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Innovations and Payment Systems

How will the rising demand for contactless cards affect instant issuance?

Although the technology isn’t widely available yet, it likely won’t be long until consumers can have contactless, instant issuance cards

Summary

Consumers want convenience and instant issuance credit cards fit the bill. But now that contactless cards are getting quite popular, how will that affect those cards? Find out what experts have to say on the subject.

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Instant issuance — it’s all in the name.

The solution helps banks or credit unions instantly issue debit and credit cards to customers on-site, so they can leave the branch with a ready-to-use card in hand.

Normally, when you sign up for a new bank account or request a replacement card for your existing account, you have to wait for it to arrive in the mail.

Then you have to either dial in to an 800 number, go to your bank’s website or visit an ATM to activate the card before you can start using it.

That’s why instant card issuance is major step up in convenience for cardholders.

But what will the rise of contactless cards mean for the burgeoning instant issuance movement? Find out what experts think, but first, learn more about instant issuance cards.

Why is instant issuance relevant for cardholders today?

Because a high level of instant gratification — think hailing a ride, ordering a dinner or applying for a mortgage — has swept multiple facets of daily consumer life, the idea of waiting to receive a credit card in the mail feels antiquated.

Enter instant issuance.

If you’re signing up for an instant-issue credit account, your bank can give you purchasing power immediately.

And instant issuance benefits aren’t limited only to new cardholders. If you need a new card because you lost or damaged yours — or if it has been compromised — an instant-issue card will enable you to get back to business-as-usual, seamlessly.

What goes into instant issuance technology?

Some banks and credit unions purchase an on-site instant issuance machine and take on this full set of responsibilities themselves. Others opt to work with Software as a Service (SaaS)-based providers who handle all the heavy lifting, allowing them to enjoy plug-and-play instant issuance capabilities. 

A financial institution’s instant issuance technology needs to prove to payment brands like Visa or Mastercard that it can print and encode cards correctly.

Cards must also follow a set of standards established by EMVCo for thickness, durability and proper placement and programming requirements of the chip for EMV Cards.

Additionally, some of these cards also feature contactless capabilities — you can use your card to not only swipe or dip at a terminal, but you can also wave or tap if your card features a contactless “wave” symbol.

Instant issuance must also demonstrate its ability to meet Payment Card Industry Data Security Standards (PCI DSS Compliance), which simply means that the equipment needs to follow certain security protocol in the handling of your data.

See related:  Best instant approval cards of 2019

SaaS-based instant issuance can support contactless cards

Rob Dixon, head of product and business development for Card@Once at CPI Card Group, shared his thoughts on the question.

Instant issuance has followed the same trajectory of traditionally issued cards as technology has advanced, Dixon said; years ago, payment cards were limited to magnetic stripe cards, but were updated as the shift to EMV (Europay, Mastercard and Visa) chip cards went into motion.

Contactless cards are the next step forward — banks and credit unions want to offer the frictionless payments of dual interface cards, which combine the capabilities of EMV plus contactless transactions, providing cardholders with the ability to swipe, dip, wave or tap, Dixon added.

For cardholders, the instant issuance experience will remain as straightforward as ever if their bank or credit union offers dual interface cards and has an on-site solution that supports contactless issuance, for both new or replacement cards, according to Dixon.

Without such a solution, customers will have to wait to receive their new dual interface cards the old-fashioned way – in the mail, he added.

“Fortunately, for banks and credit unions that utilize SaaS-based instant issuance, the necessary updates are taken care of by their technology partner – ensuring that if they’re offering customers dual interface cards, they can be offered on-site instantly as well,” Dixon said.

CPI Card Group has been offering contactless cards on its Card@Once instant issuance solution for nearly two years.

Another company that’s keeping up with contactless technology and instant issuance is Dynamic Card Solutions. On Feb. 20, 2019, it unveiled contactless capabilities with its latest CardWizard software version.

“The card market is continuously evolving and new opportunities such as contactless technology are making headway because of the ease and convenience offered to consumers coupled with the revenue-generation opportunities that the technology brings to financial institutions,” said Ron Zanotti, vice president of sales and marketing, DCS.

“Having the ability to instantly issue a contactless card increases the number of card transactions and shortens the time it takes consumers to use their cards for first purchase.”

See related: Are contactless ‘tap-and-go’ credit cards about to take over the US market?

Having an instant issuance, contactless card might not be an issue

Martin Lynch, compliance manager and director of education at Cambridge Credit Counseling Corp., feels that, even if a bank doesn’t have the capability to produce contactless instant-issue cards, it won’t be an issue.

Consumers aren’t averse to carrying multiple technologies, “so I don’t think that’s an obstacle,” Lynch commented.

“If their credit cards are wave-and-go but their instant-issue debit cards can be customized and printed at their local branch in a matter of minutes, I think they’d live with the differences until the next, improved product comes along,” Lynch said.

It might make instant-issue card machines a tougher sell, but quickly replacing a lost debit card is a service that every bank wants to offer its customers, Lynch added.

“My guess is that branches without the technology to make contactless cards instantly will spend to keep customers focused on their great service, and they won’t worry as much about how the instant card stacks up against the contactless card’s enhanced security,” Lynch said.

Issuing banks have a lot of work to do

David Gafford, co-founder of Shift Credit Card Processing, said that now that we’re seeing EMV and the shift to chip readers in the rearview mirror, contactless cards are the new hill to climb for issuing banks.

Although many banks have the ability to instantly issue cards at a moment’s notice, not all issuing banks are ready for the change and are at risk of being left behind, Gafford said.

The technology that goes into a Near Field Communication (NFC) card – or contactless card – is the same technology that enables mobile payments in your smartphone.

And adding this technology to EMV chip cards is an additional step that not all issuing banks have planned for.

NFC-enabled cards were designed to speed up the payment process for consumers, yet it’s still taking quite a bit of time to catch on in the United States, Gafford added.

The slow adoption rate for NFC technology is due in part to both retailers not being ready to accept NFC payments and consumers simply not having NFC-enabled cards, he pointed out.

The larger issuing banks, such as Chase and Wells Fargo, have had NFC-enabled for many months now, but the institutions being hit the hardest are the smaller issuing banks, such as credit unions and community banks.

The technology necessary to issue NFC-enabled cards in addition to the EMV chip now required in credit cards is significant, and not all issuing banks are ready for the change, Gafford said.

“While we’ve grown accustomed to instant issuance of credit cards from banks, the continued adoption of NFC-enabled cards is sure to cause a problem for issuing banks as they jump this new hurdle,” Gafford warned.

Banks will adapt

Although instant issuance of a credit card with NFC capabilities isn’t ubiquitous yet, it’s just a matter of time before banks catch up technology-wise with convenience features that cardholders love.

Because technology moves at such a rapid pace it can be difficult for businesses to keep up with current trends.

But today, businesses either adapt or get left behind, so it shouldn’t be too long before the majority of financial institutions can instantly issue credit cards that feature contactless payment technology.

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