Contactless Payments: The ‘Tipping Point’ Is at Hand - Sponsored Whitepaper

Across the United States, a major awakening is occurring among consumers. Millions of Americans are now discovering that their new or reissued credit and debit cards (along with other form factors like key fobs and stickers) have an innovative feature: They are contactless-enabled. Using this technology at the point of sale, consumers can pay without swiping their cards through magnetic readers, handing over their cards to the clerk, signing their names or entering their PINs. For consumers, this means a faster checkout and a reduced reliance on cash. (Plus, they appear to enjoy simply waving a contactless payment device and paying without ever touching the pad or stylus needed for contact transactions.)

At checkout lanes with specially equipped readers, consumers with a contactless-enabled card can choose how to pay. They can use the conventional payment card contact process, which usually involves handing their card to a clerk, who swipes it and prints a receipt to sign. Or they can save time by simply waving the card within close proximity to a contactless-enabled reader to finalize the transaction in one efficient step.

Fast, secure contactless payments are appealing to merchants, too. The technology gives retailers a way to encourage more frequent visits by customers who prefer this payment method, as well as to potentially speed up transactions and reduce operational costs.

Evidence from various pilot programs shows overwhelmingly that once consumers have tried contactless payments, they have a strong preference for this method. As the move toward contactless gains momentum, more consumers will be trying—and appreciating—the speed and convenience of contactless payments, and they will remember which stores give them this option. As a result, those merchants are well positioned to increase revenue in three ways:

1. Customers who value the expediency of contactless payments are likely to keep patronizing the retailers that offer them this option (or even increase their patronage at these merchants to the detriment of merchants that do not provide this option).