Tpi Cash And At Ms The Future Chip Wickenden 10 Jul2011

© 2011 NACHA — The Electronic Payments Association®. All rights reserved. No part of this material may be

used without the prior written permission of NACHA. This material is not intended to provide any warranties, legal

advice, or professional assistance of any kind.

Cash and ATMs: The Future

Chip Wickenden

FIS Global

The Payments Institute – July 10-13, 2011 – Washington, D.C.

© 2011 NACHA — The Electronic Payments Association®. All rights reserved.

• Cash

• ATM

Definitions

2

Ready Money, Money in the form of bills or coins,

Money holding a defined or stated value.

Acronym for ―Automated Teller Machine‖,

Synonym: ABM, or ―Automated Banking Machine‖.

Unattended electronic machine at a bank or other

location that allows customers to perform cash

withdrawals and basic banking activities.



A Brief History of ATMs

3

ATMs in the bank

lobby, or at the

bank entrance,

connected to the

bank DDA

system

Regional ATM

networks form:

mutual benefit

model

National

networks form,

network

consolidation,

card brands

enter Surcharge model

emerges

Shared deposit

functionality

emergesAdditional

dispensing and

transactional

services added

Image Deposit

and Currency

recognition

deploys

Reduce

teller

transaction

cost

Expand

coverage,

improve

customer

usage

Improve

coverage

and utility

for smaller

FI’s

Enhance

the revenue

model

Non-

customer

fee income

Card

Associations

define value

plays

Increase

utilization of

non – cash

dispensing

functions

1969

PIN Debit

at the POS

2011



ATM Use in the United States

4

425,010

415,321

395,000

396,000

383,000

371,000

352,000

324,000

273,000

227,000

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

Total U.S. ATMs

11.8

14.9

10.1

10.5

11.0

10.8

10.5

13.6

12.8

10.8

-4.0 1.0 6.0 11.0 16.0

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

Total U.S. ATM TransactionsBillions of Trnsactions

55%

18%

9%

18%

Types of U.S. ATM

Transactions

Withdrawls

Deposits

Balance Inquiries

Other

Sources: Creditcards.com, Wired Magazine



How ATMs Work

5

ProcessorNetwork Interface

/ HSM

Consumer Printer

Card Reader

Journal Printer

Internal Switches

Currency Cassette



How ATMs Work

6

Device Controller • Handles Customer

Interaction

• Validates Cards

• Manages screens

Transaction Switch• Routes Transaction

Requests and Responses

• Fraudulent Transaction

Monitoring

Operational Monitor• Monitors System Health

• Detects Anomalies

Bank Marketing

System

ATM Network

Gateways

Bank Fraud

Monitoring

ATM Operations

ATM Processing

Bank Core

Processing

Others

https://www.memberonefcu.com/notice.htm?http://www.cu24.com/ATMLocator/index.aspx



What’s on an ATM Card

7

Check Card – no POS

Embossed Card Info

Hologram

Debit Card – POS

Network Logo

Card Type

Magnetic Stripe

Signature Block

Network Bugs

Legal Notice

CVV / CVC000



Track 1 (IATA)

*** Track 1 Layout: *** | SS | FC | PAN | Name | FS | Additional Data | ES | LRC |

– SS=Start Sentinel "%―

– FC=Format Code

– PAN=Primary Acct. # (19 digits max)

– FS=Field Separator "^"

– Name=26 alphanumeric characters max.

– Additional Data=Expiration Date, offset, encrypted PIN, etc.

– ES=End Sentinel "?"

– LRC=Longitudinal Redundancy Check

Track 2 (ABA)

*** Track 2 Layout: *** | SS | PAN | FS | Additional Data | ES | LRC |

– SS=Start Sentinel ";"

– PAN=Primary Acct. # (19 digits max)

– FS=Field Separator "=" Additional Data=Expiration Date, offset, encrypted PIN, etc.

– ES=End Sentinel "?"

– LRC=Longitudinal Redundancy Check

Track 3 (Supplemental)

*** Track 3 Layout: **

Similar to tracks 1 and 2. Almost never used. Many different data standards used.

What’s on an ATM Card?

8

Magnetic Stripe Data



Europay / MasterCard / Visa

• Smartcard technology

replaces magnetic stripe

• PIN validation transfers

fraud liability to issuer

• Encryption algorithms

provide much higher

security levels

• Form factor not limited to

a card

A Word About EMV

9

. . . Or “Chip and PIN” as the Brits call it . . ,

Source: MasterCard Worldwide

http://en.wikipedia.org/wiki/File:Smartcard3.png



Cost Components of a Typical ATM System

10

36.0%

35.0%

12.0%

5.0%

4.0%

4.0% 2.4%1.6%

Cash & Consumables

Problem Recovery

Hardware

Channel Management

Telecommunications Ops

Switch & Host Ops

Application Management

Installation/MACs

Source: Various



• In order to promote their use, banks did not charge

customers for the use of ATMs

• Once cooperative networks had been established banks

began charging foreign ATM fees

– Offset network expense

– Source of revenue

• Surcharging was restrained by mutual consent in order

to continue promote network growth

– Charging everyone else’s customers had a great deal of appeal

The Quest for Revenue - Surcharging

11



• Customer inserts check, currency or both

• Terminal reads and validates

• Displays Image of checks and amounts

• Customer option to accept or decline

• If declined all items are returned

Image and Mixed Deposit and ATMs

12



• PIN Debit pioneered Point of

Sale debits as a natural

extension of the network

• Debit POS drove a reduction

in ticket size from the credit

card base, but still increased

total average ticket

• Banks are continuing to work

with in branch and stand

alone kiosks

• Branch back counter devices

such as currency

counters/recylcers also

leverage the network

Leveraging the Network – POS, Kiosks, and More

13



• Objective: Gather and correlate

magnetic stripe and PIN data in order

to clone the card and drain the

account

• Challenge: PIN data is stored

separately

• Technique: Camouflaged skimmers

and cameras

• Countermeasures: Transaction

monitoring software; self aware

terminals

ATM Fraud

14



• the number of ATM

transactions per inhabitant

increased by 44.9%

between 2001 and 2007,

with a 12.6% increase in

the number of cash

transactions per terminal

in the same period.

• What else are they doing?

Brazil

15

• Check Balances

• Get Cash

• Make a Deposit

• Transfer Funds

• Account to Account Transfers

• Reload Prepaid Card

• Pay Bills

• Pay Taxes

• Donate to Charity

• Buy Tickets

• Top Up Prepaid Phone



Money Transfer without Bank Account

• As with all other cardless Paramatik transactions, press the

“ENTER” button and select the “Withdraw/Send Money

Transfer without Bank Account” step from the ―Cardless

Transactions” menu,

• Enter your T.C. Identity number and mobile phone number,

followed by T.C. Identity number and the mobile phone number of

the person to whom you want to send money and deposit the

amount you want to send into Paramatik.

When you deposit money, a PIN will be sent to the recipient's

mobile phone via SMS.

• The recipient will press the “ENTER” button on Paramatik and

select the “Withdraw/Send Money Transfer without Bank Account”

step from the “Cardless Transactions” menu.

• After entering his/her T.C. Identity number, date of birth, mobile

phone number, followed by the PIN sent to his/her mobile phone,

the recipient will withdraw the money sent.

Garanti Bank in Turkey has a Different Remittance

Solution

16



These ATMs Have Taken Money Full Circle

• Commodity Barter

• Coins

• Currency

• Notional Accounts

• Electronic

Accounting

• Digital Currency

• Non-Cash

Currency

• Dispensing

Commodities

17

Source: Finextra.com



18

ATM Security

You just can’t make this stuff up . . .



ATM Security

19



The Lifecycle of Cash

20

Individuals

Businesses

Bank Cash

Vaults

Bank ATM /

Branch

Central

Banks

Print &

Mint

Inventory &

DestroyDispense /

Accept

Accept

Pay /

ReceiveHoard

Deposit /

Withdraw

Inventory /

Validate

• A developed economy may spend 0.75% of GDP maintaining cash supplies

• An emerging economy may spend up to 2% of GDP

• Translates to 1 -5% of the face value of currency annually

Source: Payment System Advisors

Deposit /

Withdraw

Transport



• Brazil: 2004 – 52,019 million real; 2008 -

92,379 million

• Russia: 2001 - 487,225 million Russian

rubles 2010 - 4,756,155 million

• India: 38,336,000,000 banknotes in 2004

to 56,549,000,000 by 2010

• China: 22,039.08 million Yuan in 2005 to

408,139.93 million Yuan by 2010

• United States: 2000 – $568,614 billion;

2011 – $1,005,288 * (67% offshore)

Currency in Circulation

21

77%

876%

47%

1,751%

77%

* Including 90,000 ten thousand dollar bills

Percentage of the world’s transactions in cash - 85%

Sources: Various central banks, Wired Magazine

http://upload.wikimedia.org/wikipedia/commons/5/50/10000-2f.jpg



Are We Really Winning the War on Cash ?

22

0

10

20

30

40

50

2000 2003 2006 2009

Annual T

ransaction V

olu

me

U.S. Payments Volume by Type Billions of Transactions

Checks

ACH

Debit Card

Credit Card

Prepaid/EBT

0

1100

Cash in Circulation

(RH Axis)



Cash on the Balance Sheet

23



Cash Vault Operations

24

Typical Cash Vault Services

• Deposit processing and verification

• Teller and cash drawer audits

• Currency inventory management

• Counterfeit Detection

• ATM cash replenishment

• Check imaging and processing

• Branch order preparation and fulfillment

• Federal Reserve Services

• Coin processing and wrapping

• Commercial order prep

• Retail deposit processing



Cost of Cash to the Retailer

25

Source: Nielsen Report 2009



26

Wouldn’t You ?

Source: The Daily Express



Oh, the Irony !

27

Sources: Change.org, Wired Magazine



Final Thought – What About the Branch ?

28

5%

8%0%

87%

2002

Deposit via Mail

Deposit at ATM

Depsit via RDC

Deposit at Branch

5%

25%

1%69%

2010

5%

26%

13%

56%

2016 E

11,400,000

7,977,099 5,221,374

4,344,512 3,468,304 2,610,687

2002 2010 2016 E

Retail Checks Deposit Transactions

As we continue to “win the war” on cash and checks, we need to think

very carefully about what will happen in the branch.

Source: Celent Research 2010



Unnamed lawyers made us include the following: The views expressed herein are the speaker’s personal views and do not

necessarily reflect the views of NACHA - The Electronic Payments Association

Thank You and Disclaimer

29

Chip Wickenden

Solutions Executive

FIS Global

[email protected]

1-904-422-1321

mailto:[email protected]



30



Do Products Like These Address a Significant Contactless

/ Mobile Threat?

• Slightly. For the simplest

contactless transactions, like

commuter tap & go

functions, the card can be

decremented, so a shield

offers protection

• POS transactions generally

have multiple interactions

now, which effectively

prohibit the ―pocket surfing‖

scenario

• Reverse engineering a

31



Worldwide ATM Growth 2B to 3B in 5 Years

32



Future ATM Distribution

33



34



Ummm – Can Somebody Call Security . . .

35



Actually – That’s a Poster ... Not the Latest Technology

36

Tpi Cash And At Ms The Future Chip Wickenden 10 Jul2011

Economy & Finance

Transcript of Tpi Cash And At Ms The Future Chip Wickenden 10 Jul2011