How do cardless ATMs work? (2024)

Money Management

A cardless ATM gives customers the ability to withdraw cash without the use of a debit card. They work similarly to a traditional ATM – dispensing cash following successful identification – and may still have a card reader that can be used if preferred.

Cardless ATMs are equipped with technology needed to securely identify a customer and dispense their cash without the debit card present. This is known as “cardless cash.” The only requirements are a smartphone, a checking account that supports cardless cash, and the bank’s app. Cardless ATMs display a distinctive contactless sticker, so they’re often easy to spot, too.

How do cardless ATMs work?

The main principle of a cardless ATM is to make cash accessible without a debit card. Depending on the account provider, additional security measures are used to allow access to cardless cash: quick response (QR) codes, near-field communication (NFC), verification codes, and biometrics. Let’s take a deeper look at how each one works.

QR codes

QR codes have become a familiar sight in modern society, as they are frequently used when sending packages or on menus, for example. These small, pixelated squares hold far more information than a standard barcode, but it’s not necessary to know exactly how QR codes work to use them for cash.

To withdraw cardless cash, the user first requests the withdrawal through their banking app. The ATM will then provide a cardless cash QR code to be scanned to complete the transaction.

NFC

Most modern smartphones will be equipped with NFC capability as standard, allowing people to use their smartphone as their wallet.

This same technology allows users to share their bank details with the cardless ATM to facilitate a withdrawal, known as an NFC ATM or tap ATM. Simply open the app, tap the phone on the reader, and enter the PIN when prompted, exactly as if the card is present.

Verification codes

A user’s banking app on their smartphone may instead create a one-time cardless ATM verification code when a cardless withdrawal is requested. Enter the code at the ATM to trigger the identification process and complete the transaction. These codes can only be used once and are usually time-sensitive and expire shortly after use.

Biometric verification

Smartphones are often equipped with facial recognition software, fingerprint scanners, and even retina scanners as an enhanced way to help keep private information secure. Some banks offer this service, letting customers access their finances with face recognition ATMs. Alternatively, a fingerprint ATM can scan fingerprints as a form of verification if the customer has shared this data with their bank.

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Potential advantages and disadvantages of cardless cash

Cardless ATMs and cardless cash may appeal to some and not to others. Like many feats of modern technology, there are potential benefits and drawbacks to consider. Here are some possible pros and cons of cardless cash.

Potential advantages

• No need to carry a card: The main advantage of a cardless ATM is that cash is available without a card, so it solves the issue of forgetting a wallet at home. Cardless ATMs also allow the user to access all their accounts, even those with cards that usually stay at home.
• Extra security: When the debit card is removed from the equation, banks need to add levels of security, so some cardless ATMs use two-step authentication. To enhance security, verification codes expire, while biometrics are of course individual. Plus, all identification processes need the user’s smartphone to be present. Cardless ATMs also offer physical advantages by potentially removing the risk of tampering devices like card skimmers.
• No additional costs:Banking apps are typically free and enabling cardless withdrawals generally won’t incur any extra costs. Simply use the app instead of a debit card. This could vary depending on the bank.

Potential disadvantages

• Compatibility issues:Without a compatible smartphone, it is impossible to use a cardless ATM. Crucially, the smartphone must also always be in working order, which may not be useful if someone’s phone is prone to crashing, runs out of battery, or becomes damaged.
• Location:Cardless ATMs are not yet the norm, with only some larger banks providing them. This means they may be harder to find, so leaving home without a wallet or purse should ideally be planned out in advance.
• Smartphone security: As smartphones hold more personal and financial data, it is important that they are adequately protected. The safest way to do so is to never share banking log-in details with anyone. Also, consider installing trusted anti-virus software and remain vigilant when using unfamiliar connections or websites.

Cash is still king in some parts of modern life, and cardless ATMs provide valuable access to cash without the use of cards. Consumers may prefer cash in certain situations, such as to avoid a card processing fee or if they choose to maintain privacy. Cash could also be useful in an emergency.

But alternatives to cash, like PayPal’s digital wallet, are more important than ever – especially if there’s simply no ATM nearby.

Learn more about the PayPal digital wallet.