Wells Fargo & Co. recently announced it is launching contactless cards, which allow customers to tap and pay at retail stores and public transit hubs.
The bank has already started handing out contactless cards to those who pen new consumer credit card accounts. Existing credit card customers will receive contactless versions when their current ones expire.
Later this year, the bank will roll out contactless functionality at Wells Fargo’s 13,000 ATM locations nationwide. Cardholders will be able to tap to initiate withdrawals or conduct other types of transactions at the machines.
The Technology Behind Contactless Cards
Contactless cards are based on the same that allows customers to initiate an ATM transaction using a mobile wallet. The technology, which offers tap-and-pay functionality, was unveiled in 2017.
This type of payment does not require a consumer’s payment device and a point-of-sale terminal to have any physical contact. Instead, a shopper holds a contactless card, dual-interface chip card, NFC-enabled smartphone, or wearable about an inch away from a POS or ATM.
The payment account information is transmitted wirelessly over radio frequency (RF), and these transactions are cryptographically secure and every transaction generates a unique code.
Why Everyone Is Attracted to Contactless Payments
Contactless technology is in the spotlight because of the convenience, speed, and security it offers customers. Tap-and-pay cards take about two seconds to process, while chip and PIN cards take about 30 to 40 seconds. These numbers may seem small, but they matter to consumers.
The desire for faster transaction speeds, and the use of contactless bank cards for transit, like the transportation system in Chicago and the one that is in the works in New York, are boosting the value of contactless payments for consumers, issuers and merchants.
Networks have noticed this and that why they are rushing to get contactless cards made and issued to shoppers. This is part of the reason why Wells Fargo opted to unveil its contactless cards now.
Contactless Cards Being Issues from Other Major Credit Card Brands
Wells Fargo’s is following the moves of other major credit cards brands, like Visa and American Express.
Visa predicts that 100 million of its cards in the U.S. will be converted to contactless by the end of 2019. American Express Co. and Capital One Financial Corp. have already begun the transition. Capital One’s Quicksilver, Savor, and Venture card portfolios, as well as American Express’ gold card, are already enabled for tap-to-pay. In 2018, JPMorgan Chase & Co. announced plans to gradually switch credit and debit cards to the contactless type as cards expire.
Businesses are Responding to Customers’ Demands for Quicker Payments
About half of U.S. store locations are now contactless-enabled, which makes accepting them a worthwhile endeavor for more merchants. Large retailers, like Target and CVS, are working on technology to begin accepting contactless payments, including cards.
Other retailers, even major ones, like Walmart, have hesitated to allow customers to pay with contactless cards because it will force them to also accept all types of mobile payments, like Apple Pay. Some say the technology prevents them from routing their payments over less expensive debit networks.
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