Digital Transactions – But experts point out that consumer adoption remains an unanswered question about contactless technology. Though U.S. banks have over the past three years issued almost 25 million credit and signature-debit cards with contactless functionality, some observers contend actual usage is very low. “We’re not able to find anybody who’s really using this at all,” says James Van Dyke, founder and principal of Javelin Strategy & Research, Pleasanton, Calif. Both Visa Inc. and MasterCard Worldwide, which run the payWave and PayPass contactless platforms, have refused to release usage numbers.

Observers who follow the contactless market blame a number of factors for anemic consumer usage, including spotty marketing and the fact that merchant acceptance is far from universal. Nick Holland, a senior analyst at the Aite Group LLC, a Boston-based research firm, estimates about 55,000 merchants are now equipped to accept contactless cards. He includes some 10,000 New York City taxicabs in his estimate. As for marketing and consumer education, some merchant clerks have encouraged card swipes instead of waves or taps. “You’ll find some merchants talking you out of using it,” says Van Dyke,

Javelin’s strategy, which the firm proposed in a recent report, calls for Visa and MasterCard to open their contactless platforms to proprietary and gift cards issued by merchants. The firm argues this move would allow merchants to justify the expense of installing contactless readers because their own cards would be equipped with the technology. The bank card networks tout speedier transactions and higher average tickets among benefits of contactless technology.

The inclusion of merchant-issued cards would also make them eligible to be stored in mobile wallets, Javelin argues, as handsets become equipped with near-field communication (NFC), an interactive technology that turns mobile phones into contactless-payment devices. That move would allow consumers to carry proprietary card accounts without having to carry the actual plastic. Javelin points out that a common reason consumers pass on proprietary cards is that they don’t want to make room in their already-stuffed wallets for cards with limited utility. “Now we’re changing the whole picture” for contactless, Van Dyke argues, if proprietary and gift cards are included in network contactless platforms. Read Full Article