Contactless Cards: The Time is Now, Analysis Suggests

There’s no time like the present for contactless cards in the United States, a recent analysis from global management consulting firm A.T. Kearney posits. According to the report, released in late July and titled “Why US Banks Should Make Contactless Cards an Immediate Priority,” rolling out contactless cards in the US market can yield strategic and economic benefits to merchants, financial institutions and consumers.

The existing presence of contactless payments technology at the point-of-sale is a major reason contactless payments are ripe for growth, the report said. According to the analysis, 70 percent merchant locations in the United States have the necessary hardware to accept contactless card payments. Further, 48 percent of Visa face-to-face card transactions stateside happen on a terminal that have been activated and accept contactless payments, the report said. And the number is expected to rise as over 95 percent of new POS terminals shipped include the capability to accept contactless payments.

“It is a myth that US consumers and merchants are not ready for contactless,” says Monica Gabel, an A.T. Kearney principal who led the research effort, in a press release. “Our readiness metrics suggest that the time to promote contactless adoption is now.”
According to analysis of “US-like countries,” contactless card adoption accounted for a significant boost in transactions per card in the years after their implementation. Consumer card transactions increased up to 30 percent over the three years following roll out, translating into five to 40 new transactions per card per year.

That means retail cash payment volume could be reduce about $190 billion through 2022, improving productivity, reducing cash-handling costs and boosting security for merchants. For financial institutions, the report said, cash-handling cost savings could top $22 billion through 2022, or six percent of annual consumer banking operating expenses.

The benefits to American financial institutions for issuing contactless cards do not stop at cash-handling savings, the report said: “Meaningful strategic benefits can be accrued by banks that launch contactless cards early and position themselves as innovators and leaders. Leadership in contactless rollout and promotion could result in market share gains through stronger customer acquisition, a greater share of wallet, and increased customer loyalty.”

Contactless cards offer a fast, secure payments experience for consumers and merchants. The Electronic Transactions Association (ETA), the voice of the payments technology industry, has been part of the continuing effort to support the growth of contactless payments through its Contactless Task Force. The Contactless Task Force met this year at TRANSACT as part of its ongoing mission to develop and implement an industry-wide plan that encourages the adoption of contactless payments. The task force includes executive leaders from all relevant segments of the payments technology industry, including all major card networks, payment processors and merchant acquirers, financial institutions, software and tech firms, hardware developers and sales channel organizations.

Check out this Transaction Trending podcast with Liz Ryan, EVP of Wells Fargo Merchant Services and ETA Contactless Task Force co-chair, for more information on contactless payments in the United States.