Smartphones Could Replace Cards at ATMs

A British bank is testing ATMs that let customers take out money using their phone rather than a bank card. It says the technology could be safer than using a card because there's less room for hackers to steal details.

Withdrawing money without a card isn't a completely new idea. One rival bank already allows users to get cash out using a smartphone app that generates a unique code that they can then type in to the phone to get money. The idea is to remove the need to carry a card, for example on a night out.

The new system from Barclays would be even quicker to use however, and wouldn't necessarily require app. Instead, the user would simply wave their phone near the ATM, type in their PIN code (on either the phone or the ATM) and select an amount to withdraw.

Android Only For Now

As an alternative method, a user waiting in line at an ATM could enter both the PIN code and the withdrawal amount on the phone, then simply wave it at the ATM to make the cash come out. However, they'd only have 30 seconds to do this before the system would lock out and they'd have to re-enter the amount and PIN. (Source: engadget.com)

The system works through Near Field Communication (NFC), a wireless technology that works over a few centimeters rather than the longer distances of WiFi or Bluetooth. It's the same system used on contactless payment cards. The Barclays system will work on compatible Android handsets but as yet isn't available on iPhones because Apple won't let third-party apps use its NFC technology.

Technology Overcomes Skimming Scams

According to Barclays, the system can be more secure than using cards for a couple of reasons. One is that it avoids distraction theft in which a user is distracted during the time the card is in the machine, making it possible for a thief to take the card, the cash, or both. That's less likely with the phone method because the user never needs to let go of the handset. (Source: bbc.co.uk)

It could also overcome the problem of skimming in which scammers place a device on the ATM that appears to simply be a chunkier-than-usual slot but is actually a tool for reading the information on a card and capturing its PIN, making it possible for the scammers to clone and use the card.

What's Your Opinion?

Would you use your phone to withdraw cash if that was an option? Do you think the benefits are significant? Can you see any obvious drawbacks?