The financial world is always changing and evolving. Virtual ATMs have slowly started gaining traction around the world.
Virtual ATMs are not a new concept as a result of the fintech era. Instead, the idea has been around for decades, albeit it never gained much traction until recently. Consumers have shown an increasing appetite in virtual, mobile, and online financial services.
How Does it Work?
In this modern era of mobile devices, virtual ATMs will only become more popular. Service providers such as Sonect have made a big impact. They allow consumers to withdraw cash with their smartphones at no extra cost.
All it requires is using a mobile app and finding a shop nearby. By generating a barcode, money will be deducted from one’s Sonect account, and the cashier will hand over the amount in cash.
As this service doesn’t cost anything, it makes for a very interesting concept. Combined with the option to choose when and where one wants to pick up cash, it provides a high degree of financial inclusion.
Privacy concerns will arise with services like these. Sonect claims users will only share data to confirm their identity. All financial data is kept safe and secure, far from prying eyes.
Advantages for Businesses
As a business owner, virtual ATMs create new opportunities. It allows for attracting new customers who want to pick up some cash. Getting people into one’s store has always been a crucial challenge. As such, diversifying the services provided as a store owner is an option worth exploring.
As this virtual ATM doesn’t require any space or investment costs, it makes for an intriguing experiment. Business owners receive the funds they pay out to customers in their bank account. This is an interesting way to reduce the amount of cash in a store.
Given how high the demand for cash remains in 2019 and beyond, virtual ATMs have a bright future ahead. That can also result in big business for stores supporting this unique business model.
A Competitor for Banks?
On the surface, virtual ATMs seem to be a threat to banks. In reality, that situation is very different. Any financial institution can embrace this model. Rather than investing in physical ATMs – and forcing costs upon customers – this new model provides nothing but advantages.
It makes for a cheaper alternative to physical teller machines. This model also allows for global expansion without physical space requirements. Security-wise, it also removes the threat of explosive attacks against physical bank ATMs.
The Future of Cash Withdrawals
Virtual ATMs make for a compelling alternative to traditional teller machines. That does not mean this model will become a global trend, however. Service providers still need to obtain licenses in regions where they aim to operate. With little to no regulation on virtual teller machines today, that may prove to be rather problematic.
Keeping that in mind, it will be interesting to see how the industry fares. Very few companies engage in virtual ATM services today. That situation may come to change in the years ahead. For now, however, it is a very niche business model.