Consumer awareness of contactless cards is low and mobile
wallets don’t fare much better.
A few months ago I moderated a series of focus groups where I
asked the participants how many had a contactless card. Now I didn’t expect
everyone to have one, nor did I expect everyone who had one to know that they
did. However, to my amazement, I was met with blank stares. I actually had to
draw the contactless logo on the whiteboard so people could look at the
cards they had in their wallets to see if they were contactless cardholders.
Similar confusion exists among merchants. As part of Mercator’s
PaymentsInsights series, we asked small businesses what contactless
payments they accept. The disparities in the responses to this question are
Doesn’t the logo mean that the consumer can pay with a
contactless card or mobile device regardless of wallet vendor or form factor?
Merchants apparently don’t know what they can accept, and that’s a problem if
contactless usage is to grow: only 16% of small businesses report they can
accept contactless cards while 50% report they can accept Apple Pay and 41%
report accepting Google Pay.
When I ask at the checkout counter if they accept Apple Pay,
it is not uncommon for the clerk to say “I don’t know,” or, my favorite, “You can
try.” Thanks for the help.
Consumers who are new to contactless are going to try once
or twice and then go back to their old ways of dipping or swiping a card if the
contactless options don’t work or aren’t available. That’s just simple consumer
behavior 101. Expecting consumers to “keep at it” until they come across a
terminal that will work for them is not reasonable in the real world.
All of this is to say, there is significant confusion at the
two most important parts of the contactless payment chain—the consumer and the
How did we get to this point? Rather than assign blame, I
think it is best to talk about how we overcome the obstacles.
Make mean - There are competing standards and technologies
currently required to accept the different versions of contactless. It is
unreasonable to expect a merchant or consumer to know or care about this. When
they see the contactless logo on a terminal, they should be able to use/accept
contactless payments in all its forms.
education – Merchants, including frontline staff, need to know what contactless
payments are and how they are accepted. Solve
item 1 above and this will become materially simpler.
Consumer education – Just telling
consumers that their card can now be used to “tap & go” or can be loaded
into a wallet is not enough. They need to have a compelling reason to switch
from tried and true payment methods before we can expect mass adoption. They
also have to know they have a contactless card. Many people don’t know they
have the capability available on their card. Solve item 1 above and this will become easier.
issuance – Major issuers are phasing in contactless cards as expired and
lost/stolen replacement cards are issued. This is going to take time. Even when we get to near universal issuance,
item 3 above will be required.
If the broader payments industry fails to address some of
the issues raised above, contactless will fail to become mainstream. Fixing it
is going to require a concerted effort by all parties in the industry – networks,
issuers, acquirers, equipment manufacturers and industry associations.