Transforming the ATM Through EMV
There are murmurs in the financial industry that the ATM could be a dying channel. With the proliferation of mobile banking, person-to-person payments and other remote channels, some feel that ATMs are useful merely as check depositories and cash dispensers, and even those functionalities w
But much like how we still have branches and paper checks, the ATM channel is not going away. In fact, with the upcoming migration to EMV, credit unions will have the opportunity to enhance their ATM capabilities and introduce fresh revenue generating services.
Complying vs. Strategizing
While deadlines for liability shifts and final implementation have been laid out by the payment networks, the specific dates vary between each organization and are widely perceived as a moving target. Nonetheless, EMV will become a requirement in the United States over the next few years and credit unions need to begin making plans now for how they plan to introduce the change.
It is important to remember that while EMV is one of many compliance issues facing institutions, it is one that should be approached not as a burden, but as part of a long-term payment strategy.
Fraud reduction is the clear leader in EMV benefits, but the transition also provides credit unions with the opportunity to expand the functionality of payment cards. With the additional memory capacity of chip-and-PIN cards, non-payment functions such as loyalty programs, contactless payments and other member services can be leveraged to enhance the member experience.
Most compelling, however, is the chance to use the EMV migration to make enhancements to ATMs that create new sources of income, offsetting the cost of compliance while plugging the holes left by drops in interchange fee income.
Outside of the growing use of ATM check capture, machines in the United States have not been the target of innovation in quite some time. Meanwhile, financial institutions in Europe and Asia have continued to focus on the channel as an important part of their revenue-generating and client service efforts. Recent upgrades to some international ATMs include:
- Online Account Access: Members can access their online banking accounts at the ATM in order to complete transactions such as various fund transfers, bill pay and personal loan applications.
- Donation Acceptance: During disasters and other times of need, your institution can serve as an automated hub for donation acceptance by enabling community members to give money through your ATM network.
- Event and Lottery Tickets: Members can use the ATM to purchase tickets to activities such as concerts, sporting events and movies, as well as lottery tickets.
- Virtual Prepaid Cards: Any consumer can create a virtual card by either loading it with funds from an existing bank account or can insert cash into the ATM (in the case of cash-in ATMs). The customer can then print a receipt that displays the value of the virtual card and all the details necessary when making purchases online. These cards could be valuable tool to reach the underbanked, as well as those consumers wishing to avoid Card Not Present fraud.
Each of these services represents additional income for the credit union through service and convenience fees. In addition, by offering innovative functionalities at the ATM, the credit union is broadening its exposure to potential members.
An important aspect of expanding your ATM functionality during the EMV conversion is to take a close look at the member base to determine which new services make sense.
What online banking services do they use the most? How tech-savvy are they? What other remote services are seeing wide adoption? When the credit union deploys the new ATM services, members’ transactions should also be tied back to the CRM system to enable targeted marketing at the device.
As you begin making the required ATM hardware changes to comply with EMV, take a look at your payment processor and card issuer as well. These vendors should be well versed in EMV processing and not exploring the transition for the first time as you are.
In addition, many of the advanced capabilities are easier to deploy if you bring some or all of your ATM management in-house and drive the devices yourself. This keeps the credit union from being tied to one provider and limited to a basic menu of ATM functionality.
Select software providers that provide the necessary technical assistance while giving the institution the flexibility and tools needed to create product offerings that improve experience for their specific member base.
For the foreseeable future, the U.S. will continue to rely on cash and therefore will need ATMs. The devices are becoming more and more intelligent and offer endless opportunities for targeted marketing and new services. Your ATM network should always be part of the conversation about a unified multi-channel experience and not left in the dust for the pursuit of new trends.