Mobile didn't leapfrog contactless. But can contactless still help?

A new survey from PSCU indicates that four years after Apple Pay made its debut, only one in 10 U.S. consumers find mobile wallets easy to use, around 88 percent fail to see the technology as fast or convenient.

Part of the issue is that in the U.S., contactless cards didn't pave the way for mobile as they did in other regions. Without widespread acceptance of contactless cards, merchants were put in the position of being asked to upgrade their terminals for mobile without any promise that the investment would pay off.

“Consumers aren’t seeing a great advantage in terms of speed using mobile versus cards,” said Tom Pierce, chief marketing officer for PSCU, which handles card processing and other services for credit unions.

But don’t count mobile wallets out yet, experts warn.

JPMorgan Chase & Co.’s recent decision to issue contactless payment cards to speed up transactions at Near Field Communication-enabled terminals may breathe new life into mobile wallet usage. Chase — which was one of the most outspoken advocates of contactless cards the last time the U.S. tried to adopt the format — is beginning the contactless rollout this year with credit cards, expanding next year to debit cards.

“Chase’s move is a market-defining event,” said Richard Crone, a principal with Crone Consulting LLC, noting that one of every two U.S. households has a Chase-branded credit, debit or reloadable payment card, so when the majority of the bank's products support NFC, it will compel more merchants to get on board with contactless payments.

According to some estimates, contactless card transactions take less than 15 seconds compared with 20 to 30 seconds for a traditional EMV card transaction.

“The bottom line is that contactless card supply will create demand as it did in the U.K., Australia and other parts of the world, which in turn will lead to more merchants supporting contactless, making mobile wallets more relevant,” Crone said.

It’s true that mobile wallet usage has been low to date, primarily because relatively few merchants supported contactless payments, said Randy Vanderhoof, executive director of the U.S. Payments Forum.

“Broader merchant acceptance of NFC will get consumers tapping with whatever payment device they choose—card or mobile,” Vanderhoof said.

Over the next few years, mobile wallets will benefit from the rise of contactless cards, predicts Thad Peterson, a senior analyst with Aite Group.

“There’s a generation of mobile-first individuals who see phones as more convenient for paying than cards, and mobile wallets are really convenient for in-app and online payment, so what we’ll likely see is a slow build of a ‘mobile first’ mindset that will eventually supersede the ‘card first’ generation,” Peterson said.

But there is still a lot of work to do before mobile sees a benefit from contactless card issuance.

In PSCU’s survey, one in three respondents said they have used some kind of mobile payment, but 38 percent said they have security concerns about the technology, said Pierce.

MaritzCX, on behalf of PSCU, conducted the online survey of 1,500 U.S. customers of credit unions and banks in September.