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U.S. Payment Cards Market – The Signs for Contactless Migration are Positive |
NEWS |
ABI Research recently published its latest edition of the market data Payment & Banking Card Technologies(MD-PBSC-20), a biannual report. The database contains detailed information regarding the installed base and shipments of payment cards broken down by product and technology type. It covers all regions and 30 individual countries.
Below are some top-level findings that pertain to the U.S. market, paying attention to not only what to expect over a forecast period ending 2023, but the likelihood of contactless migration and factors that may impact contactless migration speed.
What to Expect From the Overall U.S. Payment Cards Market |
IMPACT |
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What Does this Mean in Terms of Contactless Migration? |
RECOMMENDATIONS |
Despite expectations of flat market growth throughout the forecast period, there remains a significant opportunity pertaining to U.S. contactless migration.
Today, the question is not necessarily when U.S. issuers will migrate to contactless payment cards, but how they will do so. This, in turn, will define the growth trajectory of contactless issuance.
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To date, the most significant contactless project that remains is the Citi Costco card. But, it will soon be joined by another major issuer by the end of 2018, and it is in the process of moving part of its portfolio to the contactless interface.
ABI Research does not foresee a blanket contactless migration program taking shape in the United States, but rather it will be addressed in a targeted approach. Issuers are likely to target select parts of their respective portfolios and perhaps even adopt a regional targeted approach, which will be heavily linked to different cities. This includes New York, which is in the process of updating its transit systems to accept open-loop payment credentials.
In addition, the extended expiry dates of 4 and 5 years may result in a slower rate of contactless migration. This is a significant point given the fact that U.S. issuers will not likely replace contact cards that are already in circulation with a contactless card until the point of expiry.
Finally, there is no contactless mandate in the United States, an area that leading payment networks including Visa and MasterCard are undoubtedly considering. The mandate is considered too early to implement, given the fact that most U.S. issuers have only recently completed EMV migration.
ABI Research believes that the path to contactless will not be an overnight success. Issuers will likely adopt a more considered and targeted approach, heavily linked to card expiry that will translate into a smooth growth path. Thus, shaping strategies and concentrating on areas and regions considered ripe for contactless, precursors will provide the most successful path initial contactless migration until blanket portfolio-wide migration programs begin to take shape.