Though one large issuer has delayed a big order, overall demand for contactless payment cards is strong, according to a major card maker.
Martin Ferenczi, the managing director for North America at Oberthur Card Systems, said in an interview this month that one of the French company's large issuer customers had postponed and scaled back an order because the bank has extended a pilot program that was expected to conclude this quarter. He would not name the issuer.
However, orders from other issuers are strong. "Three other banks are ordering large amounts, and the number of institutions ordering contactless has substantially improved," Mr. Ferenczi said.
Many of the contactless cards issued by JPMorgan Chase & Co. when the New York banking company announced its Blink product in May 2005 are coming up for renewal next year, he noted, and the issuer's renewal rates will provide an important gauge of the technology's success.
Jessica Hougentogler, a spokeswoman for JPMorgan Chase, said the company would renew all its current contactless cards equipped with the technology. It has issued more than 10 million Blink cards. "When we rolled out the program in 2005 the concept of contactless wasn't even out there, and we went from almost no merchant acceptance to over 50,000 now," she said.
Wells Fargo & Co., HSBC Holdings PLC, Citigroup Inc., Washington Mutual Inc., and KeyCorp also offer contactless cards. "What is key from our standpoint is the adoption of the technology by more than a handful of institutions," Mr. Ferenczi said.
Still, Mr. Ferenczi said, "one thing that has not happened in the market place is an explosion," meaning more than 100 million of the cards in consumers' hands.
Chris Allen, an analyst at Dove Consulting, a division of Hitachi Consulting, estimated that the contactless card total in the U.S. market is closer to 30 million. Though the adoption is strong, he said, the market still has to find a place for one piece of the puzzle.
"Explosion happens when you have more merchant acceptance," he said. "You have a lot of cards out there that are not used."
