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Tuesday, August 22, 2017

Contactless payments lifting off

In "The payments journey: From point of sale to points of commerce – Part 1", The Green Sheet, April 10, 2017, issue 17:04:01, Dale S. Laszig wrote that the payments industry's history is "replete with examples of wide-scale migrations, from paper to electronic data capture, and from mag-stripe to contact and contactless EMV (Europay, Mastercard and Visa) cards." Only months later, it appears the migration to contactless form factors is escalating. A new study from Juniper Research predicted 53 percent of global POS transactions will be contactless within five years, compared to 15 percent this year.

The United States, which was the last developed economy to implement EMV, is expected to experience a significant increase in contactless payments. In POS & mPOS Terminals: Vendor Strategies, Positioning & Market Forecasts 2017-2022, Juniper reported that contactless payment adoption in the United States would rise sharply over the period, from less than 2 percent of transactions this year to 34 percent by 2022. Juniper stated that "customer dissatisfaction at the slower speeds of chip card transactions, allied to burgeoning contactless infrastructure, would provide further impetus for smartphone-based payments currently dominated by Apple Pay."

Visa and Mastercard both mandated that all POS terminals in a number of regions must be contactless-enabled by 2020. According to Juniper, in markets where contactless has been heavily promoted, Poland and the United Kingdom, for example, "adoption has soared."

Report author Dr. Windsor Holden said, "While U.S. card issuers haven't yet made contactless a priority, the extremely positive response across Europe, both from merchants and consumers, suggests the US would see very rapid migration at POS if and when contactless cards become mainstream." However, he also cautioned that the United States' reluctance to implement PIN at the POS for non-contactless payments means that the full benefits of card-present fraud reduction, experienced elsewhere by the migration to EMV, are unlikely to be realized.

Juniper researchers also concluded small merchants ‒ the sweet spot for many ISOs and merchant level salespeople (MLSs) ‒ will increasingly embrace mobile POS accessories, which facilitate payments via connections to mobile devices, and further predicted that growth in this market would accelerate the transition from cash to card payments, particularly for lower-value transactions.

POS systems offered throughout the United States are increasingly able to accommodate contactless payments, and based on prior migrations, there is no doubt MLSs will be prominent among those who help merchants embrace this change. end of article

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