In the United States, the total number of contactless debit and credit transactions for general purchases are in the single digits. The nation can’t match the numbers in Canada and the United Kingdom.
A Deeper Look at the Numbers in the UK and Canada
In the UK, almost 30% of all credit and debit card transactions were made using all credit and debit cards in February, according to the London-based UK Finance, trade association of banks, other financial firms, and payment networks.
According to the association, the UK saw 644 million contactless card transactions. This number was up more than 20% from 534 million in 2018. The total value of the contactless transactions made in February was £5.9 billion. That was an increase of 20% from the total of £4.9 billion from the same time last year. All of the statistics provided include transactions made with cards issued in the UK and overseas, according to the association.
In Canada, the country’s biggest merchant acquirer, Moneris Solutions Corp., has reported that 51.5% of card-present transactions in the first quarter were contactless. This is the first time Canada ever reached this milestone. According to the acquirer,
contactless payments grew nearly 25% each year while credit and debit card spending rose just 2.5%.
What’s Causing the Boost in Contactless Payments?
Canada and the UK are experiencing bursts in contactless payments for a variety of reasons. First, both countries converted to EMV chip card payments early on (and lightyears sooner than the U.S.). Also, many of the EMV point-of-sale terminals in those countries support different types of technology. The terminals support contactless payments using near-field communication (NFC) technology when an NFC-enabled card or smartphone with a mobile wallet is tapped on the terminal.
Contactless payments got a major lift in the UK when Transport for London, its mass-transit system started accepting general contactless payment cards. There is a good chance that this will happen with New York unrolling its contactless card system for its transit system. NY’s system will be fully implemented within the next year and a half.
It’s a different story in Canada. New technologies and systems are easier to implement there than in the U.S. because its financial system is more centralized. Additionally, EMV was required by the card networks for issuers and acquirers there, which added to the boost in contactless transactions.
Another major difference between Canada and the U.S. is how they deal with POS terminals. Since many Canadian merchants rent terminals instead of buy them, they get more frequent upgrades, which included terminals that supported EMV contact, as well as contactless.
The good news is that by the end of the year, Visa will have 100 million Visa-branded EMV cards that allow for contact and contactless NFC payments. Many issuers, including JPMorgan Chase & Co. have committed to issuing cards that allow for both types of transactions.
Obviously, Canada and the UK have taken some actions and have had some things that have come up at the right time that allowed them to lead in terms of contactless payments. The U.S. is making strides and will likely to continue, especially with the NY transit system in play. When the U.S. will become a leader in contactless payments is anybody’s guess, but the nation definitely has its sight on it.