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What happens to ATMs when we all pay with our phones?


It is easier than ever to spend money. Credit cards, mobile payments, e-banking, and e-commerce customer-to-vendor payments are all growing at staggering rates. These services are creating a new generation of customers hungry for streamlined, convenient payment systems. Today, there are $348 billion in mobile payments alone and by 2022 that number will skyrocket to almost $1.3 trillion— a staggering increase of 272 percent in three years. In fact, there are scant countries where electronic transactions aren’t growing faster than physical money. So what does that mean for cold-hard cash and the Automated Teller Machines (ATMs) that dispense it?

Contrary to popular belief, ATMs are not going the way of the dinosaurs–at least, not anytime soon. They remain extremely popular: Over $400,000 in cash withdrawals are made every second from 3.2 million ATMs around the world—that’s 17 percent of global GDP. Cash is cheaper, more anonymous, and still the most commonly used payment, constituting 85 percent of global transactions. All that cash has to come from somewhere.

ATMs have come far since the Barclays bank in London in installed the first model in 1967–but they’re about to make their biggest leaps yet. The next generation of ATMs will trim the time it takes to get cash from minutes to seconds, deliver state-of-the-art features like video banking, and leverage biometric capabilities to protect customer security.

Getting Cash Fast

The average customer is busier than ever and even cash users expect it to be as quick and convenient as electronic payments; luckily, ATMs are keeping up.

1.2 million ATMs worldwide now offer automated deposits, a 10 percent increase from last year, saving banks money by reducing tellers and customers frustrating experiences in lengthy bank queues.

The Tower is a new ATM designed specifically to dispense cash rapidly using a debit card, or even a thumbprint, to complete a transaction the user started on their phone before they arrived. Other ATMs would be dedicated for more complicated transactions, streamlining both types of customer’s experiences.

Cash recycling is a growing feature at ATMs. This means that the cash deposited is the same cash that is dispensed. It’s cheaper for the bank and faster for the customer and some 16 percent of ATMs globally are now capable of it—a number expected to grow in upcoming years.

Distance Makes the Service Stronger

While the number of ATMs fell for this first time this year, decreasing by 1 percent thanks to branch closures and mobile money, that still leaves 3.24 million ATMs around the world. More than half of them are in China, the United States, Brazil, Japan, and India, all of which except India experienced declines in numbers this year. However, in the rest of the world—particularly in other emerging markets— ATM numbers are growing. By 2024, there will still be 3.22 million.

This is particularly relevant for remote areas. Approximately half of ATMs are located away from branches, a number increasing with 15,000 off-site ATMs erected in 2017 alone. In these markets, ATMs of the future will operate like mini-branches, offering features once exclusive to brick and mortar banks like opening accounts, paying loans, and dispensing money from multiple currencies in a more cost-effective and convenient way.

These are particularly important as the industry looks for ways to include the world’s 1.7 million unbanked, particularly in rural areas and developing countries. In Chile and Egypt, for example, 60 percent of ATMs are off-site. Even in advanced economies, like the Netherlands and Sweden, 70 percent of ATMs are off-site.

FirstOntario Credit Union in Canada offers remote teller services where rural customers can use an ATM to video chat with a banking associate who can help them pay loans, get cash advances, or book appointments. Similar services in Turkey and Singapore are housed in soundproof booths and marketed as micro-branches in areas where an entire bank would prove too costly.

Financial inclusion, described as a “building block for both poverty reduction and opportunities for economic growth” by the World Bank, is a global development priority and ATMs will remain a crucial part of it.

Security is paramount, and ATMs are delivering

A growing number of data breaches in recent years means public concern is honing in on finances and cybersecurity—and for good reason. But as long as cash continues to thrive, as is likely for years to come, ATMs will be a physical target. This means that the next generation of ATMs must be vigilant, harnessing cutting edge technology to keep customers and their finances safe.

Many ATMs will soon be card-less, forgoing clunky and insecure plastic for biometrics that include fingerprint scanners and facial recognition software. The cash barrel dispenser is another innovation that uses a thumbprint instead of a card—speeding up transactions while increasing user security. Pins are easy to steal— fingerprints are not. Still, other ATMs will resemble tablets and provide contactless service, making them more user-friendly and less likely to transmit germs.

A safety feature crucial to all of these ATMs of the future will be safe locks, the high-security and electronic locks that help customers enter ATMs swiftly while preventing unauthorized access.

Whether it is speed, convenience, security, and global economic development, ATMs aren’t becoming irrelevant. Instead, they’re hurtling into a future where customers expect them to be as nimble and accessible as the electronic payments they’ve become accustomed to. In this future, cash is still king and the ATMs that dispense it matter more than ever.

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