Contactless and wearable payments are maturing, and paving the way for speed and convenience in the credit card markets.
Driven by the power of fintech, contactless (like Apple Pay or Samsung Pay) and wearable payments (like the Samsung Gear S3 and Apple Watch) are experiencing increased adoption rates that will continue to see growth.
Apple Pay is currently dominating the contactless payments in the U.S., but that is likely to change as chip cards are now being fit with contactless capabilities. Additionally, financial institutions, like Wells Fargo, Chase and Bank of America have begun to implement contactless NFC enabled ATMs to their stores.
Credit card issuers have the capability to dominate the contactless markets in the coming year and take some of the control back from apps like Apple Pay, Samsung Pay and Android Pay by enabling both debit and credit cards with tap-and go-functionality. Consumer’s may find it more convenient to swipe their favored payment card instead of their smart phone.
The key component driving adoption rates is the availability of near field communication (NFC) technology at retail locations. As merchants are now required to be EMV compliant, this serves to expedite contactless and wearable payment options since most EMV terminals have the ability process those types of transactions.
NFC’s presence is rapidly scaling in the U.S. Aite Group estimates 3.15 million merchant locations will have NFC-capable terminals by the end of 2017, up from 1.18 million in 2016.
Consumers need for speed and faster options is also a driving factor as frustration with sluggish EMV lines has greatly increased even though credit card companies have been working hard to speed up point of sale transactions. Any payment option that keeps customers moving quickly through their transactions is a win – and contactless payments are providing exactly that.
With expanding NFC technology, the growth of wearables will continue to flourish this year. In order for this technology to really take off, however, it will initially have to piggy-back on a device consumers are already using – like fitness trackers or smartwatches. Once consumers begin to see the advantages of wearables, items such as rings and bracelets will likely gain popularity. Until then, most will find it more convenient to have payment functions on devices they are already using and offer multiple capabilities.
Consumers appetite for quicker, new methods of payments is continually growing, and I expect 2017 to be another record-breaking year for contactless and wearable options.