New ATMs Use Phones Instead of Cards to Authenticate Customers – Rhoonet
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New ATMs Use Phones Instead of Cards to Authenticate Customers

This year, a handful of national banks plan to introduce ATMs that dispense cash when you tap your phone on a wireless keypad, instead of when you swipe your card.

Smartphone getting cold hard cash from the Automatic Teller Machine

It’s a mobile wallet innovation that mid-western bank Wintrust Financial and national bank J.P. Morgan Chase have already begun successfully introducing in several cities across the United States.

These new ATMs might just be the innovation that bridges the gap between online financial management services, cash, and digital wallets. Customers have been quick to adopt convenient financial management services like remote deposit, but slow to adopt digital wallet technology, which many people see as redundant or unsafe.

The Idea Behind the Digital Wallet

A digital wallets is an online payment technology that lets a person pre-register their credit, debit, gift, and


It’s called a smart or digital wallet

loyalty cards so that they can efficiently make payments from a smartphone or tablet. Many financial service brands offer digital wallets, including big players like PayPal (Mobile), MasterCard (MasterPass), Visa (, QIWI Wallet, and Allied Wallet.

Digital wallets combine the convenience of paying with cash (it’s faster to process, no PIN involved) with the ease and security of paying with a card (no messy change to sort out, no chance of losing paper money or having it stolen).

Customers Don’t Yet Demand Digital

A staggering 57% percent of consumers still do not know what a digital wallet is or how to use it, according to a


Market Force show 57% consumer don’t what digital wallet is

2016 Market Force study, and – for better or for worse – many do not care to find out. Since credit cards are already convenient and secure, many people don’t see the need to open and manage another account.

As of late 2016, very few American consumers make payments using a mobile wallet. Only 14% of the consumers that Market Force surveyed ever use a digital wallet, up just 2% from last year. The age group most likely to use a mobile wallet is 25-34 year-olds, who use services like PayPal Mobile and Apple Pay to make in-store payments, to “tap-and-pay” for purchases, and to conveniently store a loyalty card.

Even among those who use mobile wallet, it’s not typically the preferred payment method. A 2015 study by the credit card service company TSYS found that a negligible minority of consumers prefers to use a mobile wallet for in-store purchases. Consumers prefer, first, to use a debit card, second, a credit card, and, third, cash.

Like previous studies, the Market Force study concluded that, overall, consumers are far more interested in mobile financial management services than they are in mobile payment services.

Studies continue to show people prefer to visit the physical bank

It also concluded that people still like to visit a physical bank or, at least, to have the option of doing so. Only 3% of consumers use an online bank with no physical branch locations.

Banks are Slow to Innovate

In 2016, investors poured nearly $20 billion into fintech projects like the new ATMs. Despite efforts from banks like Wintrust and J.P. Morgan, however, most banks are slow to innovate. When banks do innovate, it’s usually in reaction to customer demands, and the demand for mobile wallet and similar technology just isn’t there.

A 2016 report by the business intelligence firm L2 analyzed the digital transformation of 70 financial service brands that operate in the United States. It found that, overall, banks were slow to adopt new online technology and, especially, to adopt new services like “Get a Quote” and “Find an Advisor.” Forty-four percent of the financial service brands that L2 looked at offered neither service to customers.

Wintrust and J.P. Morgan’s new ATMs, which Bank of America and Wells Fargo will also introduce in 2017, give customers the chance to get more comfortable using their phones where their cards ought to go. By integrating withdrawing cash and the mobile wallet, these ATMs help bring disparate payment methods into a coherent, single system.

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Stephen Kota

Steve Kota is the Chief Story Teller at Rhoonet. Mr Kota spent over 15 years as East Coast Territory Manager at HughesNet; the provider of rural satellite broadband.​ Steve spends his leisure time travelling, painting, fishing and photography.

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