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Contactless Payments—Old Could Be New Again

By Sarah Grotta
August 22, 2016
in Analysts Coverage
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Mobile Payment: Flat lay vector illustration

For those in the U.S. still waiting for contactless to arrive in a big way, an article in Banking Exchange suggests the waiting will continue. There’s not real indication yet that contactless is being embraced, despite its adoption overseas:

Part of its slow adoption can be seen in the incredibly dynamic payments arena, fraught with competing technologies such as EMV, proprietary digital wallets, mobile advances, and wearables. Contactless simply has been swamped by competing technologies striving for dominance.

Another part of this technology’s slow adoption arises from consumers already perceiving their current means of payment—cash, checks, credit cards, and debit cards—as being familiar, ubiquitous, and, frankly, good enough.
(Periodically, the payments industry must remember that consumers’ world doesn’t revolve around how they pay for things.)

The article suggest that the issues with EMV may eventually create a reason to adopt contactless:

Again, ironically, the (Smart Card) Alliance argues that contactless payments could in turn ease the pain that comes with EMV transactions, namely the perceived increased time needed.

The perception of both cardholders and merchants is that inserting a card, optionally entering a PIN or signing for the transaction, and waiting for authorization seem to take a lot longer than just swiping a card. Contactless EMV transactions, however, are perceived to be much faster than contact transactions, while still maintaining the high EMV security standard.

It appears however, that the industry is choosing to fix the contact chip through initiatives such as MasterCard’s M/Chip Fast or Visa’s Quick Chip rather than taking the route of enabling contactless which, among other tasks, would require card re-issuance (again) with a more expensive chip.

Overview by Sarah Grotta, Director, Debit Advisory Service at Mercator Advisory Group

Read the full story here

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