Brief:

• Mastercard partnered with ATM maker Diebold Nixdorf on a test of two services that let people quickly get cash by using a mobile app, according to a press release.
• The Cardless ATM feature lets account holders withdraw cash from the nearest ATM using a banking app. Once they're at the machine, a person can tap or scan a QR code on their phone, authenticate their identity and receive their cash without having to pull out a card.
• The other feature, Mastercard Cash Pick-Up, lets banks send cash securely and easily to any person, banked or unbanked, through special ATMs without using a bank card. The two companies are demonstrating both services at the Money20/20 Europe trade show in Amsterdam, June 4-6.

Insight:

Mobile devices have let many consumers reduce their dependence on cash for purchases or payments, reducing the need for an ATM, but many banks are increasingly reliant on the machines to expand their service footprint and offer a wider variety of services, such as ticketing for sports events or purchases of stamps, per the Financial Times. 

Mastercard and Diebold Nixdorf's cardless ATM technology can help banks market their services to more customers, such as the 7% percent of households in the U.S. that don't have a bank account, and the 20% of households that are underbanked, meaning that the household had a checking or savings account but also obtained financial products and services outside of the banking system, according to FDIC data.

Cardless ATMs hold benefits for both customers and banks. They likely make transactions more convenient and transparent for consumers, while cutting down transaction time, as most of the identity authentication and other tasks are handled via mobile app. This would remove friction from branch visits and help banks serve more customers quickly. At the same time, cardless ATMs could be more secure because majority of the transaction takes place through a person's banking app and not a card, eliminating the risk of fraudsters slipping card readers or pin trackers into the machine. ATM fraud was responsible for 70% of total debit card fraud in 2016, per research cited by Business Insider.