The Contactless Revolution is Here. Are You Ready?
Years in the making, the U.S. market is finally ready for contactless payments. Although late to the game, the U.S. payment ecosystem, including issuers, processors and merchants, is preparing to support contactless as a dominant payment methodology. According to A.T. Kearney, 70 percent of U.S. retailers already have point-of-sale terminals capable of accepting contactless payments, and more than 95 percent of new POS terminals are contactless-enabled. Moreover, according to Visa, 78 of its top 100 merchants by transaction volume already offer tap to pay.
Several major trends are driving the adoption of contactless payments. These include:
- Changing consumer behaviors: The ubiquity of the “on the go” lifestyle, particularly among younger consumers, is changing how people prefer to pay. From a consumers’ perspective, contactless cards are not a new way to pay but rather a faster, more convenient way of paying with a card. Another example of this is the growth in ticketless concerts and events, enabling greater speed and convenience, and eliminating the need for attendees to carry wallets and separate forms of payment beyond a preloaded wristband. Juniper predicts one in four tickets issued will be contactless by 2023.
- Fast casual restaurants embrace mobile apps: The fast-casual restaurant sector is helping drive the mobile and contactless payment revolution, primarily as a way to speed up the payment process and increase table turnover rates. Although tap-and-go was thought to have limited application at sit-down service restaurants, as customers resist handing their smartphones to their server, fast-casual chains like Applebee’s® and Buffalo Wild Wings® have seen success with table-side contactless payment terminals. Applebee’s installed contactless payment tablets at every table in late 2013, and other restaurants quickly followed suit.
- Mass-transit presents massive opportunity: Taking a cue from Transport for London’s successful rollout of a system-wide contactless platform in 2012, the Chicago Transit Authority introduced its own Ventra® contactless payment system in 2013. Ventra accommodates multiple payment options, including a proprietary contactless card, paper contactless-enabled one-time use tickets, contactless-enabled debit card compatibility and a mobile app. The CTA serves 1.6 million rides on an average weekday.