Could Smartphones someday replace ATM cards?

We’ve put together some possible pros and cons.

The Good

It’s more secure. Currently, a thief can install a skimming device on an ATM or a camera and collect your account information and pin number. With this new technology, a thief would need your smartphone and the banking app password to gain access to your account. If you lose your phone or it gets stolen, you can always deactivate it remotely.

It can speed up the process of getting money. Instead of digging through your wallet for the right plastic card, inserting it into an ATM, waiting for the machine to recognize your account, putting in your pin number, and then finally being able to access your money, you’ll be able to (depending on how the app works) simply tap your phone. You’re immediately authenticated and cash is dispensed.

The Bad

You need a smartphone. According to the Pew Research Center, as of October 2014, 64 percent of Americans adults own a smartphone (90 percent own a cell phone). That means roughly 36 percent of the American adult population wouldn’t be able to take advantage of this feature — potentially widening the gap of the under-banked.

Hackers follow the money. Now that cash can be obtained by compromising mobile, expect hackers to get in on the game.

Losing your phone means losing access to your account. Already a nightmare on its own, losing or having your phone stolen would also mean you no longer have access to your money.

The Bottom Line

As consumers demand more mobile banking experiences, many financial institutions will meet that demand. You can expect to see more companies allowing smartphones to authenticate ATM transactions. However, this will likely remain voluntary. Plastic cards aren’t going anywhere anytime soon.