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Are Digital Payments Killing ATM Use?

As more people pay for things with digital wallets and contactless cards, there’s no surprise there will be a decline in cash transactions. Fewer cash transactions equal less of a need for ATM machines.

All of this makes sense. However, a drop in cash use doesn’t mean ATMs are out completely.

A recent report showed that the numbers of ATMs in some of the largest markets dropped for the first time ever.

More than 50% of the world’s ATMs are in China, the United States, Japan, Brazil and India, according to Global ATM Market and Forecasts to 2024, a new report from the London-based research and consulting firm RBR. The number of cash machines have declined in all of those places except for India, though that country has seen ATM growth slow down.

Reasons for the Drop in ATMs

According to the report, different reasons have led to the declines in each country.

Rapid adoption of cashless payments led to a number of ATM installations to drop in China. In Japan, its ATM market fell in response to banks’ attempts to improve operational efficiency through heightened ATM sharing.

As people began embracing digital payment options at speedy pace in Brazil, banks responded by removing about 1,200 machines in 2018, according to the report.

The story is different in the United States. As more banks closed, so did their ATMs at branches, leading to overall fewer machines, according to the report.

ATM Growth Elsewhere

Though the report saw declines in those countries, it found that ATM numbers have risen in almost all other countries. Many of the increases are due to financial inclusion initiatives in the Asia-Pacific, the Middle East, Africa, and Latin America.

What the ATM Market Will Look Like in the Future

If things continue as they are now, RBR believes the global ATM total will fall from 3.24 million in 2017 to 3.22 million in 2024. These number are quite different than what RBR at projected in 2016. The firm expected the number of ATMs install to rise to 4 million by 2021.

What This Means

Increased adoption of electronic payments no doubt is having an impact on cash and ATMs. However, the projections aren’t tragic. Places, like China and Brazil, have had to embrace non-cash payments to provide greater accessibility to financial services.

Things are a bit different in the U.S. More people than ever are also using electronic payments, but many still use cash. With states, like New Jersey, and cities, like San Francisco, banning businesses from going cashless, the ATM market won’t be in terrible trouble in the U.S. Even, the federal government is looking to adopting a similar measure.

Additionally, more people in the U.S. are turning to platforms, like Zelle, as alternatives to checks rather cash. With this in mind, the ATM market will go through some pains, but seems very likely to cause a major upset in the U.S.

A Final Thought

ATMs continue to play essential roles in modern banking and the omnichannel experience, and it fulfills the vital function of providing people with access to funds. Banks in the U.S. are finding ways to make ATMs part of the full user experience.

For example, Chase has cardless ATMS, which allow people withdraw money from terminals with their smartphones. With the use of a wallet, cash also may be sent to a third party. Then, the ATM is used to withdraw the cash that the party sent.

Banks understand that ATMs are crucial touch points in customers’ journeys, and they realize they would be alienating a part of the public if they stopped providing ways to fund people’s requests for cash.