Is Cash Divorcing the ATM? A Look at the Future of Cash Machines

Trevor Mast
Senior Vice President Financial Services Products
Posted on June 11, 2015

green atm

Despite the fact that ATMs have only been mainstream for the last 30 years or so, many people already wonder whether their time as cash dispensers is about to end. The continued rise of technology has made card purchases available almost everywhere, and now mobile is adding to the mix. Cash is becoming far less common in people’s wallets.

That doesn’t mean cash and ATMs are going away. A Federal Reserve report from the Diary of Consumer Payment Choice (DCPD), showed that consumers actually prefer to use cash more frequently than any other payment method, including debit and credit cards. That alone will keep ATMs running. What may surprise you most, however, is that advances in payment technology are creating a new future for ATMs.

Who is using ATMs and cash?

Cash remains king. It’s the preferred payment choice for small transactions, the leading payment alternative for Gen Y-ers, and the primary payment option for lower income segments. It’s also the number one method of payment for a number of expense categories, including gifts and person-to-person exchanges; food and personal care items; entertainment; transportation; medical, educational and personal services; and government and nonprofit expenses.

According to a Federal Reserve study completed in Oct. 2012, the average American consumer had 59 transactions with 23 of those involving cash. That was the largest share of consumer purchase activity, although those transactions amounted to only 14%of the total consumer transaction value – averaging about $21 per cash transaction, compared to $44 for debit cards and $168 for checks.

Future of ATMs & cash

ATMs save time for consumers – and money for financial institutions – by eliminating the need to visit a bank or credit union branch and speak with a teller or financial advisor in person. As new technology continues to develop, they also will offer new features to support customers.

That’s already happening internationally. In Latin America, for instance, consumers can use ATMs to pay for water, phone and electricity bills, and even pay to view a soccer game on a home TV. In Switzerland, new ATM machines allow consumers to open bank accounts, receive new debit cards rather than cash and even sanction car loans.

ATMs with features like these will soon be more common in the United States, but that’s not all.

Banks are starting to realize that consumers want flexibility when withdrawing cash. There are special ATMs that allow bank account holders to withdraw cash in varying denominations, sometimes as small as $1 to $5. This allows consumers to only withdraw what they need. With mobile phone usage on the rise, bank cards may not even be needed to access accounts at ATMs. The demand for card-less transactions is on the rise as it provides convenience and security for consumers. Not only does it make it easier to transact at the ATM, but it also prevents card skimming fraud. In fact, some financial institutions have mobile banking apps that communicate with an ATM and prepare a transaction before the consumer arrives.

The future of ATMs is starting to look green as well. ATMs are evolving with the attempt to better the environment by providing an option to email receipts. In fact, 100% of new ATMs in Japan will soon see cash recycling as an added feature.

While technology is certainly shaping the future of payments, the traditional cash method does not seem to be going anywhere anytime soon. Along with the advancements of ATMs, financial institutions will benefit from breaking preconceived notions about these machines by educating consumers on their usage and benefits.  Find a partner who can help set a strategy and direct them to the future of ATMs.

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Trevor Mast
Senior Vice President Financial Services Products

Trevor’s expertise in product management, sales and client service; as well as team leadership; sets him apart from his peers and allows him to provide executive-level guidance to his teams and with his colleagues. At FIS, Trevor provides executive oversight of the credit, debit, ATM, software, and fraud prevention product portfolio.