Now that the vast majority of U.S. payments volume runs through merchants that are equipped for EMV cards, the payments industry is setting its sights on the transition to contactless payments, according to a quarterly market report from the U.S. Payments Forum.
The nonprofit industry organization said that as of March 2019, contact chip payments were “firmly ingrained in the U.S. market” and that payments volume from chip-enabled merchants was almost 70%. Four years ago, in contrast, few card issuers, merchants and customers were prepared for the then-looming liability shift associated with EMV cards.
Now EMV cards are common, but credit unions and other card issuers will need to start preparing for a new wave of card technology, according to the U.S. Payments Forum.
“Momentum is growing: tens of millions of contactless cards are expected to be issued this year and 78 of the top 100 merchants accept contactless payments today,” it said.
The forum predicted that the transportation industry would lead the transition to contactless payments.
“What we’ve seen in other countries, and expect to see here, is the contactless ‘halo effect’ when transit riders start using contactless cards,” U.S. Payments Forum Director Randy Vanderhoof said. “When a large transit agency moves to open contactless payments, issuers get cards in the hands of riders who quickly get used to tapping and seek it out wherever they can. As a result, contactless transactions rise dramatically at merchants in surrounding geographical areas. We’ve seen this in the U.K. and Canada, and will start to see this in the U.S. this year.”
However, the U.S. isn’t going cashless anytime soon, Vanderhoof noted.
“There are consumers that want and need to pay cash, and that likely won’t change. It’s really about providing enhanced customer experiences and choice,” Vanderoof said.
The announcement comes on the heels of news that EMVCo, The FIDO Alliance and the World Wide Web Consortium are creating a new interest group focused on the security and interoperability of web payments.
The Web Payment Security Interest Group plans to create a vision for web payment security, develop use cases, perform gap analyses, work with other organizations and find standardization opportunities. It will not publish specifications, according to a press release from the founding organizations.
“FIDO Alliance, W3C, and EMVCo develop complementary technologies that can enhance the security and convenience of web payments,” EMVCo Executive Committee Chair Karteek Patel said. “This group has been created to better understand and shape the future of secure web-based payments, and ensure alignment on the work of the three technical bodies.”
“W3C’s authentication and payments standards are part of the bigger story of the transformation of the payments industry,” W3C CEO Jeff Jaffe added. “The transformation will continue in unpredictable ways as the web adds new services such as streaming video, real-time communications and augmented reality. This interest group will help ensure that new payment models for these services will have security as a fundamental requirement.”