A new card payment trend is sweeping across the United States once again. Following the wake of the EMV®1 migration, Visa® now predicts that 100 million of its cards will include a contactless interface before the end of this year2. But what exactly are contactless cards and why would Financial Institutions want to issue brand new cards to their customers?
Dual interface cards use a contactless payment specification to facilitate transactions. A simple tap to a compatible terminal and your transaction is complete. This technology offers several advantages over its EMV® counterpart, namely quick transaction speed and an enhanced customer experience. According to a Market Timing Study, contactless transactions can be as quick as 0.5 seconds; seven times faster than typical Chip & PIN transactions3. The ease of tap-to-pay for small value transactions also makes contactless a viable replacement for cash and pushes them towards the front of wallets.
The contactless experience not only benefits cardholders; Financial Institutions also reap the benefits of the cards’ ease of use by profiting from higher active use as well as increased spend. According to card network data, contactless cards promote 46%4 active use over contact-only cards and increases spend by 14-16%5. Several of the largest issuers have already begun migration including American Express®, Chase®, and Capital One®. As associations continue to push for acceptance, early adopters can stay ahead of the curve and generate long-term profitability by making the switch now.
1. EMV® is a registered trademark or trademark of EMVCo LLC in the United States and other countries. www.emvco.com.
2. Anderson, S. (2018, November 13). Tap-and-Go Increasingly Part of the Mobile Payments Landscape. Retrieved from https://paymentweek.com/2018-11-14-tap-go-increasingly-part-mobile-payments-landscape
3. Market Timing Study September 2012: Visa payWave transactions without receipt are on average 7x faster than typical Chip & PIN transactions with receipt. Retrieved from https://www.visa.ca/dam/VCOM/regional/na/canada/merchants/documents/visa-paywave-put-your-customer-in-the-fast-lane-en.pdf
4. VisaNet 2015-2016 Increased volume per active card for Australia cards without payWave -4% and with payWave +10% growth post activation window. Source: Visa Inc. 2017 Investor Day Presentation, Retrieved from https://s1.q4cdn.com/050606653/files/doc_presentations/2017/Investor/2017_Investor_Day_JACK_web.pdf
5. Mastercard. (2018, September 17). Almost 1 in 2 UK transactions are now contactless [Press release]. Retrieved from https://newsroom.mastercard.com/eu/press-releases/almost-1-in-2-uk-transactions-are-now-contactless/