U.S. issuers, acquirers and merchants that are executing EMV migration projects face liability shift dates and increasing consumer demand for more secure transactions.
But if they arent already, they should be considering adding another piece to their EMV migration roadmapEMV contactless and NFC mobile payments.
Contactless payment isnt a new concept in the U.S. We have experimented with it before with mixed results. Consumers that had contactless cards liked them, but merchant adoption remained low. Despite this, card issuers, merchants and acquirers should consider implementing all of the capabilities EMV has to offer, including contact, contactless and NFC mobile payments, at the same time.
There are three main reasons why contactless EMV and NFC make sense as part of a payments strategy:
It has been successful in other markets. From a behavior perspective, consumers have adapted quickly to contactless in other markets.
For example, when Australia started rolling out EMV, there was a large focus on EMV contactless card and NFC mobile payments. And in a few short years, Australia has become a leading country in terms of penetration of contactless payments and the number of taps per month. According to data from the banking group Westpac, 60% of all Visa and MasterCard debit card payments are contactless transactions. There are two parts to why this is working. One, the payments brands, card-issuing banks and merchants are encouraging it and implementing it together at the same time, and two, consumers simply like it and want to use it.
Canada has also rolled out EMV contact and contactless concurrently from both issuance and acceptance perspectives. About 75% of major retailers in Canada accept contactless payments today, according to Rogers Communications.
Demand is growing. With Apple Pay newly introduced to the market, expect consumer demand for contactless and NFC mobile payments to keep growing. In the first 72 hours of being available, Apple says that Apple Pay was activated by 1 million people and, from all accounts, the wallet works very well. But were also seeing a domino effect as usage for other NFC-based mobile wallets, such as Google Wallet and Softcard, is reported to be growing along with Apple Pay. As consumers get used to waving to pay and retail acceptance grows, it follows that the demand for EMV contactless cards and acceptance will grow as well.
It can save money and time. From an issuance perspective, card issuers can consider dual-interface cards that have both EMV contact and contactless capabilities. This will save them having to go back and re-issue contact-only cards with contactless capabilities outside of normal reissuance cycles later down the road. On the acceptance side, most terminals shipped today are capable of all forms of paymentmagnetic stripe, EMV contact and contactless and NFC paymentsbut still require testing and certification, which can take months. Merchants and acquirers looking at EMV terminal testing and certification timelines can build all forms of payment into one project, saving time, resources and money. Turning on the functionality after terminals are in-store can be done but may be burdensome.
Being one of the last major economies to migrate to EMV chip payments actually puts the U.S. in a unique and beneficial position. Instead of migrating to new payment technologies in stages, U.S. issuers, acquirers and merchants can get ahead of the demand curve and capitalize on all of the forms of payment EMV offerscontact contactless and NFC mobile payments.
Xavier Giandominici is a director at payments consultancy FIME America.
