Mobile-Payments Specialist Paydiant Patents an App That Stages ATM Cash Withdrawals

A mobile-banking feature that allows ATM users to stage withdrawals in advance received a patent Tuesday from the U.S. Patent and Trademark Office. The technology, conceived and implemented by Paydiant Inc., a Wellesley, Mass.-based startup, has already been integrated into software at ATM maker Diebold Inc. and at Fidelity National Information Services Inc. (FIS), owner of the NYCE electronic-funds transfer network.

FIS clients Wintrust Financial Corp., Rosemont, Ill., and Los Angeles-based City National Bank have begun using the app, while an unnamed third financial institution will deploy it soon, according to Chris Gardner, co-founder at Paydiant.

To use the feature, a customer logs into his bank’s mobile-banking application, touches a button labeled “Get Cash” or something similar, and indicates the amount of the withdrawal. The application sends a token to the user’s device linking the user, his account number, and the requested transaction.

Later, at one of his bank’s ATMs, the user pushes a “mobile” button on the ATM screen and scans a quick-response (QR) code displayed on the screen to identify himself and trigger cash dispensing via an encrypted connection to a cloud server.

Gardner argues the app speeds up cash withdrawals while making them safer, since there is no need to enter a PIN at the ATM. PIN entry can be susceptible to skimmers or to so-called shoulder surfing, in which criminals lurk behind ATM users to see the PINs they enter.

The app is meant to be complementary to mobile deposit capture, by which customers can deposit a check by using a mobile device to create an image and send it to their bank.

Paydiant, whose mobile-payments app was most recently adopted by the Subway sandwich chain, is hoping the new withdrawal feature will also help banks set the stage for mobile payments, which are not yet accepted at most retail locations. “The neat thing about the ATM stuff is that ATMs are retailers or acceptance points [the bank] actually controls,” Gardner tells Digital Transactions News. “It allows [banks and customers] to be a little more patient about letting the [mobile-payments] ecosystem grow.”

Paydiant’s business model with the new feature as well as its mobile wallet is to provide technology but remain in the background as a so-called white-label vendor. “You won’t even see ‘Powered by Paydiant’ on this,” says Gardner. Still, the company is helping to sell the new technology to financial institutions with significant ATM fleets. “We’re talking to a whole bunch of banks,” he says. “I would be surprised if we don’t have another five or 10 [signed] by the end of the year, hopefully some of the big guys.”

ATM expert Sam M. Ditzion likes the combination of ATM and mobile technology represented by the new patent. “It’s certainly an intriguing concept. People have been trying to figure out for years what else we can do with ATMs,” Ditzion says. “How can we integrate these two technologies?”

But Ditzion, chief executive of Boston-based Tremont Capital Group Inc., an investment and advisory firm specializing in ATM systems, cautions the new feature will ultimately will have to deliver on its full promise. “Is there something about this other than being cool that actually adds value?” he asks. “Is it faster, is it more secure?”

The patent is the second awarded to Paydiant, following one granted nearly a year ago and covering a mobile-wallet and contactless-payment solution for in-store and online transactions.