Transit could drive contactless payment growth

The U.S. Payments Forum released its quarterly Market Snapshot, providing a look at the state of EMV chip adoption in the U.S., fraud, what’s next for payments in 2019, and Forum priorities and projects for the year.

Contact chip payments are now firmly ingrained in the U.S. market, with payments volume coming from chip-enabled merchants approaching 70%. To improve customer experience and provide more payment choice in-stores, the payments industry is now turning its attention to contactless chip technology for fast and secure payments with a tap of a card or mobile device. Momentum is growing: tens of millions of contactless cards are expected to be issued this year and 78 of the top 100 merchants accept contactless payments today.

Just as in other countries, the U.S. Payments Forum expects that transit will be a driver for contactless payments in the U.S. Large transit agencies have moved or are moving to open contactless payments, including in Chicago, Portland, and New York.  

“What we’ve seen in other countries, and expect to see here, is the contactless ‘halo effect’ when transit riders start using contactless cards,” said Randy Vanderhoof, director of the U.S. Payments Forum. “When a large transit agency moves to open contactless payments, issuers get cards in the hands of riders who quickly get used to tapping and seek it out wherever they can. As a result, contactless transactions rise dramatically at merchants in surrounding geographical areas. We’ve seen this in the U.K. and Canada, and will start to see this in the U.S. this year.”

With contactless technology taking center stage, many people have questions about how contactless devices work and what their security features are. To assist, the U.S. Payments Forum launched the GetContactless.com website and has published implementation resources.

Forum Priorities

As merchants and issuers work to secure the e-commerce channel, several authentication methodologies and standards have become available, leaving stakeholders with questions around what they are, what problems they solve and how they fit together. These include EMV 3-D Secure (3DS), W3C Web Payments and Web Authentication, FIDO and EMV Secure Remote Commerce (SRC).

The Forum has already delivered education relating to EMV 3DS including the recent EMV 3-D Secure Data Elements Webinar and plans to deliver a more detailed paper about the use of new EMV 3DS data elements by merchants, issuers, and other payments industry stakeholders. The Forum plans additional projects to help the industry understand these different authentication methodologies and standards and how they can best be implemented for payment credential, user, and transaction authentication in e-commerce.

Securing the e-commerce channel is the focus of several Forum projects underway including white papers on tokenization and fraud mitigation approaches. Other EMV and emerging technology-related Forum projects underway include:

• A Contactless Open Payments for Transit webinar to provide a high-level overview and implementation guidance for transit open payments.
• A white paper on transit contactless open payments use cases for paying with aggregated fares.
• A best practices guide for customer-facing terminology for transit agencies implementing contactless open payments.
• A white paper providing best practices for contactless transactions at the point of sale.
• Resources providing guidance on streamlining Level 3 contactless testing and certification.
• An updated resource on effective approaches for mitigating card-not-present fraud.
• A resource to provide a primer and discuss lessons learned with payment tokenization implementation.
• An educational resource on emerging data elements used for mobile payments.
• A guide on mobile payments standards and specifications.
• A resource on authentication methodologies used for mobile in-app and remote payment transactions.