For many years, the smart card industry as a whole has been supporting the adoption of contactless cards, or to be more specific dual interface cards: cards that can be used in contact or contactless modes. However, one must recognize our efforts have been more successful in Europe and in Asia than in North America. Things may be changing now as more US card issuers are adopting hybrid cards.
However, we are often in a snake that bites its own tail situation as the switch from a technology to another requires careful planning and coordinated actions: merchants are only interested in installing contactless POS terminals when contactless cards are on the field and financial institutions are only issuing contactless cards if the accepting infrastructure is in place. Depending on regions, the situation starts to evolve when payment schemes, Visa and MasterCard, issue mandates, as is the case in Latin America and South East Asia, requiring the all new cards to support contactless operation and POS terminals to be contactless-ready by April 2019.
ABI Research just published a research in which they anticipate US contactless card shipments will grow tenfold from 25.7 million cards in 2016 to 229.6 million cards in 2021. On a more global scale, ABI Research even consider contactless payment card issuance is set to hit 1.5 billion units in 2018, accounting for over 50% of all payment card shipments delivered globally. According to the analyst firm, the regions driving this growth include the US, India, South East Asia, and Latin America, leading the analyst firm to expect issuance volumes toward 2.3 billion annually by 2022.
In the US, as of now, many large merchants are still reluctant to install contactless-enabled POS terminals. For instance, Walmart, with over 5,000 stores has no plans to invest in contactless readers for the time being. On the other hand, McDonald’s and Walgreens are equipped and CVS and 7-Eleven have set up a roadmap for contactless POS terminal equipment installation. As a result, the US Payments Forum reports that active contactless-enabled payment terminals are only approaching 20% of the US market.
But even terminals adoption will not be enough. The following step is to set up a training plan for all shop attendants, to make sure they will give the right instructions to cardholders.