Contactless credit card technology still hasn’t gained mass appeal…
With increased security and speedier payments, contactless credit cards were destined to replace ‘standard’ credit cards and were once touted as the wave-of-the-future. But considering the response from consumers – maybe not! Futurists predicted a decade ago that embedded chip technology would replaced the magnetic strip and was the way consumers would pay for everything from fast food to appliances. In fact, there are approximately 25 million of these devices in the hands of consumers and 400,000 contactless terminals at 80,000 merchant locations. But that only represents 1% of all U.S. merchants. So far, consumers haven’t bought into the concept and merchants see no need for costly upgrades to provide a service that just isn’t catching on.
According to new Javelin Research & Strategy report, the technology is failing because merchants and wireless carriers haven’t been convinced that the cost is worth making the switch. If carriers and merchants can be persuaded to accept the technology, Javelin predicts that there will be 57 million mobile enabled devices by 2013.
The credit card industry has been pushing contactless cards in an effort to expand their viability. “There is widespread agreement that tap-and-go contactless payments will pave the way for the day when cell phones and other devices will become the consumer’s ‘electronic wallet,’ packed with all their credit cards, merchant cards, coupon offers and more,” the report concludes. “Contactless technology has the backing of the major card networks as the de facto next level of payment technology, with the primary goal being the migration from mag stripe cards to devices that can store multiple payment products – specifically mobile handsets. With this end-goal in mind, contactless adoption is floundering.”
Gartner Industry Advisory Services also did studies in 2005 and 2007 to measure consumer interest in contactless payments, both with cards and mobile devices and came to the same conclusion – interest has flat-lined. “It is very slow progress – people are still not naturally interested,” says Christopher Uzreau, Gartner research director of banking and investment. “Expecting them to move to integrated contactless mobile phone payment solutions in a rapid fashion is unrealistic,” he says. Visa Micro Tag and Paywave technology is just one example of a new technology that has yet to gain mass appeal.
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