Contactless Cards May Pave Way for Smartphone Payments

But U.S. consumers remain slow to adopt mobile-phone payments.

May 16, 2019

NEW YORK—Four years ago, the launch of Apple Pay generated headlines proclaiming the death of plastic. But plastic continued to thrive. Now consumers are “tapping” when they make a purchase, which means using a physical contactless card, reports

The increase in tapping a physical card at checkout may boost the comfort level of consumers who are not yet using a smartphone to make payments, and a new issue of Auriemma Research’s Mobile Pay Tracker suggests that contactless cards may have some mobile-friendly consumers reverting from digital to physical payments.

Mobile payments and contactless cards utilize the same near-field communication (NFC) technology, but consumers have been slow to use mobile payments. Since its mainstream release in 2014, mobile payments have only been used by one-third of eligible consumers, which is far less than the 59% of contactless cardholders who have tapped with their cards.

Overall, consumers appear amenable to contactless cards, specifically because cards are so familiar. But mobile payment users are even more open to tapping their cards because they’ve already tapped their phones. In fact, three-quarters of mobile payment users have used a contactless card to make a contactless payment, compared with 40% of nonusers.

“Consumers have been repeatedly asked to change their payment behavior,” Jaclyn Holmes, director of Auriemma Research. “While adjusting to various card payments is easy, the larger switch in the physical mechanism of phone payments takes more time.”

Of mobile payment users, 60% expressed interest in using contactless cards, compared with just over one-quarter of mobile payment nonusers. In addition, mobile payment users are more likely to say contactless payments improve everyday purchases. More than one-third say their experience with self-checkout lanes, grocery stores, vending machines and public transportation would improve if they could use contactless payments.

Many terminals do not accept EMV contactless payments due to outdated technology. This has been a problem for Apple, Google and Samsung Pay, as well. However, Visa is now requiring all contactless terminals to support NFC contactless technology, which gives EMV contactless cards and mobile payments more opportunities to grow.

These changes will make mobile payments an option at more locations, but that doesn’t mean the use of mobile payment will rise. Overall, consumers are uncertain about whether contactless card payments are better or worse than mobile payments—65% say they are about the same, 18% say they are better, and 17% say they are worse.

Those who believe contactless card payments are better typically say they are faster, easier and more secure than mobile payments. Those who believe contactless card payments are worse often express concerns about security and say they still need to take out their payment card.

“Consumers will have more options at checkout than ever before, but will they choose contactless cards or a mobile wallet?” asks Holmes. “Although upgraded terminals benefit both methods, the point-of-sale experience continues to be fragmented for mobile payment users who must pull out their physical card when things go awry.”