September 17, 2008:  According to a consumer research study commissioned by the Smart Card Alliance, contactless payment systems are growing in popularity.  The barrier to further growth is getting consumers to try the payment option.

According to a separate study from Jupiter Research, 9% of the U.S. population now has a contactless credit or debit card.  Last year the number of open network contactless cards in circulation reached 35 million, nearly doubling the 19 million issued in 2006.

Still, more industry promotions are needed to educate consumers about the value of contactless, the alliance study pointed out.

American Express, Chase, Citibank, Washington Mutual, and Wells Fargo are the large issuers getting behind contactless payments.

The Alliance survey showed 92% of contactless users thought the system was both fast and easy. On the whole, these users had positive experiences at merchants too, reporting that 85% of cashiers knew how to accept contactless, and 84% saw contactless acceptance marks at the point-of-sale.  Contactless users are also paying with their contactless cards or fobs frequently, with over 22% using contactless payment more than six times per month.

ContactlessNews quoted Deana Cook, who manages the contactless feature at Chase, as saying, "Millions of Chase customers make contactless payments every day using Chase cards.  We have found that customers especially appreciate making contactless payments in places where speed and convenience is important. Our research shows that customers who make contactless payments do so often. Contactless technology is also safe and secure. Issuers of contactless credit cards have seen no evidence of increased fraud."

Commenting on the potential for fraud, Peter Ho, vice president and product manager for Wells Fargo Card Services, was quoted by ContactlessNews as saying, "Unlike other card payment mechanisms, contactless payments utilize a dynamic verification value that is unique to each transaction. This is a very strong security feature because it prevents criminals from making fraudulent contactless transactions."

According to the Alliance study, 25% of consumers surveyed are now familiar with contactless payments compared to 15% in 2006; however, more than 50% of consumers still are not familiar with contactless payments.  Even in high penetration zip codes nearly half of all consumers are unfamiliar with contactless.
There are now 75,000 U.S. merchant locations accepting contactless payment, including taxi cabs and transit operators, according to David Robertson, publisher of the payment industry newletter, The Nilson Report.

The Alliance survey, conducted in 2008 by Javelin Strategy and Research, included two pools of respondents: 1,500 representative of the U.S. online population and 500 contactless credit/debit card users.

Source: www.contactlessnews.com