News & Views - Savantor

Time for plastic move aside?

Monday, 17 December 2007

Drawing cash at an ATM or cashing a cheque at a Bank counter - both actions need something more than just the customer being present whether that is a cheque book or a card.  However, in a seasonally timed launch, RBSG introduced a novel method of dispensing cash to the needy and, in the process, we could be witnessing the stirrings of something new in the cards industry.

For decades, the humble plastic has had a place in our pockets and has provided significant profits but also overheads for card issuers.  The plastic has had to incorporate security features and just getting the card to the cardholder can be a risky process.  Keeping the card safe is an on-going struggle and assuming it isn't lost or stolen before it expires, the whole process then repeats itself on re-issue.

If a card doesn't have to be produced, then there are obvious savings to be made.  In a new initiative RBSG are providing cash through their ATMs by way of a time-limited PIN that needs only keyboard entry.  A plastic is not required.  This service is designed to provide emergency funds to those whose cards have been lost or stolen and does depend on the "cardholder" providing the Bank with correct answers to security questions beforehand.

Building on this concept, it is not too far-fetched to envisage the day when a plastic is no longer required and those "security questions" have been replaced by biometrics.    Fingerprint, palm print, retinal scan - any could suffice at a beefed-up ATM to verify the cardholder.   Button-pressing would then be needed only to determine the amount of cash required and from which account it needed to be taken.

Critics may say that the costs would be too great as, for not only ATMs but also for retailers, biometric readers would have to be installed.  Retail systems such as Pay By Touch have already been trialled in the UK.  No one expects such a system to be cheap but the on-going savings year-on-year would be massive - no plastics to produce, no chips to put in the cards, no mailing costs, no plastics to be stolen or replaced, no card skimming or PINs to be compromised, no PIN mailers needed and, of course, operational overheads in terms of manpower requirements would be significantly reduced.

Realistically, this won't happen tomorrow, but RBS do seem to have opened a door which gives us a tantalising glimpse of what the future could hold. 

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