RDATE:17092008
PRINCETON JUNCTION, N.J -- After two years of fast growth in
contactless payments, the verdict is in: Once consumers try
contactless, they like it! And with large issuers including American
Express, Chase, Citibank, Washington Mutual, Wells Fargo and many
others issuing contactless cards, the number of users is growing
fast.
New U.S. consumer research commissioned by the Smart Card Alliance
showed nine percent of the U.S. population now has a contactless credit
or debit card. Last year the number of open network contactless cards
in circulation reached 35 million in 2007, nearly doubling from 19
million in 2006, according to another study from JupiterResearch.
The Alliance survey showed 92 percent of contactless users thought it
was both fast and easy. On the whole, these users had positive
experiences at merchants too, reporting that 85 percent of cashiers
knew how to accept contactless, and 84 percent saw contactless
acceptance marks at the point-of-sale. Contactless users are also
paying with their contactless cards or fobs frequently, with over 22
percent using contactless payment more than six times per month.
The Alliance survey, conducted in 2008 by Javelin Strategy and
Research, included two pools of respondents: 1,500 respondents that are
representative of the U.S. online population, which is 73 percent of
the U.S. population, and 500 contactless credit/debit card users.
Leading contactless issuers have also made positive reports.
"Millions of Chase customers make contactless payments every day using
Chase cards with blink," said Deana Cook, who manages the contactless
feature at Chase. "We have found that customers especially appreciate
making contactless payments in places where speed and convenience is
important. Our research shows that customers who make contactless
payments do so often, and we continue to issue and reissue millions of
Chase cards with blink. Contactless technology is also safe and
secure. Issuers of contactless credit cards have seen no evidence of
increased fraud."
Peter Ho, vice president and product manager for Wells Fargo Card
Services, commented on the high security of contactless payment cards.
"Unlike other card payment mechanisms, contactless payments utilize a
dynamic verification value that is unique to each transaction. This is
a very strong security feature because it prevents criminals from
making fraudulent contactless transactions," he said.
One challenge highlighted by the recent Alliance consumer study was
that more communication is needed to reach more consumers. Awareness
has grown significantly since 2006, with 25 percent of consumers
surveyed now familiar with contactless payments compared to 15 percent
in 2006; however, more than 50 percent of consumers still are not
familiar with contactless payments. Even in high penetration zip codes
nearly half of all consumers are unfamiliar with contactless.
"Communicating and building awareness of contactless benefits to get
consumers to try it is critical, and an important priority for all of
the stakeholders," said Randy Vanderhoof, executive director of the
Smart Card Alliance.
Merchant acceptance of contactless is also strong and growing. There
are now 75,000 U.S. merchant locations accepting contactless payment,
including taxi cabs and transit operators, according to David
Robertson, publisher of The Nilson Report, a trade newsletter that
tracks the payment industry.
"Contactlesspayment acceptance at merchants is taking off much faster
than PIN debit did," said John Suchanec, senior vice president of
Payment Research and Innovations, Bank of America. "Contactless
acceptance is already growing at a rate that it took seven years to
achieve with PIN debit. Mobile will accelerate the curve."
To help explain the fast take up by merchants, Chris Schwanz, payment
systems program manager for IDQ Companies, commented on how Dairy Queen
and other merchants benefit from contactless acceptance: "At Dairy
Queen, contactless payments are an important part of our overall
payments strategy. As a quick service restaurant (QSR), we are
constantly striving to enhance speed of service, and contactless
payments certainly support that goal, especially in the drive-thru
area. Another benefit is that contactless payments are more secure
because the guest is able to maintain possession of their card. Our
contactless footprint is growing and we have over 1,700 locations
accepting this payment option. This fall, we're planning a contactless
pilot for our closed-loop gift card program and we have high hopes for
success on that front," Schwanz said.
Contactless users are very positive on mobile payments as well.
Current contactless users are twice as likely to use a mobile wallet as
non-users. The Alliance research showed 43 percent of contactless
users were likely to use a mobile device as a mobile wallet, compared
to 19 percent of the non-users. Consumers are even ready to switch
carriers to get what they want, with 47 percent of contactless users
saying that they would switch mobile carriers to gain mobile payments.
As to why contactless payment is popular with consumers, a busy
professional woman working in New York City summed it up nicely in this
comment. "When grocery shopping, I never like fumbling for cash,
having to put change back into my wallet, then trying to exit the store
with my hands full of groceries. All this with other impatient
customers behind me in line. Using my contactless card is super
convenient and fun. It's faster and easier than swiping a card, and I
definitely prefer to use contactless where I can," she said, requesting
anonymity.
The Smart Card Alliance Contactless Payments Council Web page provides
information, white papers, news and other resources about contactless
payment. The most recent white paper, Proximity Mobile Payments
Business Scenarios: Research Report on Stakeholder Perspectives,
explores business models for mobile payment for banks and mobile
network operators. The Council brings together financial payments
industry leaders, merchants and technology providers to facilitate the
adoption of contactless payments in the U.S. through education programs
for consumers, merchants and issuers.
About the Smart Card Alliance
The Smart Card Alliance is a not-for-profit, multi-industry association
working to stimulate the understanding, adoption, use and widespread
application of smart card technology.
Through specific projects such as education programs, market research,
advocacy, industry relations and open forums, the Alliance keeps its
members connected to industry leaders and innovative thought. The
Alliance is the single industry voice for smart cards, leading industry
discussion on the impact and value of smart cards in the U.S. and Latin
America.
CONTACT: Deb Montner, Montner & Associates Tech PR Agency
Tel: +1 203 226 9290
e-mail:
dmontner@montner.com
Smart Card Alliance
WWW:
http://www.smartcardalliance.org
.
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