Issuers are lining up to issue dual contact and contactless payments cards in the U.S. through the expired card reissuance process and other card replacements. They are doing so to pick up any available incentive, and also to turn more small cash exchanges into a quick and easy tap or wave card transaction with interchange attached.
By all accounts, contactless has been very well received by the open transit systems and their riders. Adoption outside of transit is a bit more nuanced, as PaymentsSource noted.
Issues with contactless have made acceptance at the POS complex to manage operationally, which in turn has made the experience for consumers inconsistent. This all stems from the fact that there are still terminals in the market that are based on the old Magnetic Stripe Data (MSD) technology plus those that offer the newer, more secure EMV version of contactless.
Processors are working to support both forms so cardholders don’t know the difference and their transactions are nearly effortless. If, however, consumers find their card works as a contactless payment at one retailer, but is declined at another, creating the muscle memory to tap to pay becomes that much more difficult.
From the article:
Two different contactless operating modes are still in place in the U.S. — magnetic stripe data (MSD) contactless from before the 2015 liability shift, and new EMV contactless — which many issuers, merchants and processors are struggling to reconcile under the card networks’ EMV contactless requirements.
Card issuers have banned contactless MSD-only card issuance in favor of more secure EMV cards, but contactless MSD-only readers still dot the U.S. landscape. Examples include vending machines, kiosks and some stores whose terminals supported pre-EMV contactless and mobile payment pilots.
The U.S. is now in a transitional period with both modes active, creating a complex environment for merchants and issuers to navigate when trying to align to each of the payment network’s rules,” the U.S. Payment Forum said this month, announcing a white paper clarifying requirements to support both the older and the newer contactless modes.
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group
