Contactless Payments Achieving A 'Ripple' Effect
Over 50 million contactless cards and devices could be in circulation in the US by end-2006, with up to 35,000 merchant locations or 20,000 POS terminals accepting cards, according to Visa USA. Contactless cards are quickly reaching critical mass in the US as card issuers dispense tap-and-go cards to gain a share of the cash-reduction pie and increase payment revenues. Retailers in the last year have similarly moved from pilot tests to full rollout of contactless payment solutions, lured by the promise of faster-moving checkout times and higher transaction values.With research showing that contactless cards can reduce transaction time by up to 50 per cent, gas stations, coffee bars, fast-food restaurants and convenience stores were the first targets for the technology. However, other industry sectors with high volumes of low-value payments are now adopting the technology in light of its speed and low barriers to entry. American Express for one has noted that consumer demand is dispersing merchant interest in contactless cards beyond the initial target segments as the value of the technology for everyday purchases is realized. Once the US payments industry pulled behind contactless payments, this unified approach fueled momentum for the new payment option, as did the opportunity for issuers to gain more revenues from interchange fees. In this light, card issuers and merchants have driven US-based rollouts but in Europe, contactless cards are unlikely to take off as quickly as EMV migration is still a near term priority. Both MasterCard and Visa are optimistic that contactless cards will eat into EuropeÆs still-significant cash volumes, and expect small-scale pilots to commence in 2006 and 2007. Related Links:
