The first analog electronic game, the first email, and even the first hand-held electronic phone – were all born in the United States. In fact, the United States has a long and proud history of leading the way in terms of technological advances. The first modern digital computer was invented by George Stibitz, followed some four decades later by the personal computer thanks to the genius of Steve Jobs. There is no shortage of examples of Americans leading the way where technology is concerned, but when it comes to contactless cards in the world of commerce, Americans are surprisingly lagging behind.
Tap and pay – that’s the name of the game, at least in some parts of the world. Contactless cards are all the rave in parts of Europe, including the United Kingdom and Poland, throughout Australia, and in Canada. Even southeast Asia enjoys the benefits and freedoms associated with contactless cards, but the tap and pay game in the United States has had a much more difficult journey.
Relying on “near field communication” (NFC) – a specialized wireless technology – contactless cards are, well, contactless. Instead of having to enter credit card, debit card, or bank details, a customer simply holds up their mobile phone to the contactless terminal, and the customer’s financial details are immediately captured. Contactless cards use radio-frequency identification that can be embedded in cards, phones, watches, and other wearable devices to allow for quick, effective payment transactions. An antenna built into the plastic secures the connection with a contactless reader known as radio frequency identification (RFID) technology. Instead of having to swipe the credit card or insert the chip and wait, customers simply hold their card near an RFID reader which picks up the signal, communicates with the card, and processes the payment. This all happens in roughly 13 to 15 seconds – approximately half the time it takes to complete an EMV transaction using the swipe or chip method. Of course, the terminal has to be contactless card optimized in order for the transaction to succeed. No more waiting to be prompted to enter your personal identification number (PIN), no more waiting to be prompted to remove your card, and certainly no more waiting for you to sign on the dotted line – contactless cards save you time and get you out of the shopping line in a hurry.
This is where it gets interesting. Contrary to popular belief, the first contactless card was actually issued in 2003 in the US – but tap and go, tapped and went.
Some believe it was all because of Apple. By 2007, Apple had released its smartphone, and even though the US had been gradually rolling out contactless cards in various trials and pilot projects, the focus quickly shifted to mobile payments. Still, others believe it came down to sheer economics. With over one billion credit cards in circulation, manufacturing costs became a decisive factor for US card issuers who decided to hold fast to contact-only cards. In late 2016, when banks were mandated to issue EMV-compliant chip cards, most banks opted to issue chip cards with no contactless antenna, saving an average of .35 per card. Moving to contactless cards would have also forced merchants to upgrade their payment terminals to be contactless card optimized, and those in the know didn’t believe the customer demand was worth the effort or the investment.
In order to catch up with the rest of the world, US banks and financial giants are now beginning to issue contactless cards, including MasterCard, Citibank, JPMorgan Chase, American Express, and KeyBank. Even smartwatches are joining in the contactless wave with Fitbit and Garmin offering smartwatches that can also be used as payment devices. Customers can simply load their credit or debit card information into their smartwatch wallet, wave their wrist at a contactless optimized payment terminal, and voilà – they’re off to the gym with a fully paid for double-chocolate latte – what? This is a blogpost about contactless cards, not healthy life choices. Plus, who doesn’t deserve a double-chocolate latte? After all, you are working it off with your Fitbit.
Issuers of contactless cards set the limit so the available funds will vary from card to card. Generally speaking however, contactless cards are designed for small purchases – that double-chocolate latte for instance, or a fill-up at the gas station, a bus pass, or a quick meal on the go.
With no need for swiping, no need to insert the chip insert, and no need to wait, contactless cards might just catch on in the United States, after all.
Citi Bank has recently issued contactless Visa cards in partnership with Costco, and Trader Joes has entered the tap and go game. We know. Just the mere mention of Trader Joe’s and you’re dreaming of Triple Ginger Snaps. With a contactless card, you could have that tasty snack in the palm of your hands in roughly 15 seconds – no hype, no swipe, no wait. American subway and bus stations are also making the move toward contactless cards, offering speed and convenience to busy commuters.
No muss, no fuss, no swipe, no gripe – contactless cards are making a comeback into the American commerce scene.
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