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Contactless cards: The future is here

Tap-and-go payments are now everywhere in the U.S.

Summary

Major credit card issuers and metropolitan transit authorities in the U.S. are on the contactless payments bandwagon. Here’s what’s ahead for contactless credit cards.

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I’m a big fan of contactless cards. When I started to use my first contactless card back in 2019, I had an amusing experience at the grocery store. I touched my card to the payment terminal and the cashier began to shake his head.

He started to say, “No, you …” and then his expression changed to shock when the machine dinged and my transaction was processed. The shopper behind me exclaimed, “Whoa, it’s the future!”

I’m sure the store employee was about to tell me I needed to dip my card into the payment terminal, as we’ve all done countless times since chip cards went mainstream a few years ago. He (and the next shopper in line) had clearly never seen someone pay by tapping, rather than inserting, their card.

Two years later, the future is here. The push from all major card issuers to roll out the new technology across their portfolio of products, which started a few years ago, along with the coronavirus pandemic, have finally helped contactless cards to take off in the U.S.

See related: Coronavirus fears boosting contactless payments, study shows

How it works

Contactless payments are much faster than dipping a card and just as secure. Visa said in April of last year that 60% of its in-person transactions (excluding the U.S.) are contactless.

In a study released in April 2020, Mastercard reported that 79% of respondents across the globe said they were using some form of contactless payments. And between February and March 2020 – the start of the global COVID-19 pandemic – contactless transactions grew twice as fast as traditional credit card transactions at groceries and drugstores, according to Mastercard.

The technology behind tapping a card and mobile payment services such as Apple Pay and Google Pay is interchangeable. If a merchant can accept a tap from a card, it can accept a tap from a phone, and vice versa.

Generally, I prefer tapping a physical card rather than using a mobile payment service. I’m more comfortable identifying the card that offers the best rewards by pulling a specific piece of plastic out of my wallet rather than activating the payments app and scrolling through a list of cards on my phone.

Coming to America

Up until a few years ago, contactless payments were still in their infancy in the U.S. A.T. Kearney reported in 2018 that just 0.18% of point-of-sale transactions were contactless.

But that has been changing. That’s largely because the infrastructure for contactless payments is already in place. In its same study, A.T. Kearney reported that 70% of terminals had the necessary hardware in 2018 to accept contactless payments while more than 95% of new point-of-sale terminals are enabled for contactless transactions.

All Chase Visa cards have been equipped for contactless payments since the end of 2019. American Express and Capital One were among the early leaders in sending contactless cards to their customers (typically for new cardholders and when existing cards expire, although you can request them sooner). Wells Fargo joined the bandwagon in 2019, and Bank of America also offers contactless cards. (See chart below for a list of U.S. issuers that offer contactless credit cards.)

New York is a fascinating case study. It’s the country’s largest city and, in May 2019, it began accepting contactless payments at certain subway stations in Manhattan and Brooklyn, as well as Staten Island buses. The Metropolitan Transportation Authority is rolling out its OMNY contactless fare system through 2023.

We’re nearing a tipping point in the U.S. Most merchants can now accept contactless payments. More card issuers are delivering contactless cards to consumers. There’s a big mobile payments push from popular companies such as Apple and Google. And transit systems in New York and Chicago are contactless-equipped, with other big cities such as Boston and Washington, D.C., turning to contactless payments.

In the U.K., many people first experienced contactless payments on London’s transit system, and then they realized they could also pay quickly and easily by tapping at restaurants, supermarkets, pharmacies and so on.

I think the same thing will happen here. The demand is definitely there: Our research in 2019 showed three-quarters of credit card holders prefer to pay for small purchases with cash and debit cards. The most common explanation for avoiding credit was that other payment methods are quicker and easier. With contactless payments, that’s no longer true.

See related:Gas pump upgrades could fuel the growth of contactless payments in the U.S.

U.S. issuers that offer contactless credit cards

Most major credit card issuers in the U.S. offer contactless cards. Here’s a look at the contactless offerings from some of the largest card-issuing banks. (Dan Rafter)

American ExpressAmerican Express

Bank of AmericaBank of America

  • All of Bank of America credit cards now come with contactless capabilities. You can request a contactless card from Bank of America. And when your current card expires, your new one will be contactless.
Capital OneCapital One

ChaseChase

  • Chase in 2018 announced that it would offer contactless technology on all newly issued and renewed Chase Visa cards. Popular cards such as the Chase Sapphire Reserve and Chase Freedom featured the technology by summer 2019. Chase debit cards also offer contactless tech.
CiiCiti

DiscoverDiscover

  • Discover cards are also contactless today. You can request a contactless Discover card through customer service. And when your current card expires, it will automatically be replaced with a contactless version.
Wells FargoWells Fargo:

*All information about the American Express Cash Magnet Card, Capital One Savor Cash Rewards Credit Card, Wells Fargo Propel American Express card and the Citi / AAdvantage Platinum Select World Elite Mastercard has been collected independently by CreditCards.com and has not been reviewed by the issuer. These cards are no longer available through CreditCards.com.

Editorial Disclaimer

The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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