I was out of the country recently, and saw the ease with which funds were withdrawn from an ATM using only a mobile device, not a card. After thinking about this, I have come to the reality that it may not be point-of-sale access that will drive NFC to the mainstream, but cardless ATM access.
Isis is testing now in a couple of cities, Google Wallet will recalibrate their efforts and work so that mobile commerce could begin the process to become a mainstream payment tender as is a plastic card today. Many were disappointed that the iPhone5 did not have an NFC chip, and that many smartphones are sold without an NFC chip. That combined with the complexity of adding a payment cards’ mag stripe data to the mobile device and it would seem that there is much still to be done to equal the utility of a plastic card. Yet if mobile commerce, that is buying goods and services using the mobile device, is ever to become mainstream, cardless ATM access may be the key.
Regardless of any success with mobile/NFC at the POS, if the cardholder still must have a plastic card to access funds at an ATM, what’s the point? The path for NFC to mainstream is to be a universal solution for payments. No one will see a real breakthrough if NFC is only a cardless POS replacement methodology. If NFC is to make the leap to mainstream, the cardholder must be provided with a total solution to replace a plastic card by using their mobile device.
In Africa for example, a cardless ATM transaction is common place, and the process is fast and secure. I believe the success of mobile/NFC lies with the ATM industry and the creation of a universal file structure that allows access to the 450,000 or so ATM’s in the United States. The ATMIA did see that cardless ATM access is an important element in the total picture of payments. It sees the importance of being the keeper of the vision for cardless ATM access to allow the owners of ATMs to support one file format to reach most, if not all of the ATMs in the country.
There are two primary process flows for cardless ATM transactions, push and pull. For a push transaction for example, a state could want to disburse funds during an emergency, and is unable to get a plastic card to this group quickly. Pushing funds via a mobile device with a dynamic PIN would allow for the disbursement of funds. On the pull side for example, this is a cardholder out on the town, and decides they need more cash, in this model they would pull funds from their account, only without a plastic card.
Such a solution is not without its headwinds. Getting all of the ATM owners, manufacturers, as well as the issuing institutions and card processors on the same page is a formidable task. Yet, if there is to be an environment where the mobile/NFC device is a ubiquitous payment solution, cardholders will require that they can access cash via an ATM. The ATMIA has taken a bold step to create a structure that can be used by all to provide a cardless transaction. Now, we need all of the stakeholders to work to develop a solution that will allow for NFC to become mainstream.
Merchants will be unwilling to invest the funds or FTE cycles to implement NFC if scale is not reached, and there are millions of cardholders wanting to buy with the ease and convenience of mobile. In the early days of “pay at the pump” for petroleum retailers, many said that they would not spend the money to upgrade to pay at the pump, and soon went out of business. If a petro retailer does not have pay at the pump, they watch many potential customers drive off in search of pay at the pump. Technology does not drive incremental sales for a merchant, yet having NFC may be seen in the same light. Potential customers will shop elsewhere, if they know that they have to carry a card with them to shop. Mobile commerce has the ability to be a game changer, yet only when there is scale, and I believe that scale is only possible with a total solution, POS and ATM.
Mr. Williams brings over 24 years of experience in credit and debit cards arena. As president of President of Paymentcard Services, Inc. he has designed and implemented fully operational credit, debit and prepaid card and mobile commerce programs for clients throughout the world. Clients include Federal law enforcement agencies as well as other law enforcement agencies within the State governments. Paymentcard Services is a prime contractor to DHS for a terminal based prepaid access device interrogation at point of arrest. He is a member for Texas’ Counterterrorism and Critical Infrastructure Committees dealing with post event infrastructure recovery. In addition to his work designing and implementing payments efforts, Jack as key to the development of the International Red Cross’ mobile disbursements effort in Haiti, post earthquake.