Could contactless cards finally be making headway in the U.S. market? It may be so.
Merchant acceptance of contactless cards has, unquestionably, increased. According to Visa, seven of the top 10 U.S. merchants (ranked by transaction volume) currently take contactless payments. So, too, do 14 of the top 25 and 54 of the top 100 merchants (again ranked by transaction volume). Of all new payment terminals shipping in the U.S., 95 percent are contactless-capable. And by the end of this year, Visa anticipates that U.S. consumers will have a “tap-to-pay” option at 50 percent of all locations where in-person transactions take place.
Additionally, Visa has been actively promoting contactless cards, starting with a major television advertising campaign that featured contactless technology in use at Starbucks locations. Capital One has also touted the speed and convenience afforded by contactless payment technology in a dedicated marketing campaign, while Costco rolled out a contactless payment card in partnership with Citi.
Regardless of the progress these developments and statistics appear to substantiate, whether contactless cards will really catch on after languishing at the periphery for the past several years remains to be seen. We hope this will be the case, especially as U.S. issuers, merchants, and consumers should be on board with a “tap and go” payment mode that is faster and more secure than other electronic payment methods.
The fact that contactless cards have gained traction elsewhere in the world may bode equally well for acceptance here, as the U.S. tends to follow in the footsteps of other markets when it comes to adopting new payment models. Consider this: Last September, Visanet said contactless payments had grown to account for 92 percent of all point of sale (POS) transactions in Australia, up from seven percent five years before. In the United Kingdom (UK), contactless payments are said to comprise more than 50 percent of all POS transactions, and in Canada, to represent 45 percent of all POS transactions.
Meanwhile, PaymentsUK.org recently projected that contactless debit transaction volume in the UK will exceed cash transaction volume for the first time ever in 2018, with the former totaling $13.4 billion and the latter, $13.3 billion. In 2012, UK merchants rung up $15.4 billion worth of cash transactions $11.6 billion worth of contactless debit card transactions.
However, we still think a few pieces must fit into the puzzle before the contactless payment model becomes a staple in the U.S. market. For one thing, issuers really must continue to take the lead here. Why? Merchants will be compelled to jump on the acceptance bandwagon if consumers demand access to contactless card products—but will be unable to truly move forward if issuers don’t pave the way for it to happen. Meanwhile, card brands must be ready with contactless payment acceptance certification at the point of sale (POS) in order to move the needle.
Additionally, as more merchants embrace the contactless model, prepaid card “players” will need to do the same. After all, the speed of contactless payment in general appeals to their target market—consumers who typically pay with cash rather than plastic.
So we’re not placing all our money on contactless cards. But we’re no longer skeptical, either.