The groundwork has been laid for widespread U.S. contactless payments adoption, but what will be the impetus for actually taking shape is a mystery, according to the Federal Reserve Bank of Boston report, “Tap to Pay: Will Contactless Cards Pave the Way for NFC Mobile Payments in the U.S.?”
Background on the Contactless Card and Mobile Payments Movement
In 2015, the U.S. payment card industry made a major move in that direction when banks began issuing EMV chip cards with gusto. Now, many in the industry are pushing
contactless EMV payments as the next move.
The push is gaining force through many of the nation’s large issuers, including JPMorgan Chase & Co., which is committed to issuing chip cards with contact and contactless interfaces.
Another step in the right direction is that the majority of EMV point-of-sale terminals at businesses are contactless-capable. However, not all businesses have activated the function.
Another positive marker is that the promotion and increased use of smartphone-based mobile wallets, like Apple Pay, Google Pay, and Samsung Pay.
The Relationship Between Mobile Payments and Contactless Cards
Experts in the filed believe there is a correlation between the use of contactless cards and mobile payments. Some believe it contactless cards could trigger mobile payments growth.
Though people love using credit cards for a number of reasons, include rewards and loyalty point programs, the use of a contactless card is about as quick as using a mobile payment. Embracing one may make others more inclined to use both.
Both contactless cards and mobile wallets use the same near-field communication (NFC) radio frequency technology, which makes transactions safer.
The two types of payments also make work off each other. For instance, if customer goes to pay with a mobile wallet, and the point-of-sale is unable to accept it, the customer may be more likely to use a contactless card. If this happens often enough, it will drive up the use of contactless cards.
Additionally, it is very likely that the simplicity of using contactless cards may become more attractive to a broader customer base that is not as tech-smart.
Also, as mobile payments and contactless cards gain in popularity, it can be expected that more merchants will activate the functionality of it.
What All of This Means for Contactless Payments in the Future?
Despite all of the ifs, ands, and buts in these scenarios, many experts in the payments industry believe the current contactless payment movement is in better shape than it was a decade or so ago.
One of the reasons is that many merchants have POS terminals that, if not already activated for contactless payments, can easily be made so. Also, a plus is that they do not require special readers.
Also, today more than ever, shoppers have smartphones with NFC capability and the sheer expense of dual-interface cards have come down. For example, a non-printed, non-personalized contact-only EMV card may sell for $0.50 or less. Meanwhile, a dual-interface card costs approximately $1.
Though the path to complete contactless payments adoption in the U.S. is unclear, there are many variables in play that make the possibility more plausible than in the past. The change may not occur tomorrow, and it may be slower than most would like, but it definitely on the horizon.