(August 30, 2007) New mobile-transaction technology developed by ATM maker Diebold Inc. is already attracting interest in the marketplace and promises to change not only the way consumers interact with ATMs but also how they pay merchants and each other. The North Canton, Ohio-based company announced earlier this week it had received five patents covering technology that allows consumers to use mobile phones as input devices at ATMs, among other applications. “It’s been only a few days, but there are hints from our sales associates that there may be customers interested in this,” says Jim Block, director for global advanced technology at Diebold.

Diebold argues the products would make ATM services much faster and convenient, and would increase transaction security at the same time. In one scenario, for example, a traveler in a strange city would use a global-positioning service on her cell phone to find the closest ATM, then would use the Diebold application to “order” cash at that machine, or in other words instruct the local network to dispense cash when she arrives at the ATM. Upon arrival, she would use her phone to enter a one-time pass code sent to her by the network to make the machine spit out her cash, avoiding the possibility of so-called shoulder surfing and card skimming, techniques used by fraudsters to capture card information and PINs as users interact with ATMs. A pending patent application would allow the phone user to identify the machine to the network by using the embedded cell phone camera to snap a picture of a bar code emblazoned on the ATM and then entering the numeric code.

In another application covered by the existing patents, a handset user could communicate with an ATM while standing in line behind another customer who is already using the machine. The technology, says Block, would keep track of the amounts of cash to dispense in each case.

With yet another application described by one of the Diebold patents, individuals would have the ability to pay each other electronically. In this scenario, the template of a check image would appear on the device’s screen. After the user fills out the “check,” software in the phone serializes the document so the user could transmits it to his payee, who could then cash it by downloading it at a teller window, either through a service offered by the wireless network or via near-field communication. At this point, the image enters the payment stream as would any other check image. “This [service] assumes the infrastructure has developed where the bank would be able to take an electronic image of a check much as it takes a paper check,” says Block.

While he says it is difficult to estimate how long it will take for the applications to become commercial products, Block says the likelihood is three to five years. The product most likely to launch first, he says, is the one that allows consumers to order up cash at ATMs. “It doesn’t require a lot of other technology to mature before it’s possible,” he says.

In pursuing a marriage of cell-phone and ATM technology, Diebold hopes to take advantage of the near-ubiquity of cell phones, together with growing interest in mobile banking, particularly among younger consumers. For example, in a recent survey conducted by Boston-based researcher Celent LLC, 50% of consumers age 18 to 25 said the availability of mobile banking was somewhat important, important, or very important to them in selecting a bank.

(Jim Block discusses the Diebold technology in detail in the upcoming October issue of Digital Transactions magazine).