Moving more and increasingly complex payments capabilities to ATMs and away from bank branches is a good thing, as we’ve argued before with ATM ApplePay and with MasterCard’s patent application to turn ATMs into full-fledged POS units. But there is a line where it doesn’t make sense and JPMorgan Chase’s current debate about removing per-day cash limits crosses that line.
Here’s the background. Chase has just capped ATM withdrawals for non-Chase-customers at $1K/day “cracking down as people started pulling out tens of thousands of dollars at a time when the bank was modifying its machines to dispense hundred-dollar bills with no limit,” noted The Wall Street Journal on Monday (April 4). “Generally, ATM limits are set by the bank that issues the ATM card and handles the customer’s account. But limits set by banks owning the machine are starting to catch on—with Chase among the first big U.S. banks—as concerns increase among law-enforcement officials about how criminals can move money across the globe using various new bank technologies.”
This forces the question of what limits, if any, are appropriate as the economy moves away from cash—and, for that matter, away from paper checks, too. Philosophically, PFs should embrace any efforts to make financial transactions easier. Clearly, the convenience line moves from human tellers in physical bank branches to traditional ATMs to more modernized ATMs to mobile devices. Therefore, theoretically, anything that moves from the physical branch to an ATM should be good, right? Not necessarily.
First of all, unlike mobile devices, ATMs have a very physical limitation: Once the cash that some human loaded into the ATM runs out, the ATM loses much of its most-desired functionality. Sure, it can still accept deposits and reveal balances, but not that much more. To be candid, those particular services are much better handled by a mobile app. (Note: That is true up to the limit of mobile deposits which, I assure you, I’ll get back to shortly.) The ATM’s most powerful function is to dispense cash, as that is something mobile apps can’t do. When the money is gone, the ATM becomes rather pointless.
Therefore, money restrictions are also a means to keep the machine functioning fully for as long as possible.
Also, there are relatively few typical legitimate situations where a consumer needs more than $2K in cash—and most of them are anticipated and can be handled during bank branch hours. When would cash be needed? To buy a car or a house? Both events are not going to likely happen daily and, even if they do, those are best handled digitally. Why risk carrying $40K in cash unless there’s no viable alternative?
As promised, let’s get back to the mobile check deposit limits. The reason cited is fraud—deliberate or accidental—such as when a customer deposits a check via mobile and then tries and cash the same check in a bank branch. But systems today can easily handle that, with a message to the teller that the system has already processed that specific check.
At the same time, small businesses that receive payment primarily through checks—for the moment, there are still a lot of them—need higher limits on mobile check deposit and would rather have no limits at all. Unlike ATMs with their physical limitations (how much cash they hold in their innerds coupled with however much cash the ATM company is willing to tie up in their ATMs at any given time), mobile check deposits need have none.
Let me ask it this way: What is the limit for check deposits at the physical bank? None. Don’t they worry about fraud? The answer is that they do and they have mechanisms to deal with that, such as getting the approval for large checks from the branch manager. The same needs to happen with mobile check deposits.
Bottom line: The answer to this Chase problem is not lifting restrictions on ATMs, where they need to be. It’s lifting restrictions on mobile payments, where they don’t.