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EMV-based ATMs may help lead the way to cardless transactions

EMV-based ATMs may help lead the way to cardless transactions

With the transition to the EMV standard approaching in little more than five months, banks are making their ATMs ready for the process. The primary benefit of using smart chips in cards is the increased security: With magnetic stripes easy to break into and replicate, defrauding bank users remains a regular occurrence among banks. EMV, however, is difficult to crack, making it a viable solution. In addition, the efforts of Visa and MasterCard to transition both financial institutions and customers into using the technology now includes taking on fraud responsibility if a merchant is using the chip-and-PIN standard. The standard may also ease into a newer standard of transaction that is currently in development: cardless ATMs.

ATMs with EMV capabilities provide a secure starting standard

Given that ATMs are a target for fraud through card skimming, EMV should be deployed in a manner that will help mitigate that situation. Another step in that direction is cardless ATMs. As My Bank Tracker defines it, this concept is similar to using a remote control on a TV. A customer walks up to an ATM, places his or her smartphone next to it, and conducts business such as withdrawals and deposits through a mobile app provided by the financial institution. All of this can be done without even using the ATM directly, as the mobile device interacts with the ATM on the customer's behalf, including inputting the PIN.

The process is currently being experimented on in the U.S. through certain banks. Recently, BMO Harris Bank, which serves the Midwest, announced a pilot program of cardless ATMs called mobile cash. Around 750 ATMs will be equipped with this function around the region, utilizing quick response codes to perform the service. Another 150 will be ready for use in June 2015.

Currently, the functionality of cardless ATMs is limited to cash withdrawals, though it's possible it could expand in the near future. It offers a possible secure option in transactions, since the card isn't directly needed. However, there are still security risks involved, especially as the technology is still young. EMV, on the other hand, is a proven standard that has existed for nearly 30 years. There have been very few if any successful attempts to break into the chip itself. Banks that are looking to gain a more secure way of completing transactions may see cardless as the future, but should look to EMV as the most effective way of keeping their customers safe.

April 22, 2015