Contactless payment cards may never have had strong footing in the U.S. to begin with, but perhaps the biggest sign of the technology's downfall is JPMorgan Chase's admission that its Blink cards never quite caught on.

"For newly issued cards, we have discontinued Blink due to limited merchant acceptance and low customer usage," says Chase Card Services spokesman Rob Tacey. "Blink will continue to be available on a majority of existing cards until those cards expire or need to be replaced."

Back in 2005, Chase was the first major bank to issue contactless cards on a wide scale, and marketed the technology aggressively. But by 2011, Chase discontinued its "Blink" branding for the cards, downplaying the ability to pay by tapping the card instead of swiping it at the point of sale.

Already, many consumers who had contactless cards didn't know about the function or didn't know how it worked. And today, with more attention on EMV chip-based smart cards and Near Field Communication enabled phones, the business case for contactless plastic cards is disappearing.

"I do not think the basic contactless card makes sense," says Julie Conroy, senior analyst and fraud expert with Boston-based Aite Group. "It never really gained traction—at the end of the day, consumers are comfortable swiping their cards unless they are given a compelling reason to change their behavior."

Large issuers evaluating EMV-chip cards, which improve security over magnetic-stripe cards, are divided over whether to also enable contactless payments when they add the new technology, she says.

Those who already issue contactless cards don't want to remove features, especially if competitors have them, Conroy says. In addition, dual-interface cards can be "a pathway to mobile payments," she adds.

Those holding back on dual-interface cards are primarily doing so because of cost considerations, Conroy says.

If other issuers follow Chase's lead, it will essentially be a case in which the payments industry is "taking one step back to take two steps forward," says Gil Luria, analyst with Los Angeles-based Wedbush Securities.

"Contactless [card] technology was really ahead of its time," he says. "Some banks tried to issue these cards but they never had the network effect."

While adoption was never significant in the U.S., the technology did catch on in other countries, he adds.

"MasterCard talks about contactless in Australia and Poland and there are other regions where there are a lot of contactless terminals," Luria says.

MasterCard remains optimistic about contactless card adoption.

"MasterCard is a global leader in contactless payment solutions and our contactless cards can be used at more than 2.1 million merchant locations worldwide in more than 63 countries," MasterCard spokesman Jim Issokson says in an e-mail.

Contactless cards are an "ideal payment method for traditional cash-heavy environments where speed is essential," Issokson adds.

Transit systems in Chicago, London and other major metropolitan areas rely on contactless payments, he notes.

Visa and MasterCard are more focused on EMV card and NFC mobile payments, so they may not feel contactless cards belong in the mix, says Brian Riley, senior research director and analyst with Boston-based CEB TowerGroup.

Despite decades of effort, banks have never convinced a large number of consumers to make contactless payments, Riley says.

"This should not be an issuer decision, because the technology has to be supported by a network, whether it is Chase Blink or something from Citi or Bank of America," Riley says. "It's more about what First Data wants to do or what MasterCard might want to do."

First Data did not have a representative available to speak prior to deadline.

Subscribe Now

Authoritative analysis and perspective for every segment of the payments industry

14-Day Free Trial

Authoritative analysis and perspective for every segment of the industry