Wells Fargo joins the big-bank movement to contactless cards
Wells Fargo & Co. has committed to converting all of its payment cards to contactless technology, beginning with credit cards and adding contactless debit cards this summer.
With this move, Wells is admitting that contactless cards are the most immediate route to speeding up in-store checkouts. JPMorgan Chase & Co. reached a similar conclusion in the fall of 2018 when it announced plans to gradually switch credit and debit cards to the contactless format as they expire.
Wells will issue all new and replacement credit cards in the contactless format starting today, and it will do the same with debit cards in a couple of months, Wells Fargo said in a Tuesday press release.
Later this year, customers with contactless cards will be able to tap to initiate an ATM transaction, Wells said in the release.
Wells pointed to the growing number of merchants that have enabled contactless payments as a driving factor in its decision.
“According to Visa, contactless payments will soon be ubiquitous, with 78 out of the top 100 U.S. merchants (by transactions) currently offering the ability to tap-to-pay at checkout,” said Beverly Anderson, head of Wells Fargo cards and retail services, in the release.
Card technology experts said they expect other large banks to make similar commitments to contactless this year.
“This is the first year we’ll start to see a lot of banks moving to the contactless format, and a lot of contactless cards entering the mix, so it will finally be more the norm than the exception,” said Paul Kobos, senior vice president of banking and payments at Gemalto, a chip card manufacturer that handles contactless card orders for financial institutions.
Kobos estimates about half of U.S. store locations are now contactless-enabled, a tipping point that makes it worthwhile for issuers to commit to the technology, based on the experience of other countries with broad contactless acceptance, including Canada, the U.K. and Australia.
With Wells’ move, Kobos expects issuers to begin marketing efforts to raise the awareness of contactless cards and their capabilities for quicker checkouts.
“Costco began issuing contactless cards a couple of years ago, and so did Capital One, but it’s been very quiet without a lot of awareness," Kobos said. "That will change with more issuers flooding the market with contactless cards, and more merchants may finally adopt the technology now too.”
Don't look for smaller institutions and credit unions to leap to contactless just yet, though.
"The first wave will be larger banks and super-regionals, with smaller banks and credit unions working through aggregator-processors, where there's a bit of a lag," Kobos said.