Why Hasn’t Contactless Ignited: PYMNTS Community Fires Back

Why Hasn’t Contactless Ignited? PYMNTS.com readers have plenty of ideas. We were inundated with comments after our recent Ask the Industry feature:

Question: What is the biggest reason why contactless payment cards are not moving further along?

Since we love to hear your thoughts on topics of critical importance to the future of the sector, we’ve put together a second piece featuring just a handful of the numerous responses we’ve received. Below, we break down the various factors our readers feel have prohibited contactless from catching on. Which one or ones do you agree with? And what solutions would you suggest? Share your thoughts here.

Possible Problems


Lack of Incentive

“Nobody cares. It’s sexy, but there isn’t really any obvious benefit (even if it were no cost to implement). Since there is cost, why bother?” Mike

“Epic fail on all fronts. Merchants are apathetic because there is no value proposition for them – no real consumer demand yet and no interchange break (in fact contactless VISA debit cards force merchants to pay the more expensive signature versus PIN debit rate). Consumers are apathetic because chip transactions are not really faster or more convenient than the mag strip (at least until they get the chip on their phone) and on top of all that, there is no clear benefit to issuers either.” Chris

“No incentive for consumers to use the contactless functionality of a card that also has the familiar mag stripe and there is no incentive for merchants to take a contactless payment on a card that has a mag stripe. Combine that with near total ignorance of the consumers on the subject of contactless payments and you have a big fat zero.” Ken Boekhaus

“Ken is correct. There are no, as of this moment, compelling reasons for merchants to add NFC readers to their POS terminals. (Other than MC and VISA subsidizing the cost of the readers). Look up the experience that Sparkasse bank had in Germany with the Geldkarte. There are lessons to be learned there… End users and merchants drive adoption. Period.” Jon

No Ignition Plan

“David Evans puts it so eloquently (no ignition plan). Given a lack of consumer incentive, consumers will come after contactless tech deployment reaches critical mass.” Rob Rice

“If you can’t work out where it fits next to cash, credit and debit then the consumer will keep on using the tried and proven methods. It takes deep thinking, planning and execution to get it to take over what is already in place.” Jan

“This is a chicken & egg problem. There are also other contributing factors at work here. To start, the consumer proposition to this point isn’t particularly compelling. Contactless works great in tolling because the consumer doesn’t have to wait in line to pay. So far that kind of proposition doesn’t exist for retail payments.” Steve

Issues for Issuers

“Visa/MasterCard’s contactless technology has a more uphill battle. They need issuers to buy the cards with RFID, which are expensive. Issuers don’t see a lot of merchants accepting contactless because it’s disruptive to their front end point of sale systems.” Sidharth Singh

“The big issuers have not distributed large quantities of contactless plastic. I believe it’s because Visa, MC and the banks do not want to pay for the essential infrastructure that would facilitate the jump to mobile payments using contactless smartphones.” Chuck Phipps, AAP, CTP

“The card cost is much higher than a magstripe card and issuers cannot require an additional fee to their customers for that feature. Why go to contactless technology when your current system is quite profitable?” Nathalie Caye

Cost Concerns

“The cost of the terminals to support contactless will be the main reason it’s not adopted by the smaller merchants. Same issue with Smart-Cards 6-7 years ago.” Douglas

“The sad truth in the US is that deployment of smart cards and contactless cards is a victim of payment system participants’ unwillingness to bear the cost of new terminals.” Jim

Suggested Solutions


More with Mobile

“The consumer has to be given this solution on the mobile device he prefers (like the iPhone or the Android) so that he can truly leave the plastic and cash behind. Adding contactless to plastic is like giving a GPS to a pedestrian. He can walk only so far. Give it to him when he is in his car and he can go places!!!” Deepak Jain

“Perhaps the industry needs to be focusing on ways to increase the positive emotional response by offering financial incentives or engendering feelings of doing something new or cool or more useful than a traditional card payment. NFC-enabled phones seem to have some potential in the areas of newness, coolness, and usefulness.” David

“In my opinion contactless will not take off until a viable, both commercially and operationally, mobile solution is available to the mass market. By that I don’t mean a sticker on the back of your handset!!” Phil


“If we look to emerging markets, then contactless in the form of integrated NFC in mobiles addresses a real problem. Consumers have a real incentive and this may well drive merchant acceptance. In fact, you could see emerging markets leap frog the developed markets in widespread contactless acceptance. The real creativity will come from opening up mobile platforms (with NFC) to the developer community.” Neale Kant

“Strive for gradual adoption with consumers and education in an “me to” like manner by creating fastlanes in supermarkets, priority in check in, promote cashless retail concepts with new entrants, offer a better (personalized) service for NFC users. So, in my opinion, many possibilities for a positive business case when all possibilities are taken into account.” Ward Hagenaar

Ideal Implementation Strategy

“It all depends of the legal and commercial landscape that is mostly nationally determined. Look at the Netherlands for example, where banks and telcos are willing to work together on a national NFC project… The problem of convincing customers will also be easier as you have a much bigger peer pressure towards this group if a nationwide co-operation can be achieved with all the involved parties.” Rik Coeckelbergs

“Implementing the platform in public transportation scheme. The process can bring high value by bringing quicker transaction processing time and shortening the overall time in utilizing the service. Others would be a ‘vending machine’ type of transactions where the process is straightforward and simple, and usually in small amounts of value.” Lucky Bimolaksono




Related Content


Contactless Card Payments, Accepted or Declined?

Why Hasn’t Contactless Ignited?

A Look INSIDE Contactless for the Next Payment Wave