6 ways contactless is coming back

Published
  • November 04 2016, 2:58pm EDT
There was once a huge push behind contactless payment cards in the U.S., but eventually issuers lost interest in the format. However, there are signs that contactless payments will make another push.

There was once a huge push behind contactless payment cards in the U.S., but eventually issuers lost interest in the format. However, there are signs that contactless payments will make another push.

Citi and Costco's card

The biggest positive sign for contactless payments is Citigroup's decision to embed the technology in the Citi Anywhere Visa card it issues to Costco customers - especially since Costco doesn't accept contactless payments or even EMV. More than 70% of the use of the Costco-branded Citi Anywhere Visa cards occur outside the warehouse giant's stores.

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'Pay' wallets

Apple Pay, Android Pay and Samsung Pay all support NFC, prompting more merchants to install hardware capable of accepting wireless payments. These terminals aren't mobile-only, and can be used to accept contactless payments from plastic cards as well.

Loyalty goes contactless

Another factor is mobile loyalty. Companies like Kohl's are embedding loyalty into their mobile payment offerings, and this could be a driver of not only mobile wallets but also other contactless payment formats, including plastic cards.

Transit fare meets mobile wallets

Apple Pay's support of the FeliCa standard in Japan demonstrates that mobile wallet providers are willing to coexist with other contactless payment formats. This means mobile wallets could encourage the use of existing contactless fare cards, including open-loop cards.

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EMV's timing problem

Consumers perceive contact-EMV transactions to be unnecessarily slow, so they may prefer a tap-and-go experience. If shoppers haven't yet warmed up to mobile wallets, they can get the same speed from a contactless plastic card.

Global momentum

Outside the U.S., contactless cards are more popular than ever. In the U.K. — where London's black cabs recently added contactless acceptance — NFC drove 21% of all card payments in August 2016, up from 7.9% a year earlier, according to the UK Cards Association.