Blink Waves Bye-Bye to Contactless Forever?

JPMorgan Chase’s recent decision to ditch the Blink brand – a contactless card – seems like a nail in the coffin for the tap-and-go payment method, at least for cards. But with EMV liability-shift mandates around the corner, contactless’ true fate on cards will rest in the type of EMV chips merchants and issuers support. And therein is the multi-billion dollar industry decision.

Poor Blink. Seems JPMorgan Chase & Co.’s issues over use of its brand name for contactless payment have now also spilled over into a payment concept that many once believed would replace the need to swipe, or even insert, cards at payment terminals.

Earlier last week, Chase said it replacing more MasterCard-branded credit cards with those carrying the Visa brand (as part of a 2013 processing deal Visa and Chase struck), and it no longer will include contactless chips in the plastic. Chase justified the move by saying not enough cardholders were using the contactless function, and not enough merchants were accepting it, making it apparently not worth the added card cost to include the chip any longer. Really, is anyone surprised by this?

But could it be that Chase acted too soon? A growing number of transit agencies, taxi companies, fast-food restaurants and other organizations that want to get customers through lines faster are embracing open-loop contactless cards. The Chicago Transit Authority, for example, lets riders choose between its own Ventra contactless card or any open-loop contactless card issued by financial institutions.

Also, in October 2015, card-network liability-shift mandates take effect where merchants will be liable for any subsequent counterfeit fraud if they can’t accept EMV chip cards presented to them and must swipe them as magnetic-stripe payments instead. The networks believe this will motivate merchants to support EMV, and it will put the onus on issuers to add the EMV chips on their cards to reduce their fraud exposure.

Issuers and merchants have two choices with EMV. They can incorporate chips that support only “contact” transactions, where the card is inserted into a reader at the point of sale, or they can include dual-purpose EMV chips that support both contact and contactless payment.

Many analysts have contended that most issuers will place the dual-purpose chip on their cards. Though a bit more expensive than basic contact cards, they provide the full utility to their customers and accommodate the wishes of certain merchants for faster payments. Chase’s announcement that it is discontinuing Blink makes it uncertain whether the issuer plans to take that route, however.

When inquired about Chase’s plans for its eventual EMV rollout, a spokesperson declined to comment.

Chase’s website still bills Blink as a “faster, easier way of making purchases without ever letting go” of one’s debit or credit card. It’s possible that Chase views contactless as a mobile-based functionality. It is, but not necessarily because of EMV chips.

Most of the contactless technologies with any bandwidth today use QR codes instead, such as the system used at Starbucks. Analysts tend to believe that will change as the effects of the EMV liability-shift mandate take effect, and more smartphones begin to support Near Field Communication payments via EMV chips and more merchants are able to accept them. But cards aren’t going away any time soon, either.

As for Blink, this last week’s announcement by Chase wasn’t the first time the brand faced a setback. In 2011, Chase stopped placing the Blink name on cards supporting contactless payment, preferring instead to use the contactless-brand names from the major networks, i.e. Visa payWave and MasterCard PayPass, for consistency on the brands used on merchant terminals. Blink instead survived only when Chase described contactless payment on statements, brochures and other customer correspondence.

And now, it appears, it’s gone forever. Whether the same holds true for contactless functionality on Chase cards in an EMV world remains to be seen.



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