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Customer pays for her merchandise via contactless payment
Enterprise Retail / Mobile Payments / Contactless

To Tap or Not to Tap


We are in the midst of causing consumers the most confusion when paying at checkout, since we used to only ask if they wanted to use PIN debit or signature debit.

The choices available today at check-out are mind-numbing. Insert or tap? When can I insert my card? When do I remove my card? Do I have to approve the amount? Can I use my mobile phone? Do they accept Apple Pay? Samsung Pay? Android Pay? My Chase Wallet? My Visa Wallet? Every merchant’s payment system works differently.

Over time, it has been shown that the more common the payment process has been across all merchants, and the more ubiquitous the acceptance of payment methods are, the faster the adoption of new payments has been across the industry. Today’s hodge-podge of different payment options and various ways to make payments is slowing down both the acceptance of contactless and mobile wallets as well as delaying the overall checkout experience for most consumers.

As the implementation of EMV climbs from just over 50% of merchants at the end of last year to over 90% of merchants by the end of 2018, part of this confusion will go away. And despite reluctance from some, all merchants should adopt faster EMV transaction processing like Visa Quick Chip, which will remove more differences between merchant payment processes for consumers.

That leaves the tap or not to tap question.

Woman paying via her Apple watch
95 %
of issued cards in Canada are contacless-enabled

The US significantly lags other countries in contactless payments in both contactless cards issued and merchants that accept contactless payments. As of the end of 2016, over 100 million, or 63% of cards in the UK were contactless and more than 25% of the transactions were tapped. In Canada, more than 95% of cards were contactless and over 75% of retailers accepted contactless payments. In Australia, half-second Tap and Go transactions account for 75% of all face-to-face transactions.

In the US, just over one quarter of merchants accept contactless transactions today. This compares to 36% who have contactless terminals and over half who have EMV terminals today. Despite a projected 150 million Apple Pay, Samsung Pay and Android Pay users by the end of the year, contactless payments in the US account for just a percent or two of total transactions, and 90% of those are from mobile wallets.

Why the disparity between the US and other countries? Several reasons. US issuers were given an option of offering contact only or dual interface cards to meet the EMV deadline, and virtually all opted to issue the less expensive contact only cards. Also the delays in determining how to handle debit card routing compressed the timeline for acquirers, merchants and solution providers to develop and certify EMV solutions, so many skipped contactless EMV development and certification to meet these deadlines and are going back to do those certifications now.

These delays forced consumers to experience slower insert and wait times for EMV transactions. In response, the card brands created faster EMV contact transactions by largely emulating the contactless transaction flow. However implementing faster contact EMV pushed contactless transaction development and certification out again. Hopefully the contactless momentum will begin to increase. Visa and Mastercard are now pushing issuers to issue dual interface cards, and Mastercard announced a contactless liability shift this past April.

So what about mobile wallets? The Boston Retail Group’s 2017 POS/Customer Engagement Survey released in January found about 36% of all North American retailers now accept Apple Pay and expects nearly half of all North American retailers to accept Apple Pay by the end of this year. Boston Retail Partners also said 24% of North American retailers now accept Android Pay and another 18% expect to begin accepting it in the next 12 months. 18% of retailers currently accept Samsung Pay, with another 11% expected to begin accepting Samsung Pay in the next year.

Why the lag in merchant mobile wallet acceptance compared to EMV acceptance locations? Largely I think because merchants want to control the wallet experience. But how many mobile wallets does a consumer want to load on their phone? Decades ago there was a rise in store credit cards, but consumers moved to the more ubiquitous card brands. No need to carry a dozen or more cards, pay extra bills, they preferred one card that could be used anywhere. As merchants complete their EMV journey, and early EMV adopters enhance their systems, I hope they will support contactless and mobile wallet transactions. The speed and convenience of contactless will eliminate consumer confusion at the check-out, reduce checkout delays, improve transaction security, and increase consumer spending.

Will 2018 finally be the year of contactless in the US?