The ATM Goes Cardless

More Power to Phones as Banks Enable Cardless Transactions

Colt_lLast week, Wells Fargo, the third-largest bank in the US, introduced a service providing its account holders with cardless, smartphone-based access to its 13,000 ATMs in the country.

The Bank of America and JPMorgan Chase were first to introduce the feature to a limited number of their ATMs in the US, but Wells Fargo is the first major bank to enable phone-based access across its fleet of machines.

The feature should bring convenience to customers; people may leave behind their wallet but they tend to always carry their phone. It also amplifies the role of the smartphone in people’s everyday lives, and in financial services.

Wells Fargo’s cardless system requires a user to install the bank’s app, which generates a one-time eight-digit access code that’s used together with the customer’s PIN to authenticate the ATM transaction.

Wells Fargo also plans to allow customers to access their accounts through their NFC-capable smartphone and to initiate an ATM transaction by signing into a mobile payment service such as Apple Pay or Android Pay. Currently, 5,000 of the bank’s ATMs are NFC-enabled. The use of wireless authentication for ATMs is not a new concept having been first pioneered in South Korea in 2004, but the growing prevalence of smartphones and consumers’ willingness to use digital authentication solutions have certainly helped accelerate these concepts into the mainstream.

Service providers such as banks and government agencies are increasingly relying on two-factor authentication through smartphones. It offers a relatively easy method of giving customers convenient and secure access to their accounts. Users are becoming more comfortable with using their smartphone for these services, potentially allowing apps to replace costly security tokens that generate temporary passcodes.

The Fido Alliance was formed in 2013 to create a standards-based process of multifactor authentication for Internet service logins. The process requires users to approve online logins through a secondary preregistered device — usually a smartphone — by using either biometrics or a PIN code.

Google, MasterCard, Microsoft, Intel, Qualcomm and Visa are some of the top supporters of Fido and Japanese wireless operator DoCoMo has already rolled out Fido’s biometric authentication specification on its subscribers’ iOS and Android devices. This enables customers to access details about their DoCoMo account and to use the device for other Fido-certified sites. DoCoMo put itself in the middle of a two-factor authentication process making it a little harder for subscribers to leave to rivals.

Wells Fargo is being particularly energetic in launching its phone-based access system, but other banks and service providers aren’t far behind. Smartphones are increasingly becoming a key to life.