At ATMs, the PIN is being replaced by preferences. And reward points and even coffee cups.
As the number of ATMs in the U.S. nears half a million, and the demand for cash diminishes in favor of credit cards and contactless payments, the makers of money-dispensing devices are seeking alternate uses for their technologies. Increasingly, they are finding opportunities in the store.
And retailers, which are innovating brick formats to hold up against digital shopping, are ripe for it. Online (and therefore cash-free) purchases are predicted to account for 12.4% of all U.S. retail sales by 2020, according to Statista. But regardless of where the purchase is made, just 12% of shoppers prefer to use cash. So more retailers, from CVS to Walmart to Whole Foods, are adopting cash-free shopping options that rely on mobile wallets, click-and-collect and similar technologies.
In short, the retail buying process has become, for payments providers, an opportunity to add value — using ATM technology to integrate online and offline interactions for “in-line” experiences that complement sales clerks with kiosks, cash with reward points and layaways with automated lockers.
Learning from Asia and Europe
To get a sense of what to expect, look to Asia and Europe, where the adoption of mobile payment systems is far more accepted.
More than half (53%) of connected consumers in the Asian Pacific use mobile devices to pay for goods. In the UK, 41% of credit cards have contactless functionality.
And in Sweden, 59% of consumer purchases are made without cash. This may be why one Ikea store has gone completely cash free, while in China several merchants are testing staff-free stores that rely on mobile apps for payment. And in the UK, coffee mugs are replacing wallets. More on that last one soon.
The result is thousands of defunct ATMs. In the U.K. alone, nearly 4,800 ATMs closed from July 2017 to June 2018, or about 400 a month, according to Paymentsense, a merchant services provider.
10-Inches to Checkout
To protect market share in the U.S., ATM manufacturers are exploring ways to reach consumers directly where they spend, such as with retailers. In the simplest sense, this plan can manifest in the form of small ATMs at marijuana dispensaries, where people are required to pay with cash due to the patchwork of laws across states that legalize it. More complex innovations include smart lockers, and in between are card-free ATMs that offer special services.
Diebold Nixdorf, one of the world’s largest ATM makers, has developed a miniature mobile-enabled terminal, less than 10 inches wide, that can serve as an ATM, a point-of-sale terminal and a self-checkout unit. The concept connects with the participating retailer’s app, so customers can build lists and plan their trips in advance. Once in store, shoppers receive location-based product recommendations and suggestions on how to navigate the store faster, while scanning the items they want using their smartphones, bypassing checkout. At the same time, the terminals allow shoppers to collect cash, deposit checks or pay bills.
The technology could incorporate additional features, such as aligning products on the list to where the shopper is in the store, while alerting her in advance if the store is out of a listed item. Likewise, the system could help retailers manage inventory by comparing active lists with available stock.
Diebold Nixdorf also develops in-store smart lockers, like those used for retail click-and-collect, that securely hold digitally purchased items until shoppers retrieve them using an app, biometrics (such as facial recognition), cash or card.
Rewarding ATMs and Coffee Cash
In less merchandise-heavy areas, banks are outfitting ATMs to dispense retail loyalty rewards and exploring other “handheld” technologies.
Payment Alliant International uses beacon technology to direct in-store shoppers to its nearby ATMs, where they can redeem loyalty program reward points for cash. Cardtronics, another leading ATM maker, also offers loyalty program integration, as well as coupon dispensing and full-motion video advertising for targeting by time of day and the ATM card.
U.S. shoppers may even find cups replacing their wallets, as in the case of UK’s Costa Coffee, Europe’s largest coffee chain. It is introducing “Clever Cups,” outfitted with contactless payment chips by Barclaycard, so customers can pay with a wave of a mug. Users also can add to their credit balances and track spending. Why might this matter in the U.S.? Because Costa’s parent is U.S.-based Coca-Cola.
Cash lovers shouldn’t fear, however. These ATM efforts might spill out across retail in 2019, but they won’t likely replace cash in the near term.
Indeed, lawmakers are trying to protect cash, or at least consumers without credit cards. The Cashless Retailers Prohibition Act, introduced in July, would make it illegal for retailers and restaurants to reject cash or charge a different price based on the payment type used.
The law is designed to do what all retailers, and ATM designers, should do as well: Design around the customer. If ATM technology replaces PINs with other features, then it should be to remove pain points, with common-sense options that align with shopper needs. And those needs often, above all, include ease.
Banks can develop the technology, but they need retailers, and shoppers, to inform it.