In a sign of the growing popularity of contactless payment cards, JPMorgan Chase & Co. has changed its issuing strategy for its Blink contactless products.
The New York banking company unveiled its Blink line in May of last year, and said then that it would send them to customers in selected regional markets.
Tom O'Donnell, a senior vice president with JPMorgan Chase, said in an interview Tuesday that the company is "mainstreaming" Blink into its card products. When it decides to add contactless technology to a specific card product, it will "Blink-enable" every new version of that product that it sends to cardholders, no matter where they live.
It has made the change gradually this year, Mr. O'Donnell said. "A year ago," he said, "if we had sent Blink cards to everyone, they would not have been as relevant" to many cardholders, because there would not have been many places where they could use the cards. "Now it is."
Several nationwide chains now accept contactless cards, he said, including McDonald's Corp., 7-Eleven Inc., AMC Theatres, and the pharmacy companies CVS Corp. and Walgreen Co. Some of these companies' smaller competitors have followed suit, such as the Wawa Inc. convenience store chain in the Middle Atlantic and the gas and convenience store chain RaceTrac Petroleum Inc. in the Southeast.
"What we are seeing is the continuation of acceptance of contactless cards," Mr. O'Donnell said, especially among merchants where "quick and easy payments makes sense and adds value."
JPMorgan Chase has issued about 7 million Blink cards, and they are accepted at 30,000 U.S. locations, he said. He would not say how many of the cards have been used, though the company does keep track of that data.
Ariana-Michele Moore, a senior analyst at Celent LLC, said that merchants with a high volume of low-value purchases, especially ones with high customer throughput, have been the first to embrace contactless payments. These merchant categories are drugstores, fast-food restaurants and buffets, movie theaters, grocery stores, convenience stores, video and game rental shops, and vending machines.
Ms. Moore predicted that by 2011, about 15% of all payments in these target industries will be made with contactless cards. "Certainly there is a lot of excitement about contactless payments," she said.
Though contactless technology has been available for several years, issuers were reluctant to invest in the cards unless there were places where customers could use them, and merchants had little interest in buying new card readers that could support contactless payments unless plenty of customers were likely to have and use the cards.
Ms. Moore said that most cards are good for about three to four years, and that she expects many banks to follow JPMorgan's lead and incorporate contactless components into the next wave of replacement cards they distribute to cardholders, which would go a long way to addressing merchants' concerns. "A lot of credit cards out there will be equipped with contactless technology," she said.
Mr. O'Donnell said some of the point of sale terminal vendors are starting to incorporate contactless readers into their machines. Because terminals typically have a three- to four-year replacement cycle, he expects that a good number of merchants will be able to accept contactless cards within a few years. "As the hardware becomes standardized, it will have the effect of increasing acceptance," he said.
But Ms. Moore said "the value will be low for anyone outside the target industries," where transaction speed is less important, to accept contactless cards.
Though she agreed that competition within market segments is prompting more merchants to accept contactless payments, this is not spilling over to other industries. Many merchants are quite satisfied using standard magnetic stripe cards only, and "see no reason now to buy a new POS terminal."
"Maybe a majority of world merchants will one day accept contactless cards, but it is certainly not true now," she said.
