We all know a change of technology is a chicken and egg issue. There is little point for merchants to get equipped with terminals supporting contactless payments when there are few contactless cards on the field and issuers do not see any reason to issue contactless cards when the acceptance network is not ready. Seemingly, 2019 will remain as the year when the payment industry is finally getting out of this vicious circle.
Smart Payment Association (SPA), the industry association that sets its motto as “shaping the future of payment technology”, just published its market data saying that 2.6 billion smart payment cards were shipped globally in 2018, out of which 45% are contactless. In addition, SPA also establishes that 83% of all payment cards shipped in Europe in 2018 support contactless communication. Other Regions are also moving fast on the way to contactless payments: 68% of US storefronts now accept chip cards, the Indian government had set December 31, 2018 as the deadline for a national Chip and PIN migration, and other Asian countries are following the same path.
Country statistics all go into the same direction. For instance, in Ireland, the volume and value of contactless payments both grew by almost 60% in 2018, according to the Banking & Payments Federation Ireland (BPFI). In the UK, contactless overtook chip and PIN last summer when 51% of all in-store card payments were contactless in June 2018, followed by 52% in July, said Worldpay. A major player in contactless payments adoption in the UK is TfL, Transport for London, which, thanks to the acceptance of EMV contactless cards as fare media, accounting for 17 million journeys every week.
The payment schemes are actively supporting this migration, thanks to their mandates. For instance, early 2018, Mastercard required that “After October 2018, all new acceptance terminals in Europe, the Middle East, Africa, Latin America and Asia Pacific will have EMV chip and contactless enabled; After April 2019, all new cards issued in Europe, the Middle East, Africa, Latin America and Asia Pacific will have EMV chip and contactless technology; and by April 2023, all merchant terminals in Europe, the Middle East, Africa, and Latin America will be EMV chip and contactless enabled.” Visa took similar decisions.
The secure transactions industry has been pushing for contactless interface for years. The consequences of the ongoing massive adoption are huge: merchants get equipped with new terminals and financial institutions support the move by massively reissuing payment cards. Another consequence is that the existence of the contactless acceptance infrastructure paves the way for a move towards NFC, not only with Apple Pay, Android Pay and the like, but also with new upcoming initiatives.