Industry News

U.S. lags the world in contactless cards despite terminal growth: Report


Kate Fitzgerald | Thursday, May 25, 2017

PaymentsSource

Contactless cards are becoming the global standard for most markets except in the U.S., where tap-to-pay card distribution lags far behind the rest of the world, according to the Smart Payment Association (SPA), a Munich-based organization that tracks global card manufacturer data.

EMV chip-enabled card shipments reached 2.2 billion last year, and in most major markets, more than half of those support contactless payment with Near Field Communication technology built into the card, the SPA said in a Wednesday press release.

In China, about 90% of all newly issued payment cards are contactless and more than half of all card transactions in the U.K. and Australia are contactless, but U.S. contactless card penetration remains in the single digits, the SPA said.

“U.S. contactless card penetration is surprisingly low, considering the millions of contactless-enabled payment cards that were issued by U.S. banks between 2009 and 2013,” the SPA noted in a report last year.

The fissure occurred when U.S. issuers abruptly switched to issuing simpler contact-only EMV cards, in their rush to meet the October 2015 EMV liability shift, according to the SPA.

In contrast, Chinese card issuers adopting EMV went directly to so-called dual-interface cards that operate in both contact and contactless mode, the organization said.

“China has already demonstrated how leapfrogging direct to contactless cards has proved a game-changing approach that’s been wholeheartedly embraced by consumers,” the SPA said.

The U.S may see its mix of contact and contactless cards change over the next year with the gradual rise of Apple Pay, Android Pay and Samsung Pay, the SPA suggested.

“The rise of (third-party mobile wallets) is helping to rapidly drive consumer uptake of contactless payment,” the SPA said, as more consumers become familiar with tapping to pay.

Only a few U.S. issuers so far have broadly embraced NFC-enabled cards. One is Citibank, which last year issued the entire new Citi Visa Anywhere card portfolio cobraded with Costco as contactless.

Overall EMV card production, which saw a 40% growth between 2014 and 2016 with the U.S. chip migration, is still strong but beginning to level off, the SPA said this week.

Card issuers shipped 2.2 billion cards in 2016, up 5% from 2015, which was about the same as the previous year.

This article was licensed through Dow Jones Direct.  

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