Future Trends of the ATM

ATMs, or automated teller machines, have been a staple in the banking industry for decades. They allow customers to quickly and easily access their bank accounts to withdraw cash, check balances, and perform other financial transactions.

But today's ATM is evolving along with new technology and user preferences. For instance:

The rise of mobile banking and online payment platforms is changing the way consumers use ATMs. From cash apps to cashless ATMs, here are a few innovations currently in use or on their way.

ATM Trends for 2024

Based on financial patterns and industry reports through the end of 2023, the demand for cash continues in emerging economies. But in North America, ATM usage continues to trend downward. According to financial reporter James Pothen, financial experts estimate that by 2027, only 10% of all transactions will require the use of cash and checks.

At the same time, 93% of consumers expect to use cash in future transactions. At the national level, legislation has been introduced to protect cash and require merchants to accept cash. Meanwhile, ATM manufacturers are getting creative to meet consumers' needs.

Here's what the landscape looks like for ATMs in the near future.

The Contactless ATM

Contactless ATM image (credit: Enes Evren) showing a woman holding a mobile phone open to a QR code, standing in front of a contactless ATM
Image: Enes Evren

With the growing popularity of mobile payments, an increasing number of ATMs now feature contactless card readers and mobile wallet compatibility for quicker and safer transactions.

Sometimes called a 'virtual ATM,' the contactless ATM makes it easy for customers to initiate withdrawals using a banking app on their smartphone. Although the process can vary by ATM, the technology uses near-field communication to transfer data directly from an app to a payment terminal. Most cardless readers require bank customers to confirm their identity by scanning a QR code to withdraw cash.

Consumers who prefer to leave their debit card and/or wallet at home can still get cash on the go, providing they know ahead where to find a contactless ATM. Generally, it's simple to search online or contact your bank to find out which branches feature ATMs with contactless readers.

Of course, the method is far from foolproof. Not every smartphone can communicate with a cardless reader. A low phone battery can stall the process, and hackers may be able to target mobile data (this is less likely if the phone is protected by facial recognition and passcode protocols). But customers may want to carry analog debit cards, just in case.

Not sure if a particular machine is cardless? Just look for a contactless payment symbol on the ATM.

The Cash-Recycling ATM

Anyone experiencing a high rate of deposits at their ATM or within ATM networks may benefit from cash-recycling ATMs, which can accept, authenticate, and provide quick turnaround for cash withdrawals. A cash-recycling ATM reduces the frequency of going to the bank for cash replenishment and makes ATM management more efficient.

How does a cash-recycling ATM work?

During each deposit, bills pass through an automated scanner that accurately reads denomination and identifies both acceptable and non-acceptable tender (foreign bills or counterfeit money is re-routed to a holding area). Acceptable cash denominations are accurately counted and 'recycled' for future withdrawals.

Because of its super-reliable operation, a cash-recycling ATM helps protect financial institutions from fraud risk while improving uptime and serviceability for customers.

The Cashless ATM

Farmers market clerk accepting a debit card for cashless ATM payment
Image: Youngoldman

In some instances, merchants at non-traditional businesses require customers to transfer money directly from their digital wallet to the merchant. Think of amusement parks, bars, bowling alleys, farmers' markets, and other vendors who operate purely on a cash basis.

For these merchants, a point-of-banking (POB) technology makes the most sense. Like a POS device, a cashless ATM allows customers to swipe their bank cards and enter a PIN. Unlike a POS device, however, a cashless ATM asks customers to transfer a given amount to the merchant, who then dispenses either a redeemable receipt/voucher or QR codes in return.

Benefits of a cashless ATM are straightforward: the system offers easy setup, greater security (less cash on hand), and flexibility for businesses that don't use a traditional account for debit/credit payments.

But the cashless ATM does come with a few downsides. For one, transactions must be done in fixed cash increments. And because transactions are out of network, customers may pay an out-of-network fee.

The Multi-functional ATM

What about the financial institution that wants to offer customers even more options beyond those of a typical ATM?

Increasingly ATM manufacturers are developing multi-functional ATMs that can help patrons pay bills, fund transfers, exchange currencies - even charge a mobile phone - and video conference with a live teller as needed. Such ATMs are future driven and transformational for both banks and customers.

Additionally, a multi-functional ATM may feature dual modes, blending a traditional ATM with a cash-recycling ATM, plus live video interaction. And customers can take advantage of these features wherever and whenever they like with 24/7 service.

Strategic ATM Placement

Blonde woman using an ATM inside a retail setting (image via Lechatnoir / iStock)
Image: Lechatnoir

In the past, ATMs were only available in bank branches or other locations with a physical presence. However, the rise of mobile banking has led to the development of ATMs that can be accessed from anywhere. This trend is likely to continue, with more and more ATMs being placed in convenient locations such as supermarkets, public transit hubs, and gas stations.

When ATMs are placed indoors at a local retail establishment or gas station, they ensure greater safety for both customer and business owner. They also can create more foot traffic in rural areas where brick-and-mortar banks are scarce.

ATM placement can also benefit banks or credit unions that may not want to budget for a full branch in a remote area. Patrons or credit union members also benefit from an in-network ATM where they might normally pay out-of-network fees.

Biometric Authentication

Fraud. Theft. Skimming. These are all trends financial institutions would like to see disappear. Which is where new ATM technologies come into play.

Take biometrics. Increasingly, banks and ATM owners are bolstering security with biometric authentication - including the use of fingerprint scanners, facial recognition technology, and even iris scanners that can verify a user's identity.

Today's smartphone users are becoming familiar with such technology, as newer phone models encourage the use of facial recognition options in lieu of passcodes for day-to-day security. As more devices follow suit, the ATM is first in line for this security update.

In the future, expect more security features driven by artificial intelligence (AI) that can detect suspicious activity around ATMs and improve each machine's responsiveness to fraud and break-in attempts.

A Word about IoT Innovation and Connectivity

OptConnect mylo, cellular router for IoT devices like ATMs

Regardless of future ATM innovations, one need is constant: reliable wireless connections that keep ATMs online even when cellular carriers experience downtime.

The right IoT router - combined with 24/7 remote management - can also give ATM owners insight into their digital connection, predict the need for maintenance, even offer remote intelligence on the next firmware update.

No matter how sophisticated future ATMs become, they need to stay connected to the Internet. And for that, they need OptConnect.

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