Are Card-Free ATMs Around the Corner?

Could the next generation of ATMs be here? One financial technology services firm is rolling out a new system in 2016 that will allow consumers to use an ATM without an ATM or debit card. Here's how it will work:

  • The consumer contacts his or her financial institution, which uses its security checks to confirm the consumer's identity.
  • The consumer receives an 11-digit code from the financial institution. The consumer is then transferred to a system that provides a personal identification number, or PIN.
  • The consumer can then go to an ATM. Instead of inserting his or her card, there will be a button on the screen where he or she can then enter the 11-digit number and corresponding PIN.

Once consumers complete those steps, they will then be given one-time access to their account, just as if they had an ATM or debit card.

This technology has been successfully tested and is expected to become more widely available later in the year.

Does this mean we will see a phasing out of plastic cards at ATMs? Maybe.

ATM skimming continues to be an ongoing problem. As we know, more financial institutions are issuing EMV cards to replace vulnerable magnetic stripe cards. Even with this change, EMV cards can be skimmed with the right reader. And these devices are fairly easy to acquire.

The reality is smartphones may end up being the way most consumers gain access to ATMs in the future. This change could save financial institutions the expense of issuing cards—especially when they have to be replaced when a security breach occurs.

With no card involved, it becomes more difficult for thieves to utilize skimming devices that capture account information from cards. Service providers are already testing the use of smartphones to access ATMs.

However, the struggle to outsmart criminals remains difficult, because they're determined to find any weaknesses in technology they can exploit. In the process of building smarter and more secured systems, we may be seeing how consumers access their money evolve in ways never considered just a few years ago.