and don't have access to cash. And so here we have the ultimate win-win. We have banks with hundreds if not thousands of ATMs that are not a break-even because they just need more transaction activity and we have a bunch a funded account holders who want access to cash from either their brokerage or their mutual fund or their gift card or their payroll account, or even their Internet payment scheme which have idle balances resting. And the banks now provide access by using the mobile app and not having to issue a royalty-based debit or credit card in order to get access to cash.

Q: Oh … so I could actually get ATM access to that money I've had sitting in PayPal forever?

A: Terrific example, because our guesstimate is that about half of those PayPal accounts have idle funds in them. And PayPal makes it very hard to get the money out. So here's the win-win. PayPal could provide more utility to the account and people are more likely to use it for funding if they know they can get the cash out.

And so if I was Citibank and I wanted to make mobile cash access available to PayPal accounts (and we're speaking in hypotheticals here and not implying that any of these brands are doing any of this) so if I wanted to make that available to them I could say, "PayPal, we'll make this service available to you completely for free. All we want to be able to do is charge the convenience fee, the surcharge that we charge now for anybody that's a foreign ATM cardholder. And you charge whatever you want." So PayPal could decide to give it surcharge-free or they could charge a fee on how they wanted to regulate the demand and the velocity of funds out of their account. It's a really big idea and something that the card associations cannot limit, cannot control.

Q: And it lets banks out of the mobile wallet slugfest with everybody fighting over what piece of the action they get ...

A: Good observation. In fact, think about it from the bank's perspective. They're working very hard to sign up customers to use their own mobile banking app. In fact, mobile banking is growing two to five times faster than Internet banking. We have some clients who, by the end of next year will have more customers connecting with them through the mobile banking interface than through the wired Internet interface.

So this is the new touchpoint for them and obviously there's big advantages for signing up their customers for their own mobile banking app. They can reduce calls to the contact center, more self-service, but as interesting as that is, the big benefit is injecting mobile payments and self-marketing into the mobile banking app. That's where they're going to make the big money. In fact, we project that they'll make at least two, maybe three times more than they're making on a total revenue basis from interchange and overdraft fees and interest income from the advertising and offers that come before, during and after every payment.

And so what the bank wants you to do is use your mobile banking app to locate an ATM, use your mobile banking app to check your balances. Use your mobile banking app to get offers and self service. But the last thing they want you to do is to close their app and open up a Google wallet or an Isis wallet or a PayPal wallet right before purchase. If that's the case then they lose the impression and interaction of making their customer contactable right before, during and after the transaction.

Q: This could go beyond just cash access, then, right?

A: You're using your mobile phone first to get cash. Cash is not going to go away any time soon. The first and foremost use gate is authentication and opening up the machine. What we're using this to do is to facilitate advanced functionality through the ATM, but doing it in a way that doesn't require a hardware upgrade.

The last thing the ATM deployer wants to do after being wounded by ADA for the last several years is to upgrade their ATMs with NFC readers. They just don't want to do it, and the fact of the matter is that they don't have to. Because what I'll show you is an approach that uses the existing capabilities of the phone, doesn't require any new hardware and it's a minimum disruption to the current infrastructure that gives them maximum capability. The same approach can be used at the physical point of sale.

Q: It sounds great, but how do you get people to adopt it? That's always the issue isn't it?

A: It is. All new payment types start first with merchant acceptance. The key here is that the banks can actually lead the charge because they're the merchant of record for the ATMs. That's where mobile cash access comes into play for them. It's a unique opportunity for them to lead their merchant base into mobile payment by using mobile cash access and prove the concept for themselves. And at the same time, saving the cost and effort and delay of having to do truck rolls to their ATM fleet to update it with NFC.

For more on this visit the ATM research center.

Related Content

User Comments – Give us your opinion!
  • chris boone
    68110870
    Ken Crone is speaking of Paydiant. They aren't "ultra stealth," they just haven't developed half of what they are marketing.

    There are a number of solutions with much more secure, robust and capable software only approaches, the leader of which is Cimbal. Look for great things from them in the very near future.
  • Abraham Paul
    68101217
    The fact is that I have innovated un-banked, non-internet dependent Mobile Payment ideas in 1996 after introducing IN based Mobile prepaid service in one of the first GSM networks in India.
    Later I have developed Mobile phone based car parking and toll free charging, fully mobile access based ATM service, Franchisee based hard cash transactions, high volume low value transactions without service charge, transfer of money from anywhere anytime, USSD based money management using fixed phones, direct disbursement of Govt. welfare and pension payments to beneficiaries, fully transparent micro-finance support for people in the lower economic strata and so on.
    I have given out the ideas for anyone to pick and use without bothering to patent it. Available in the net:
    Please see links below: Un-banked Pay by Phone Service for Micro Finance
    http://wp.me/p1ZsI2-2o

    Universal Money Management by phone http://wp.me/p1ZsI2-4g

  • Bill Field
    67987323
    Nothing new here M2CASH has been developing the atm cardless cash collection application for the past 5 years, now using virtual card

    Also look at atm4media
  • budi saufi
    67806697
    how can i get paid???
  • Abraham Paul
    67798478
    Hi Saufi. The way I envisage receipts of hard cash is as follows.
    1. MTM-ATM Kiosks. Connectivity between MTM-ATM kiosks and MTM system can be through Internet where available or through Mobile network using STB at MTM Kiosk end.

    2.Withdrawal of cash can be done using MTM Card (identical to ATM VISA / MASTER cards) provided by the MTM service provider or by accessing the MTM-ATM by mobile phone over mobile network and interacting with it with the Mobile.
    3. MTM-ATM Kiosks. Connectivity between MTM-ATM kiosks and MTM system can be through Internet where available or through Mobile network using STB at MTM Kiosk end. Withdrawal of cash can be done using MTM Card (identical to ATM VISA / MASTER cards) provided by the MTM service provider or by accessing the MTM-ATM by mobile phone over mobile network and interacting with it with the Mobile.
    4. Hard cash transaction through MTM Franchisee outlets and MTM money changers.
    Hard cash can be obtained at MTM franchisee outlets by transferring money from MTM users to franchisee’s MTM account without discounting or service charge.

    Hard cash can be also obtained from MTM cash vendors on nominal discount. By transferring money into their MTM account.

    This by itself can grow into a substantial business and employment potential. For example by paying hard cash at a discount of 0,1 percent in lieu of e-money transferred to their MTM account to can easily generate 36% profit by the money changers.
    Hard cash can be transacted between friends and relatives by transferring equal amount of money into their MTM account.
Products & Services

Single Hopper Card Dispenser, SCT3Q8

http://global.networldalliance.com/new/images/products/SCT3Q8_3A0241_100.gif

2931/Single-Hopper-Card-Dispenser-SCT3Q8

PaySite Bill Payment Kiosk

http://global.networldalliance.com/new/images/products/PaysiteRed_100.gif

250/PaySite-Bill-Payment-Kiosk

LG 39LN549E

http://global.networldalliance.com/new/images/products/6451.png

6451/LG-39LN549E

KioWare® Lite for Android™ – Kiosk Mode Software

http://global.networldalliance.com/new/images/products/4947.png

4947/KioWare-Lite-for-Android-Kiosk-Mode-Software

RFID & Customer Driven Smart Shelves

http://global.networldalliance.com/new/images/products/RFIDnanoShelf_100.gif

2911/RFID-Customer-Driven-Smart-Shelves

LG 47WL10MS-B

http://global.networldalliance.com/new/images/products/6435.png

6435/LG-47WL10MS-B

Thermal Printer - XPM-80

http://global.networldalliance.com/new/images/products/5141.png

5141/Thermal-Printer-XPM-80

Cutters - Twincut

http://global.networldalliance.com/new/images/products/5139.png

5139/Cutters-Twincut

PaySite Bill Payment Kiosk

http://global.networldalliance.com/new/images/products/PaysiteRed_100.gif

250/PaySite-Bill-Payment-Kiosk

SiteKiosk - Secure Kiosk Software

http://global.networldalliance.com/new/images/products/3091.png

3091/SiteKiosk-Secure-Kiosk-Software

CONNECT 2014 Mobile Innovation Summit
Request Information From Suppliers
Save time looking for suppliers. Complete this form to submit a Request for Information to our entire network of partners.