US banks to test ATMs which accept your smartphone instead of cards

Dozens of banks in the US are updating their ATMs, or installing new ones, in order to allow customers to withdraw cash without using bank cards. A new cardless system will be rolled out at around 2,000 cash machines across the US, operated by at least 28 banks, including giants like Wells Fargo, Bank of America and Chase.

Under the new system, people order cash on an app on their phone, and then scan a code at the ATM to receive their money, all without inserting a card or entering a PIN. The developers of the system insist that smartphone technology makes for faster and more secure transactions. More banks are expected to adopt the technology soon.

"We think our model reduces a lot of vulnerabilities," Doug Brown of FIS Global, a major provider of software and technology for ATMs, told AFP.

Brown predicted that cardless technology would appear at as many as 80,000 machines across North America in the next 18 months – and that they'll be taken up internationally too.

One of the advantages of the technology is that it prevents skimming – a technique by which criminals steal data and money from people with illegal devices secretly attached to card slots. Skimming is thought to cost the banking industry billions of dollars a year in reimbursed funds.

Brown also claimed that it reduces the time taken for an average ATM transaction to just 10 seconds, down for 30-40 seconds.

"The performance is kind shocking to some people, they almost jump back at the instantaneous response," Brown said. "But it provides more physical security because they can make the transaction faster."

Some machines will only require a software update, but others will need to be entirely replaced.

ATM manufacturer Diebold is testing a "headless" machine, without a screen or keypad, which dispenses cash from interaction on the smartphone. Customers will then provide a fingerprint or possibly a retina scan to release their cash.