As ATM’s & Payments Go Mobile, Will You Carry Cash or Buy Digital Currency?

By Randy Smith,

Mobile Wallet Media

August 28, 2013

About Mobile Wallet Media

Mobile Wallet Media is a news media, analyst, marketing and consulting firm focused on the future of mobile: payments, marketing, loyalty commerce, security, prepaid, virtual currency, daily deals and the convergence of them all with social and local. The Chief Editor, Randy Smith, was the primary founder, inventor and former CEO of MobilePayUSA, a TechCrunch Disrupt Startup Alley Winner.

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You’ll soon be able to withdraw cash at ATMs using your phone. NFC and QR codes, used to power mobile payments, will also be used for mobile or cardless ATM transactions.

In July, MCX partnered with FIS Global and PULSE partnered with Paydiant.

The MCX partnership appears to be aimed at lowering processing costs for network retailers. FIS owns the NYCE network which enables PIN debit and ATM transactions nationwide. This partnership will mobilize transactions for NYCE at retailers such as Wal-Mart, Target, 7-11, Kohl’s and another 20+ top US retailers.

PULSE is also a nationwide debit/ATM network and is owned by Discover. Paydiant seems to be capturing major ground in the US, other than not gaining the MCX technology partnership. Last year PayPal partnered with Discover. By year’s end, with the assistance of 50 merchant acquirers on board, PayPal is projected to be ready to conduct transactions at 2,000,000 US merchant locations.

In light of these POS/ATM/Mobile partnerships and once ATM’s are mobile-enabled to replace cards, does this not open up ‘Pandora’s Box’ to a myriad of other possibilities? What if your ATM offered $105 in virtual stored value cards to buy groceries or gasoline vs. withdrawing cash $100 in cash? What if you were offered the option to set up automatic monthly purchases of digital gift cards to buy groceries, gasoline and various restaurants and department stores to earn bonus virtual dollars of 2-20%?

Why will banks want to do jump into the marketing of digital gift cards? There are three key reasons. First, the judgment of the Fed’s pricing of 21 cents for debit transactions is still too high. Second, the partnerships mentioned above will enable lower debit card transaction costs nationwide. Third it’s a great way to earn revenues.

Clearly, banks need new, more profitable revenue streams. They are already charging fees to high heaven, so that’s out, or should be out. Banks need to embrace the hybrid model of prepaid currency or they will be left out of the party. The commissions earned by locking and loading stored value for retailers may be several-fold the value of debit transaction fees. Google may get paid 80 cents for a click-thru, but could get paid $8 if they were able to prove they drove the customer to make a purchase. Transactional marketing is the big wave that banks must ride into the future or be disrupted. It’s a triple win for banks, retailers and consumers.

Marqeta, a company I’ve recently covered in comparison to the ill-fated future of bitcoins, is at the forefront of offering bonus-value, prepaid, virtual currency. Offers are purchased and redeemed seamlessly through a single card and setting up recurring bonus-buy purchases is an option. Marqeta is just getting up and running, but has kind of a big partner in Facebook. It manages the platform for the recently launched Facebook Card. With mobile payments MARKETING REACH will be KING. This model will soon become ‘THE MEGA-TREND in PAYMENTS’ due to its convenient way for consumers to secure great deals. As I wrote about last fall, it is the marriage of daily deals and gift cards.

The conclusive reality to be addressed is if you can get cash back at grocery stores or gas stations, if you can conveniently buy virtual bonus-value gift cards or coalition currency for most all shopping via your phone app over an ATM, and you can perform mobile deposit in seconds, then what need is there for ATMs?

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