Sunday, January 31, 2016

Huber rate cut leaves many drivers makbelow min wage Jan 29-16



While Uber is currently the most popular ride sharing company among riders because of the low prices and quick pickup times, the drivers may be getting the short end of the stick. Over the past few years, Uber has ran numerous advertisements stating that drivers can make over $30 an hour during peak times. According to Business Insider, Uber was even advertising in 2014 that a salary of $90,000 a year in New York City was possible.

While $90,000 a year may have been possible if the driver was working 80 hours every single week under perfect circumstances, it was never realistic. For one, it did not include Uber’s commission and fees. It also did not include gas and other expenses. And driving 80 hours a week is not sustainable or healthy for an entire year.

Regardless, it does not take $90,000 a year to live on, and many drivers would be more than happy to receive a reasonable salary. While Uber started off paying their drivers rates that were deemed acceptable, they have had numerous cutbacks in recent years. According to the Observer, the most recent rate cuts have slashed earnings to below minimum wage for certain drivers in select cities after expenses and gas.

The article states that rates were cut by as much as 45 percent in over 100 cities. According to numerous drivers that were quoted, the new rates are so low that it is not even worth driving anymore. Some are even switching to competitor Lyft because of the tipping option. An anonymous driver on Facebook told the Observer the full implications of the new rates.

“Yes, the rate cuts have affected my earnings. I am less motivated to go out and drive. Instead, I’m focusing more on my other business, which is already making me more money per week than I earned through Uber on New Years week. I now do not wait over five minutes for a passenger to show up when I arrive, because I get $5 for a cancel fee rather than driving them three miles to get the same $5. I stopped offering bottled water to my passengers. If the passenger did not put in the correct pickup address I won’t drive unpaid miles to the correct address if they call me, I’ll just collect the cancellation fee.”

For a company that is trying to make it cheaper to use Uber than own a car, they are not doing themselves any favors. Lowering the rates is going to cause their best drivers to stop driving. Drivers that are now struggling to earn a decent living will no longer be able to offer common amenities such as bottled water, mints, and gum.


Uber Pay Cuts
(Photo by Bryan Bedder/Getty Images for NYCWFF)

According to Bloomberg, Uber has cut rates in Detroit so low that drivers might be losing money. Drivers now receive $0.30 for every mile driven with a passenger in the car. They also receive $0.30 for every minute driven with a passenger in the car. They receive nothing when driving to pick passengers up or when they return home.

While Uber takes a set commission percentage from every ride, usually around 20 percent, they also take a fee called the “safe rides fee.” This is a set dollar amount that has been increasing over the past few years. This fee is $2.30 in Detroit. If a driver does the minimum fare of $5.30 in Detroit, Uber will take $2.30 of it for the safe rides fee. They will then take their commission. After all of the fees, the driver is left with practically nothing, and that is before adding in their gas and depreciation expenses. The Rideshare Guy provides numerous charts to show a few of the most affected cities by the recent cuts.

So what does Uber have to say about the rate cuts? In their opinion, it is a way for drivers to make more money. According to the Uber Newsroom, rate cuts are needed to stimulate more business. While there is nothing wrong with this stance, they are also claiming that drivers will make more money with decreased pay.

“Five and a half years in, we’ve learned that the single most effective way to boost demand during the winter slump is to cut prices for riders. Starting tomorrow—just like last year and the year before—we’re cutting prices in more than 100 US and Canadian cities, giving riders one more reason to head out of the house, ditch their keys, and avoid parking. Higher demand means more time moving people, less time spent waiting around and more money for drivers. And if drivers aren’t busier, prices will go back up again. In addition, we are guaranteeing earnings for drivers to ensure that no one is disadvantaged. That’s 24/7 incentives to put drivers at ease.”

While it is true that drivers may have more money in their pockets if they get more fares, their profit is going to be less. There is no scenario where a rate cut will lead to increased earnings for drivers. Gas and other expenses will go up with more rides, and the lower fares will not be able to offset the increased expenses. While Uber does have an hourly guarantee for drivers, many believe that the stipulations are difficult to meet.


Uber Tips
(Photo by Carl Court/Getty Images)

Another issue that is angering drivers is Uber’s position on tips. While there is nowhere in the app for riders to tip, drivers are unhappy with what Uber tells riders regarding the issue. Instead of leaving it up to the rider, Uber appears to be going out of its way to discourage tipping. Here are a few replies from Uber on Twitter after riders asked about tipping.

While full fare is charged at the end of the ride, Uber is possibly leading riders into believing that full fare includes a tip. It does not. This creates a scenario that discourages tipping, which is maybe what Uber wants in the end.

In order to get Uber to change their practices such as low rates and no tipping, a website named Not Cool Uber is documenting the latest protests, rates changes, and responses from Uber.

Unless a huge number of drivers stop driving and quit, Uber is not likely to raise the rates back to their original figures in the near future. While Uber may be taking a small hit with the rate cuts, drivers are carrying the majority of the burden. Moving to Lyft is an alternative for drivers because of the tipping option in the app, but they have also lowered their rates in response to Uber.

[Photo Illustration by Pablo Blazquez Dominguez/Getty Image]


November's big ballot probably won't be downsized by California's new election law​ la times jan 31-16​

November's big ballot probably won't be downsized by California's new election law
​ la times jan 31-16​

A California ballot

A voter shows off his sample ballot with "no" checked on all the measures after a statewide special election in California on May 19, 2009. 

 (Los Angeles Times)

In a state where direct democracy is considered a birthright, activists have often bypassed legislators and asked voters to write laws at the ballot box.

But one year after the enactment of what was hailed as a major electoral reform to encourage compromise between the two lawmaking processes, there's still skepticism of working inside the world of Sacramento politics.

Even from some politicians who work there.

"We don't have the time, in California's future, to water down critical legislation," said Assemblyman Roger Hernandez (D-West Covina) as he joined organized labor groups last week in submitting voter signatures for a November ballot initiative to raise the state's minimum wage.

The wage measure, plus a handful of others likely to secure a spot on what may be a blockbuster statewide ballot this fall, covers a topic on which there are now negotiations at the state Capitol for the Legislature to act on its own. And the overhaul of the state's initiative law,signed by Gov. Jerry Brown in 2014, is designed to give backers of would-be ballot measures a prominent role in those negotiations.

Most notably, it allows legislative hearings on an initiative any time its backers gather at least 25% of the voter signatures needed to qualify for the ballot.

Backers of the minimum wage initiative crossed that threshold last September. But no hearings have been held.

In fact, documents provided by the secretary of state's office show that the Legislature has now been notified that there are six initiatives aimed at the November 2016 ballot that have gathered enough signatures for formal hearings, with some having been eligible for almost a year.

That kind of delay wasn't what some advocates of the initiative reform law were expecting.

"I think we would all like to see those hearings take place sooner," said Trudy Schafer, senior program director for the League of Women Voters of California.

The concept of compromise to stave off ballot fights was part of the original initiative process created in 1911. But the mechanism was never used, and was eliminated in 1966.

The 2014 law is, in some ways, a return to the old system but with new flexibility. Not only can initiatives now be amended after a period of public comment, but they can be withdrawn if proponents hammer out a compromise with lawmakers — a window for deal-making that stays open even after many initiatives have qualified for the ballot.

Those modifications notwithstanding, skepticism remains.

"In most cases, there's not a whole lot of room for negotiation," said Jerry Meral, an environmental advocate and former state official who is the proponent of a $6-billion water bond he hopes to place on the fall ballot. Meral said he wrote his initiative and started collecting signatures after watching how hard it was to reach political consensus over the last legislative water bond, Proposition 1 in 2014.

"We felt the prospects of a new legislative bond, signed by the governor, were very dim," he said.

The idea of more political compromise has long had appeal with voters. In a 2013 statewide poll by the nonpartisan Public Policy Institute of California, almost eight in 10 voters who were surveyed endorsed the idea of more time for initiative backers and lawmakers to work together in search of common ground.

But that presumes there's actually a willingness by the Legislature and powerful interest groups to work together.

"In many cases, there's not a deal to be had," said Dustin Corcoran, chief executive of the California Medical Assn. The doctors group is backing a pending initiative to extend a temporary income tax on the state's highest earners, an effort that would have met certain defeat had it been proposed in the Capitol.

Gathering signatures for an initiative is also costly — in some cases, as much as $3 million to qualify for the ballot with paid signature gatherers — and wealthy interest groups may be unlikely to back down once that kind of money is spent.

Did supporters of the 2014 law promise too much change?

"Only history can judge whether it was oversold," said Rob Lapsley, a former top state elections official and now president of the California Business Roundtable. A supporter of the new law, Lapsley nonetheless admits that it will at best only defuse some initiative battles.

"It's better to have the opportunity than not," he said.

Legislators are making plans to look at the pending initiatives, but some of the mandated public hearings may not happen until spring. Sen. Bob Hertzberg (D-Van Nuys), who chairs one of the committees that will review tax initiatives, argues that early discussions aren't the key to avoiding expensive ballot measure campaigns.

"If you're actually going to come up with a compromise, these things always happen at the last minute," he said.

Hertzberg said the new law is designed to better "harmonize" the relationship between those elected to write laws and the system that allows voters to do so on their own. Still, though, he admits there's no way to avoid many of the nastiest and most expensive ballot fights through which California voters are often dragged.

"It doesn't guarantee a change," said Hertzberg of the new process. "But it does guarantee a discussion."

Follow @johnmyers on Twitter and sign up for our daily Essential Politics newsletter


Fall ballot could be blockbuster

Lincoln High School student gets perfect score on AP Calculus exam -- 1 of 12 in the world to do so la times Jan 31-2016

Lincoln High School student gets perfect score on AP Calculus exam -- 1 of 12 in the world to do so

la times Jan 31-2016

Teen gets a perfect score on AP Calculus exam

Cedrick Argueta, left, a senior at Lincoln High School in Lincoln Heights, and his math instructor, Anthony Yom, show off one of the AP Calculus T-shirts that students wore to their exam last spring. 

 (Al Seib / Los Angeles Times)

The call from Lincoln High School's principal's office came unexpectedly, as they often do.

Cedrick Argueta's friends joked that he might be in trouble. Cedrick didn't think so.

He was right. 

It turned out that Cedrick, the son of a Salvadoran maintenance worker and a Filipina nurse, had scored perfectly on his Advanced Placement Calculus exam. Of the 302,531 students to take the notoriously mind-crushing test, he was one of only 12 to earn every single point.

"It's crazy," Cedrick said. "Twelve people in the whole world to do this and I was one of them? It's amazing."

See the most-read stories this hour >>

Since word of his feat has spread, the lanky 17-year-old senior – who described himself as a quiet, humble guy – has become something of a celebrity at Lincoln High, a school of about 1,200 students in the heavily Latino Lincoln Heights neighborhood.

At a school assembly, students shouted, "Ced-rick! Ced-rick!" when Principal Jose Torres announced his score. Friends started calling him "One of Twelve."

And Torres said this week that he might as well become the teen's booking agent, laughing as he held up a typed schedule of Cedrick's media interviews.

"It's mind-blowing," said Torres, who has worked within LAUSD for 31 years. "It's the first time I've had something of this magnitude. A lot of kids expected him to be the one."

Meet the kid who got a perfect score on the AP Calculus exam

Abraham Lincoln High School senior Cedrick Argueta received a perfect score on the AP Calculus exam.

Cedrick and his classmates took the AP Calculus AB exam, a 3-hour and 15-minute test administered by the nonprofit College Board for possible college credit, in May.

Cedrick learned over the summer that he had scored a 5 – the top score – on the exam but had no idea he'd gotten every single question right until last week.

In a letter to Torres last week, the College Board called it a "remarkable achievement."

As far as math whizzes go, Cedrick is unassuming. He likes to play basketball with his buddies, and his favorite reading of late was the Harry Potter series. Knowing he was going to do television interviews this week, he donned a blue LHS hoodie and sneakers.

Math has always just made sense to him, he said. He appreciates the creativity of it, the different methods you can take to solve a problem.

"There's also some beauty in it being absolute," Cedrick said. "There's always a right answer."

When asked about his perfect exam score, Cedrick just thanked everybody else in his life.

"It just sort of blew up," he said. "It feels kind of good to be in the spotlight for a little bit, but I want to give credit to everybody else that helped me along the way."

Cedrick is the son of Lilian and Marcos Argueta, both of whom came to the United States as young adults – she from the Philippines, he from El Salvador. Lilian, a licensed vocational nurse, works two jobs at nursing homes. Marcos is a maintenance worker at one of those nursing homes. He never went to high school.

Lilian Argueta, pausing during one of her shifts this week, said her son's accomplishment is still sinking in. He texted her when he found out, and she told him it was great but, she said, she didn't understand the magnitude until reporters started calling.

Argueta said that she always told Cedrick and his younger sister to finish their homework and to "read, read, read," but that they knew she'd be proud of them whether or not they got straight A's.

"I'm just thankful," she said. "God gave me two perfect kids."

To celebrate, the Arguetas took Cedrick to Roy's, his favorite restaurant in Pasadena, where he ordered a big pork shank. He was still excited about the free souffle the waiters brought him after learning his score.

Lincoln High student gets perfect score on AP Calculus exam -- 1 of 12 in the world to do so

Cedrick Argueta, right, is congratulated by his mathematics instructor Anthony Yom, left, in his Calculus classroom.

 (Al Seib / Los Angeles Times)

On Wednesday, Cedrick hung out in the classroom of his calculus teacher, Anthony Yom, which is decked out with signs that say "Mathlife" and a picture of Homer Simpson.

All 21 of Yom's AP Calculus students who took the exam last year passed; 17 got the highest score of 5. It was the third year in a row that all of Yom's kids passed the test.

Yom, 35, said he treats his students like a sports team. They'd stay after school, practicing problem solving for three or four extra hours, and they'd come on weekends. On test day, they wore matching blue T-shirts sporting their names, "like they're wearing jerseys to the game," Yom said.

"I think they don't want to disappoint each other," Yom said. "Talent can only take you so far. These kids put in so many hours."

Join the conversation on Facebook >>

Yom said he knew most of his kids would score 5s, but even he was blown away by Cedrick's perfect exam. The odds of such a thing, he said, are like winning the lottery.

As if that weren't enough, Cedrick also earned perfect scores on the science and math sections of the ACT exam last year, he said. This year, he's taking four more AP exams, including the Calculus BC segment. Friends are pushing him for a repeat perfect performance.

"There's a lot of pressure," he said, laughing.

Cedrick graduates in June and hopes to attend Caltech and become an engineer. For his family, a scholarship would be a godsend.

Cedrick's got big plans. He wants to maybe "design something really cool." He wants to have his name on something that's known around the world.

But this summer, he just wants to hang out with his friends.

Follow me at @haileybranson and Google+


Why I'm a teenage feminist

From L.A. Unified teacher to superintendent: Who is the real Michelle King?

He brokered deals for an empire of California charter schools -- and now faces a felony charge

Heidi Cruz is her husband's not-so-secret weapon, but could she hurt his campaign? la times jan 31-16

Heidi Cruz is her husband's not-so-secret weapon, but could she hurt his campaign? la times jan 31-16

Except for perhaps Bill Clinton, no candidate spouse in the 2016 presidential campaign has proved as productive and effective as Heidi Cruz.
Beyond the mother-of-two charm that softens Sen. Ted Cruz’s hard edges and a deep Christian faith, the California-born Heidi Cruz, 43, is an accomplished executive and political adviser -- more in the model of Democrats like Michelle Obama and Hillary Clinton than Republicans like Laura Bush.
Her impressive resume includes a master's in business administration from Harvard, a stint in the George W. Bush White House and a high-paying job at investment giant Goldman Sachs, where her Wall Street savvy has made her a fundraising dynamo.
But also perhaps with the exception of former President Clinton, no other political spouse faces as much risk of turning from asset to liability.
Heidi Cruz’s links to Goldman, where she has taken a leave of absence as managing director of the private wealth management office in Houston, are beginning to distract from her husband’s populist message as a crusader against the moneyed interests of Wall Street and Washington.
“He is in bed w/Wall St. & is funded by Goldman Sachs/Citi, low interest loans,” billionaire Donald Trump tweeted recently, referring to Cruz’s acknowledgment that he received $1 million in loans from Goldman and Citibank during his 2012 Senate campaign and failed to properly report the money to the Federal Election Commission.
It wasn’t the first time Heidi Cruz’s job became fodder for Cruz’s critics. When Cruz attacked the Affordable Care Act, critics noted that he was covered by his wife’s generous health coverage from Goldman. After she took her leave, Cruz had to sign up for Obamacare.
Trump campaign officials did not respond to questions about whether his tweet was targeted at Heidi Cruz. But her supporters warned that any effort to drag her into the campaign would backfire.
“Voters do not like when you attack someone’s family,” said Cruz senior adviser Rick Tyler. The campaign declined to make Heidi Cruz available for an interview.
Even so, the Cruz campaign has tried to downplay her work at Goldman, insisting her job advising wealthy investors on derivatives, hedge funds and stock strategies actually has little to do with the tangled financial world maligned by many voters. They've instead described it as “entrepreneurial” or, as she put it on the campaign trial, “helping people who have achieved the American dream.”
She has used those corporate skills to become one of the campaign’s most prolific fundraisers. She dials up to 30 donors a day – sometimes calling from the sidewalk as she’s heading to and from events. She is “remarkably good” at convincing supporters to give money,” said Tyler, a veteran campaign strategist. “There are so few political spouses on this level.”
Partly thanks to her work, Ted Cruz has routinely had more cash on hand than any other candidate.
Heidi Cruz has also proved to be agile and compelling on the stump, making her the senator’s not-so-secret weapon and top surrogate. The couple met when they both worked on the 2000 George W. Bush campaign.
While he was stumping in Iowa recently, she met diners in New Hampshire. She filed the paperwork to allow him to run across the Southern states and opened the campaign’s Nevada office.
While she was fielding live, on-air questions from Iowa voters recently, one hostile radio caller asked her to defend “sleeping with an immigrant” – a reference to her husband’s Canadian birth to an American mother. Unruffled, she deftly rebuffed the criticism as fanned by liberals.
Those who know Heidi Cruz say they would not have been surprised if she herself had entered public life.
“I would’ve thought that she would have wanted to be the politician, rather than be the politician’s wife,” said Maureen Downey, who knew her as an undergraduate at Claremont McKenna College. 
Bright, ambitious and deeply driven, she stood out at Claremont not only as a Phi Beta Kappa economics and international relations student, but as a strong-minded, conservative woman able to stand her ground at a school still making the transition from a male-only institution.
“Women had to have a certain strength of character to bear up on what was still a very male-oriented atmosphere,” said John Pitney, a professor of government at Claremont, who was an informal adviser at the time. “She did extremely well.”
After Bush became president, it was Heidi Cruz, not Ted, who was plucked by the White House for policy roles in the Treasury Department and at the National Security Council under Condoleeza Rice. Rice declined a request for an interview for this story.
But when her husband’s career floundered, Heidi Cruz made the difficult choice of leaving Washington to join him in Texas as he became solicitor general. That transition led to what the family has described as a brief episode of depression. A police report at that time, first reported by BuzzFeed, noted a 2005 incident when she was found beside an Austin roadway by an officer who believed she was “a danger to herself.”
She later rebounded, giving credit in part to a Christian retreat. The senator has called that period “really difficult for us both.” Later that year, she signed on at Goldman’s Houston office.
Toby Neugebauer, a billionaire energy investor who met her after she arrived in the Lone Star State, said he has never known anyone who was as hard-working, driven by faith -- “and at the same time, was so off-the-charts brilliant.” He has since funded a super PAC backing the senator’s campaign.
Raised a Seventh-Day Adventist in San Luis Obispo, she still follows church recommendations to be athletic and vegetarian, but now worships at her husband’s Baptist congregation in Houston. Those who know the couple say their differences complement each other.
“Their marriage really is a partnership,” said Matt Mackowiak, a Republican consultant in Austin who got to know them when his office was a couple floors above the Senate campaign team.
“She’s winsome in a way that he’s not. She does it with a smile and with an unassuming matter. But it belies a real drive that’s inside her.”
Pitney, the Claremont professor, said he expects that Heidi Cruz is one of her husband’s closest and smartest advisers. “She is very much a 21st century political spouse.”
Heidi Cruz has said her “highest calling” now is to help put her husband in the White House. But in a recent CNN interview, she acknowledged the challenges of again putting his career first and introducing herself as “Ted’s wife... I used to have my own identity.”
That kind of sure-footed assertiveness has sometimes become a liability for the spouses of presidential candidates, particularly among more traditional Republican voters.
During the 1992 campaign, conservatives attacked Hillary Clinton when she defended pursuing her own career and seemed to diminish women who “stayed home and baked cookies.”
But so far, even the conservative, evangelical voters whom Ted Cruz is courting do not appear similarly concerned about Heidi Cruz’s career or her role in the campaign.
Even in the South, where the Cruz team is positioning itself for the March 1 primary, Heidi Cruz appears to have created a special bond among Republican women by emphasizing her role as mother and homemaker.
Allyson Ho, an appellate lawyer in Dallas, recalled being wowed on their first meeting during at intimate dinner at the Cruz home.
Ho said she was prepared to be impressed by Heidi Cruz’s “rock star” resume and professional accomplishments, but what she remembered most was the senator’s wife's understated charm and attention to detail. Before dinner, Heidi Cruz set out an appetizer platter of artfully arranged cheeses and fruits. Ho said she immediately recognized the work involved.
“It looked very casual,” Ho said. “But every element was perfect.”
For the latest from Congress and 2016 campaign follow @LisaMascaro
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la times Big U.S. banks will be rolling out ATMs that take smartphones, not cards Jan 31-16

Big U.S. banks will be rolling out ATMs that take smartphones, not cards

To the long list of things you can do with your phone — including watch a movie, buy a latte and hail a ride — prepare to add one more: get cash.
Over the next few months, the nation's three biggest banks will start rolling out ATMs that will let customers withdraw currency using their smartphones instead of debit cards — the latest step toward a future in which phones could replace bank branches and wallets.
"My boys are 5 and 6 — I don't think they'll carry around plastic when they grow up," said Michelle Moore, head of digital banking for Bank of America, which plans to make cardless ATMs widely available as early as May.
San Francisco banking giant Wells Fargo plans to offer cardless access at a limited number of ATMs by this summer and at all ATMs by the end of the year. Most of JPMorgan Chase's ATMs will start offering cardless access sometime in the second half of the year.

Cash machines that work with a phone instead of a card aren't new, but they are rare. Downtown L.A.'s City National Bank unveiled cardless ATMs in 2013, and a few regional banks have followed suit over the last year, but the number of cardless ATMs now stands in the low thousands nationwide.
Soon, they'll be much more common, especially in Los Angeles, where Bank of America, Wells Fargo and JPMorgan Chase each have hundreds of ATMs and hold nearly half of all bank deposits. Nationwide, they have a combined 47,000 ATMs, more than 10% of the nation's cash machines.
The banks' entry into cardless ATMs comes as a small but growing number of Americans are using their phones to send money to one another and to make purchases using so-called mobile wallet apps such as Apple Pay and Android Pay.
It also comes as banks are trying to push customers to do more transactions online, on their phones or through ATMs — all of which are less expensive than transactions done at branches staffed with tellers.
Just as with mobile wallet payments, which make up a tiny fraction of payments overall, analysts expect using a phone to get cash from an ATM probably will start out as a little-used novelty.
But over the longer term, it could be one more application that will make customers feel comfortable using their devices as financial tools, leading to a general growth in mobile banking, said Mark Schwanhausser, a director at consulting firm Javelin Research & Strategy.
"You're acclimating people to the techniques of mobile payments," he said. "It's like a mobile wallet on training wheels."
Banks will offer cardless access to ATMs using either near-field communication — the tap-to-pay technology used in Apple Pay and Android Pay that connects phones with credit card payment terminals — or codes that customers get through their bank's mobile app.
Using near-field communication, or NFC, a customer would sign in to a mobile wallet or bank app, then physically tap the phone on the ATM and enter a PIN.
Bank of America and Wells Fargo plan to roll out NFC access this year, though it will be available only at ATMs equipped with NFC readers.
Wells Fargo expects more than a third of its 13,000 ATMs will have those readers by the end of the year, while more than half of Bank of America's 16,100 ATMs are already NFC equipped.
Chase also has an NFC system in the works, though spokesman Michael Fusco said he's not sure when it will roll out.
For now, Chase is starting with a code-based system, which requires a software update for ATMs but no new hardware. Wells Fargo will start offering code-based access late this year.
Those systems require customers to sign in to their bank's mobile app, request an access code and then type that seven- or eight-digit number into an ATM.
The codes can be used once and expire in about 10 minutes, features that aim to prevent codes from being stolen or misused.
"After that small window of time, it's a meaningless set of digits that can't be used again," said Jonathan Velline, head of ATM banking for Wells Fargo.
Though customers might worry about seeing their bank accounts pillaged if their phone is lost or stolen, Ed O'Brien, a director at bank consulting firm Mercator Advisory Group, said accessing an ATM with a phone could prove more secure than using a card.
Fraudsters can steal debit card numbers and PINs by installing tiny devices on ATMs — a crime known as skimming. Industry estimates put bank losses from ATM fraud at $1 billion in 2008, and it probably has grown since then, according to Mercator.
"The magnetic stripe has an issue of security. Someone can duplicate a magnetic stripe, which does happen all too often," O'Brien said.
But if a phone is stolen, a thief would have to get past a few layers of security to withdraw cash from an ATM. They'd need to unlock the phone, sign in to the mobile bank app or mobile wallet and, in most cases, know the customer's PIN.
As the banks prepare to launch cardless access, Bank of America and Chase also are working on more features set to be released later.
Both plan to allow customers to set up an ATM transaction in advance, cutting down on the amount of time they have to spend in front of the machine.
A customer could log in to his bank app and say he wanted to withdraw $150, and that he'd like a $50 bill, four $20s and two $10s — a feature that will be available as the banks also provide more ATMs stocked with multiple types of bills.
Once the transaction is set up, he could go to an ATM, tap his phone, grab the cash and move on. Schwanhausser of Javelin likened it to picking up tickets at will-call instead of buying them at the box office.
And O'Brien of Mercator said being able to spend less time at the ATM could also improve security.
"You get your money in 10 or 12 seconds. You're not having to look at whether someone is behind you, you don't have to hide your PIN," he said.