Visa Inc.'s announcement Monday that it will expand to most merchants its No Signature Required program for magnetic-stripe transactions of less than $25 could be yet another pothole in the road to adoption of contactless payments in the United States, observers say.
The no-signature program accelerates checkouts, letting merchants handle customers faster and encouraging consumers to make more small-ticket purchases with cards rather than cash, Visa said.
Visa already permits 26 merchant categories to offer the format, but in July it plans to expand it significantly, to cover about 98% of all merchant types.
Red Gillen, a senior analyst at the market research company Celent, said Visa's move undermines a key selling point for contactless payments, which are also promoted as speeding transactions.
"The no-signature rule changes have taken away a good chunk of the contactless value proposition," he said. "If a magnetic-stripe card can come close in terms of speed, what's the big deal about contactless?"
Visa has offered No Signature Required payments since 2006. MasterCard Inc. and Discover Financial Services offer similar programs. MasterCard's ceiling is $50, and Discover in October expanded its program to cover all payments under $25.
"We do believe that no-signature has impacted the adoption of the contactless payment card," said Troy Bernard, a Discover senior business leader. The difference in checkout time between a contactless card and a magnetic-stripe card is "negligible," he said.
As a result, Discover is rethinking its contactless payment strategy, Bernard said, including expanding its contactless applications to more functions, such as "combined payment and door-access devices, transit devices and new-form factors, such as stickers.