Why some issuers still hesitate to offer contactless cards
Most large banks have declared their strategies for adopting contactless cards, but the rank and file of FIS’ midsize and smaller issuers are still weighing their options about when to flip the switch.
For some issuers, the timing is off. There are still stacks of EMV contact card stock to burn through before issuers commit to contactless, according to Debrian Hughes, FIS’ vice president of product management.
“Some larger issuers are ready to roll out contactless and others are holding off,” Hughes said. “Cost is a factor for some issuers and they don’t want incur unnecessary expense."
Other fence-sitters are waiting for contactless to become more of an everyday norm for in-store payments, he said.
But ultimately it’s a question of when, not if, most banks—even smaller ones—will convert to contactless, Hughes says. FIS is ready for the first wave of institutions on its platform to issue contactless cards around July 1.
FIS expects most issuers on its platform to take a gradual approach, with some beginning this year to replace expiring contact EMV cards with contactless versions.
Comenity Bank, an FIS client with several private-label payment card portfolios, already is issuing contactless cards, according to Hughes.
“Cards are a bridge to digital wallets and mobile payments, and banks of all sizes want to give consumers more options to use cards," he said. "There’s also the business case for contactless making it easier for consumers to tap instead of pay cash for small-ticket transactions, which drives revenue."
So far Hughes has not heard of any FIS customers considering mass reissuance or even flooding certain cities with contactless cards like Bank of America is doing in New York, Boston and San Francisco, where local transit authorities broadly support contactless acceptance.
But FIS customers near those contactless transit hubs are more likely to be in the first wave of banks issuing contactless, Hughes said, though he declined to name those customers.
FIS overhauled its own systems last year in preparation for contactless, so it can provide turnkey support instead of individual integrations for each bank, Hughes said. The Jacksonville, Fla.-based bank technology provider early this year finished BIN configurations and recently wrapped up final preparations to roll out contactless cards immediately for interested institutions.