​One bank's answer to card skimmers? ATM withdrawals using a smartphone

UK bank Barclays has launched a new service that lets customers withdraw cash from a teller machine using its smartphone app.

Smartphone payments might have paved the way for a cashless society but there are still places when old-fashioned cash is necessary.

As of Monday, Barclays customers will only need their smartphone to withdraw cash thanks to its new contactless mobile cash service.

Barclays, the second largest bank in the UK and the last major holdout for Apple Pay, claims the new mobile service is a more secure way to withdraw cash than cards since the device is in the customer’s hand, cutting out card skimmers and limiting shoulder surfers. The service also works with contactless cards, which removes the need to insert a card into a machine.

To withdraw cash using a smartphone, Barclays customers would need to open the mobile app and select ‘contactless cash’ before typing in how much they want to withdraw and their PIN. The ATM recognizes it as a contactless withdrawal and asks the users to tap the phone on the machine to complete the withdrawal.

Barclays is pitching the feature to customers as a timesaver. As a security feature, the new method of withdrawing cash may provide bigger benefits to the bank than consumers since UK banks are accountable for losses incurred from card skimmers. If consumers take to smartphone withdrawals it could reduce these losses.

“Those in a hurry can save time by logging in to their Barclays Mobile Banking app to pre-select the amount of cash they want to withdraw and insert their PIN. They then have 30 seconds to tap their phone against the contactless reader on the in-branch machine, which will automatically dispense their cash,” Barclays says.

There are a few limitations on the service. For one, the Barclays service will only work on Android smartphones with NFC chips and the maximum withdrawal is £100.

iPhones and Apple Pay are not supported because the service can only be used within Barclay's mobile banking app and Apple doesn’t allow third-party wallet apps to access iPhone's NFC chip — a sore point with some of Australia’s biggest banks, including CommBank and Westpac, which have filed a claim with Australian competition regulator, the ACCC, to bypass Apple’s rules.

Barclays isn’t the first to use smartphones for cash withdrawals at the ATM. In the UK, the BBC notes that Royal Bank of Scotland lets customers withdraw £130 however that system relies on SMS and codes still need to be typed into the teller.

In Australia, St George Bank last year let customers use its mobile app to withdraw cash, setting a total daily limit of $1,000 over three transactions.

Bank of America has also trialled a careless system at ATMs to let customers withdraw cash using Google’s Android Pay.

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Tags card skimmingBarclays BankCommBank appst george bankcontactless paymentscyber security

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