Next generation of chip cards may speed adoption of tap-and-go payments
Contactless chip cards are set to flow to U.S. cardholders, according to ABI Research, which tracks transformative technology innovations. U.S. contactless card shipments, which numbered 25.7 million in 2016, are projected to balloon to 229.6 million in 2021, the company’s research says.
ABI in late 2015 had projected almost double the amount of contactless card shipments to the U.S. in 2021, but it has scaled that back based on the current appetite for contactless cards among the primary issuers, says Phil Sealy, senior analyst at ABI Research.
Contactless cards represent a second wave of new cards, Sealy says.Payment cards last about three years, he says, so the first EMV chip cards, which rolled out in 2014, will start being replaced with contactless chip cards in 2017.
While tap-and-go is common in Canada and some other countries that preceded the U.S. with the switch to chip cards, “a number of Americans will already be familiar with contactless payments through their use of Apple Pay and Samsung Pay,” he says.
New contactless cards use a dual interface chip. They have two chips: a contact chip for dipping into card readers, and another contactless chip that works with a thin antenna wire around the edge of the card to communicate with a contactless card reader’s radio frequency interface.
The new cards have the contactless symbol, a series of waves, atop the cards.
Dual interface means cardholders will still be able to use the contact aspect of the card for dipping, but contactless enables quick and convenient payment authentication for lower value purchases (typically under $30), Sealy says.
Why is Canada ahead of the U.S. with contactless cards? With more than 1.2 billion cards in circulation, manufacturing costs played a huge part in the U.S. issuers’ decision to opt for contact-only cards, he says. Canada, on the other hand, skipped the first generation of EMV cards and deployed contactless cards from the outset.
See related: EMV chip card rollout in U.S. to peak in 2016, 8 FAQs about EMV credit cards
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