Cardless cash access: the innovation smartphone-first customers love
No debit card? No problem! “Cardless cash” or “mobile cash access” first appeared at automated teller machines around 2016. Bank of America, Chase, PNC, Wells Fargo and Barclays were early to market with the feature, which lets customers withdraw cash from ATMs directly using their bank’s smartphone app without using a debit card. Today, the cardless cash at ATMs feature is offered by FIs around the world, from HSBC to Commonwealth Bank of Australia to Canadian Imperial Bank of Commerce to Bank of China, to name a few.
How cardless transactions work
With the cardless access feature, customers and others can get cash and make other transactions at participating local “cash machines” without having a physical debit card present. When an ATM accepts cardless transactions, its menu will display a payment icon like those used to pay with a card in a store.
Access is via one of the following:
A mobile banking app. When at an ATM, the customer signs in to their account with a financial institution using the FI’s app on their smartphone. They then navigate to the ATM withdrawal feature, scan the ATM's QR code or enter a one-time access code shown on the phone. After authorizing the withdrawal on the phone, they can get the cash from the ATM.
Mobile money/digital wallet. With a mobile money account—a digital wallet (Apple Pay, Google Pay or Samsung Pay) that provides access via smartphone—they can open the digital wallet and choose the debit card. They hold the phone up to the ATM's contactless transaction icon to access their account and withdraw cash.
Mobile money has become foundational to increasing financial inclusion in the developing world. Accounts can be opened at places like convenience stores—even if the person doesn’t have a traditional account with a FI. The practice was first used in Kenya with the use of M-Pesa in 2007 and quickly took hold in Cameroon, Malawi, Tanzania and Togo.
A cash code. Companies and organizations can make cash payments to people without FI accounts by sending a one-time cash code via SMS, a mobile app, call center, IVR and other channels. The recipient can find an ATM on the participating network and scan the code to get cash.
Who uses cardless cash?
Access to cash at the ATM without a card is an option that appeals to many types of people:
Tech-savvy users. A report by eMarketer highlights the rising popularity of mobile banking: a massive 97% of digitally-savvy millennials (born between 1981 and 1996) and 91% of Gen Zers (born between 1997 and 2012) say they use mobile banking. This suggests tech-savvy users are comfortable managing finances through their phones, making cardless cash access an attractive extension of their digital banking habits.
A massive 97% of digitally-savvy millennials and 91% of Gen Zers use mobile banking.
Early adopters. A study by Nielsen explores the concept of innovation adoption and identifies "early adopters" as a group eager to try new technologies. Cardless cash access might be seen as a novel feature that showcases a bank's commitment to staying on the cutting edge to consumers many FIs consider important. For these consumers, it can enhance an FI’s brand image as innovative and convenience oriented.
Only 76% of the world population has a bank account, but 86% of people worldwide own a smartphone.
Security-conscious users. Some people prefer to rely on their smartphone's authentication features (fingerprint ID, passcodes) rather than using PIN-and-debit-card-based ATM security. Those who worry about skimming or card theft at ATMs may also find cardless cash reassuring—because the card isn't used, there’s little risk of unauthorized card access.
People on the go. Those who like to travel light find cardless cash access convenient because it lets them access cash without needing to carry a physical debit card.
Globally, there were 401 million mobile money accounts in 2022. Africa had 218 million active users—more than any other region.
The unbanked. Cardless cash represents financial inclusion for people around the world who do not have traditional bank accounts, including the 60% of the world’s population (2 billion people) who earn their livelihoods in the informal sector. And though only 76% of the global population has a bank account, a whopping 86% of the population owns a smartphone, which gives access to mobile money.
Rideshare drivers and other gig workers. Some companies offer workers a one-time code they can use to pick up their wages daily or after their shift.
Charities. Some organizations use a code to deliver cash to people in crisis, such as victims of domestic abuse, to help them reach a place of safety.
Emergencies. Anyone can send cash with a one-time code to stranded friends and family members if their FI offers this option.
Who doesn’t use cardless cash
Cardless cash isn’t for everyone. It generally doesn’t appeal to:
Those who don’t have a smartphone or are unfamiliar with mobile banking. Those who don't use mobile banking or are uncomfortable with digital transactions might prefer the traditional debit card method.
Those who prioritize privacy. Users who value privacy over convenience might be concerned about the potential for increased data collection associated with using their phone for ATM transactions.
Those in areas with limited mobile network coverage or frequent outages. Cardless cash access relies on a functioning mobile app and network connection. Users in areas with spotty reception might be hesitant to rely on this method, as it could lead to failed transactions.
Ultimately, the people most impressed by cardless cash options at ATMs are those who value convenience, security (with some caveats), innovation and a streamlined digital banking experience. FIs that can effectively target these user groups and address potential security concerns are likely to see increased adoption of this new technology.
Benefits to customers (and enticements to prospects)
Offering cardless cash at the ATM offers customers several benefits:
Reduced friction. No more scrambling to find a lost or forgotten debit card. Customers can access cash with just their phone.
Biometric authentication. Some cardless cash access systems use smartphone-based biometric authentication, such as fingerprint scanning or facial recognition, for augmented security. These authentication methods can enable fast, secure ATM transactions without the use of a traditional PIN.
Integration with budgeting apps. Some budgeting apps let users link their mobile banking app’s cash access feature for easier tracking of ATM withdrawals within their budgeting framework.
A recent study found that 72% of global banking customers now expect a banking experience tailored to their personal needs. These benefits can help FIs meet customer expectations of convenience and user-friendliness.
Benefits to FIs
Brand image. Cardless cash can help FIs showcase their commitment to innovation and modern technology in a world where more than 80% of financial institutions globally are concerned that they could lose revenue to more innovative competitors. Implementing innovative features like cardless cash can signify a willingness to embrace new trends and cater to the evolving needs of customers. This forward-thinking approach can enhance brand image and attract new customers, especially early adopters and other tech-savvy customers who prioritize a digitally focused banking experience. A recent study found that the feature had a significant positive influence on usage intention.
Reduced physical card dependence. The need for issuing and replacing physical debit cards can be minimized with increased adoption of cardless cash. This can lead to cost savings for financial institutions.
Streamlined operations. Cardless cash has the potential to streamline ATM management processes by reducing reliance on physical cards and associated maintenance procedures.
Focus on core business. These efficiency gains can free up resources for FIs to focus on their core activities, such as product development and customer service improvement.
Challenges and considerations
Despite its benefits, cardless cash faces some challenges:
Security concerns. Protecting user data and preventing unauthorized access remains a critical priority. Robust security measures are crucial to ensure safe transactions and build trust with users. The widespread adoption of cardless cash will depend on FIs’ commitment to prioritizing robust security measures such as multi-factor authentication and investing in technology infrastructure to support compatibility.
Technological limitations. Not all FIs currently offer cardless cash. Compatibility across different ATM networks is essential for wider adoption.
Limited user demand. Not everyone uses mobile banking or may be comfortable relying on their phone for quick transactions. Tech-savvy customers who like using their phones for everything already have multiple purchase options through their phones’ digital wallets. Others may just not yet know about it but make like it if they learn about it through their FI’s promotional channels. But for those who do know about and like cardless cash, it may be a valuable option.
Should your FI offer these options at its ATMs?
Whether to offer cash withdrawals using a smartphone app, mobile money using a digital wallet or cash with a one-time code is a strategic decision each FI must make based on their goals. If one or more of these options is implemented, it will be important to educate your customer base about the option and how to use it, so that those for whom this is valuable know about it—and so that it can be used as a tool to enhance your brand’s perception as an innovator among customers and prospects.
