A new report from Aite Group, LLC looks at the viability of contactless payments as an alternative to cash and traditional credit cards in the United States. It evaluates the progress that has been made and considers the various stumbling blocks that have been encountered thus far. It also speculates what must be done for broad acceptance of this means of payment.
While early pilots for contactless payment cards indicated a significant value proposition for issuers, merchants and consumers alike, cash remains the dominant form of payment transactions in the United States. This is attributable largely to merchant trepidation of interchange costs on low-value transactions. Still, card networks have provided little incentive for merchants to implement contactless payment technology, and have failed to remove the financial barriers that make accepting contactless payments prohibitive to merchants.
“It is widely accepted that a strategy of proliferation, even at a loss, is key to gaining traction for contactless payments,” says Nick Holland, senior analyst with Aite Group and author of this report. “A solution would be for card networks and issuers to provide a contactless-specific category of interchange and fees for merchants. Once uptake levels have reached critical mass and contactless payments are entrenched, fee structure can be altered to afford networks and issuers greater opportunity for revenue generation.”
This 32-page **Impact Report** contains 20 Figures. Clients of Aite Group’s Retail Banking service can download the report by clicking on the icon to the right.
About Aite Group, LLC
Aite Group is a leading independent research and advisory firm focused on business, technology and regulatory issues and their impact on the financial services industry. It was founded by leading industry experts in Banking and Securities & Investments. Aite Group brings together a team of business strategy, technology and regulatory experts to deliver comprehensive, timely, and actionable advice to financial institutions and technology vendors. It seeks to become a true partner, advisor, and catalyst by exchanging ideas and challenging basic assumptions to ensure that our clients always stay one step ahead of the competition.