Cardless ATM Transactions: Leveraging Mobile Technology to Improve the ATM Experience

Navigator Edition: February 2016
By: Melissa Fox

While we don’t foresee the U.S. becoming a cashless society any time soon, we are moving one small step closer to becoming a cardless one. Leading banks, including Chase, Bank of America, and Wells Fargo, have announced they will be rolling out ATMs that support cardless ATM withdrawals later this year—and where these banks go, the industry often follows.

What is a cardless ATM transaction?

With a cardless ATM withdrawal, customers use their mobile phone to initiate and authenticate a cash withdrawal, instead of inserting their debit card into a reader and entering their PIN on the key pad (see Figure 1).

Figure 1: Cardless Cash Withdrawal – Example

Figure-1_-Cardless-Cash-Withdrawal-–-ExampleSource: (graphic).

Although cardless technologies and implementations vary, cardless ATM transactions provide a number of incremental benefits over traditional cash withdrawals, including accelerated transaction speed, improved security, and increased opportunities for mobile engagement. There’s also the “cool” factor, with potential marketing and acquisition benefits in the short-term, as well as the longer-term potential to enable new ATM transactions (e.g., to create new endpoints for remittance services or P2P transactions).

Early Mover Experience

Bank of America, Chase, and Wells Fargo made headlines at the end of January (see Figure 2) with announcements that they will be joining the short list of banks, including BMO Harris, Wintrust Financial, and WSFS Bank, that support cardless ATM transactions for their customers.

Figure 2: Recent Cardless ATM Announcements

Figure-2_-Recent-Cardless-ATM-AnnouncementsSource: Public statements and First Annapolis Consulting research.

WSFS Bank, headquartered in Wilmington, DE, is a First Annapolis client and early adopter of cardless transactions. The bank upgraded all 50 of its on-premise ATMs in June 2015 to support FIS’ cardless cash withdrawals, and it plans to expand support to its 400 off-premise ATMs as well.

WSFS says its experience to date has exceeded expectations. Justin Dunn, Senior Vice President and Marketing Director for WSFS, says that customer feedback has been extremely positive. As with mobile POS payments, adoption levels are still low—Dunn estimates that less than 5% of transactions at their enabled locations are cardless—but satisfaction among users is high. “Once customers try it, and they see how fast and easy it is, they love it. We’ve been very happy with the repeat behavior we’re seeing, with customers trying it for the first time, and then using it again and again. The challenge is increasing education and awareness.”

To encourage initial trial and adoption, WSFS supported its roll-out with a robust marketing campaign, to which Dunn attributes much of their success to date: “We wanted to reinforce our position as an innovative bank and increase our appeal to certain types of customers. We’ve seen a spike in new account activity with immediate mobile adoption.”

Outlook & Considerations

For many banks, the business case for supporting cardless ATM transactions will be difficult to make:

  1. There is no direct, incremental transaction revenue associated with cardless ATM withdrawals. Current implementations are limited to on-us customer transactions, and while support for non-customer transactions is likely on the horizon, cardless access is unlikely to drive significant incremental fee income.
  2. Cardless transactions are also unlikely to result in significant cost savings. While there may be benefits to accelerating transaction speeds and mitigating skimming risks, cardless access is an incremental enhancement to the existing customer ATM experience. We do not expect it to result in significant changes in customers’ transaction behavior (e.g., increased teller transaction migration or shift in foreign ATM use).

The business case for cardless ATM technology is less about short-term economics and more about long-term positioning and channel integration. For early adopters—or even fast followers—we see opportunities to leverage cardless ATM access as part of a broader effort to reinforce and enhance a bank’s mobile strategy, to acquire new mobile-centric customers and/or wallet users, and to acclimate existing customers to interacting and conducting transactions via their mobile devices.

But even those that aren’t going to be early movers should be paying attention. Cardless ATM technology is new and still evolving—and far from ubiquitous—but we can foresee a time when mobile-based ATM interactions are market-standard. Cardless ATM access potentially opens the door for new ATM functionality, and with the three largest banks actively promoting mobile transactions, customer expectations for their bank’s ATM experience will evolve as well. As banks look at their mobile strategies and their roadmaps for upgrading/refreshing their ATM fleets, cardless transactions should be on the radar.

For more information, please contact Melissa Fox, Manager,, specializing in Payments Strategy and Innovation.

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