A case for contactless cards

Demand for no-touch payment methods from consumer banking customers continues to accelerate.

In the wake of the COVID-19 pandemic, we are all reconsidering how we do things. Over the course of a few short weeks in the spring of 2020, new realities reshaped our thinking. We became acutely aware of viruses and the role that contact plays in their spread. As a result, demand for technologies that eliminate contact and alleviate the fears of consumers and merchants skyrocketed.

In March 2020, about 38% of consumers said they viewed contactless as a basic need or feature of payments—up from 30% before the pandemic. It’s too early to understand the long-term effects of social distancing, stay-at-home orders and a closed economy on consumer lifestyles and behavior.

But it’s clear that the pandemic-related surge in contactless payments will not reverse after the pandemic fears subside. One compelling reason is that, according to industry research, about 65% of U.S. merchant locations accept contactless payments. Contactless payment capability can power a better customer experience. In addition to eliminating the risk of contagion through contact with cash, payment terminals and other surfaces, it can be faster, easier and more convenient.

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To drive adoption, the payment industry needed consumers to try contactless payments once, knowing that the benefits would speak for themselves. The pandemic sparked that trial, and now consumers are increasingly adopting this payment experience.

Contactless technology has fully emerged

While still considered an emerging technology by some, up to 80% of consumers globally use contactless credit and debit cards, and for roughly half that number, tap-and-go cards occupy their top-of-wallet position.

Consumers want it, merchants support it and issuers can no longer afford the luxury of time. Keeping your card top of wallet with cardholders means staying ahead of a flattening curve. The good news is, as a result of the U.S. EMV liability shift of 2015, you probably already issue chip-enabled cards, which means you are halfway to offering customers the security and convenience of dual interface.

Dual-interface cards offer consumers a choice of payment technologies—contact (EMV chips) and contactless (tap-and-go antennae). The flexibility of payment options is one of many reasons why dual-interface cards are widely considered the default card payment technology moving forward. Here are a few more benefits of dual-interface cards:

Security: The contactless technology of dual interface offers the same protection as a contact-only EMV card, making these cards more secure than a magnetic stripe card or cash.

Speed: Contactless transactions average 15 seconds or less. We live in a fast-paced world, so time is precious. In order to keep up, you must offer your customers fast payment options.

Simplicity: Ease of use could be a large contributing factor for adoption, particularly for transactions under $25, most of which are currently made with cash.

Control: Contactless payments allow a cardholder to complete a transaction while maintaining possession of their card and without touching the point-of-sale device.

Consumer demand for contactless payments is growing. Historically, technology has been a key driver of human behavior. This time, it’s the other way around.

Nicole Machado is the executive director of product strategy for Vericast Card Solutions.

As you’re fine tuning your financial institution’s strategy, gain insights on emerging industry trends in our Executive Report, “A look ahead to banking in 2022.”