(Update: Story is updated throughout. Adds quote from KAL executive in eighth paragraph.)
For all the speculating we do, the future is still full of all sorts of counterintuitive surprises. For example, who would have guessed that we’d make phones so smart that they’re hardly used to make phone calls anymore? And now, an ATM software company called KAL has introduced an astonishingly unlikely product: the cashless ATM.
On the face of things, it wouldn’t be unreasonable to assume a cash-free ATM is a completely useless machine. A card-free ATM makes sense, but a cash-free one confounds: what in the world could this machine possibly do for me? But KAL’s ATMs are not, in theory, useless, but their appeal is a bit narrower than the typical ATM.
Rather than dispensing $20 bills, KAL’s RTMs — “Retail Teller Machines” — dispense retailer-specific paper vouchers, which retailers are then obligated to turn into cash for customers. The RTMs, KAL claims, offer a “full range of banking services” otherwise. But unlike an ATM, an RTM cannot stand alone in a vestibule or on a street corner; they need a retail location to house them, but strangely, the value proposition is to banks, not retailer or consumers.
“RTMs are a tenth of the cost of an ATM to own and operate, so banks can have them everywhere,” writes KAL on its website. With RTMs, banks don’t need to worry about theft or the costs of stocking the machines with cash, and other maintenance, because they’re entirely cashless. Banks can install one in your local Sam’s Club and forget about it entirely. At 1/10th the cost of a traditional ATM, banks could expand their networks to 10 times their current reach. This could also help online banks like Ally and ING Direct broaden their footprint in the real world. But that’s not to say the RTM is without its potential problems.
To customers, the value proposition is minor. Sure, they might have wider access to their bank’s ATM network, but they’ll have to go to the RTM, get a voucher, and then deal with a clerk to redeem the cash. Even faced with a $2 fee, many customers might just use an off-brand ATM for the convenience it offers, compared to an RTM.
It would also free your corner bodega from the scourge of maybe-trustworthy off-brand ATMs. You could know that Bank of America® is behind the transaction, which is comforting. But it does introduce a new set of concerns.
When a customer takes, say $80 out of the RTM, the retailer is immediately reimbursed the $80 by the bank, and must dole out $80 in cash. That makes enough sense, but what if the retailer is out of cash? There’s not always a good way of predicting how much cash an ATM will need to get through a business day, or week, and now the onus is on retailers to stock plenty of $20s in their registers just to keep their RTM working. But high-volume businesses are not who the RTM is for, according to KAL.
“It’s not ATM volume,” explained Steve Hensley, Executive VP of Sales at KAL. Retailers would likely be doing two to three transactions a day, he said. With higher volume, banks would install a proper ATM. And furthermore, there is a button on the RTM that retailers can toggle off when they are out of cash, preventing customers from ending up with unredeemable vouchers.
By freeing banks from the fear that their ATMs might get stolen — which we imagine to be a high-risk, low-reward crime, just as it has been depicted in Barbershop and Breaking Bad — KAL’s new RTMs put all the risk on the retailer’s end. But with low-volume, this shouldn’t be an issue, according to Hensely. And furthermore, by giving out cash throughout the day, while deposits are made in their bank account, retailers might actually be lowering their risk of robbery.
The product was initially developed for developing countries where ATMs are more scarce, explained Hensley — it wasn’t developed for the American market. But there has been some interest, hence the American launch of the product. That might also explain why the product seems a bit confusing for American consumers, who are much more accustomed to the convenience of a traditional ATM.