Contactless EMV Payments: Benefits for Consumers, Merchants and Issuers

Publication Date: June 2016

A contactless payment is a payment transaction that does not require physical contact between a consumer’s payment device and a point-of-sale terminal. The consumer holds a payment device (such as a contactless or dual-interface chip card or a mobile device) in close proximity to the terminal (less than 1-2 in. away), and payment account information is transmitted wirelessly, over radio frequency (RF). The consumer’s contactless payment device can assume a variety of form factors, including cards, Near Field Communication (NFC)-enabled smart phones, and wearables. Contactless transactions are cryptographically secure and generate a unique code for each transaction.

Over the past decade, contactless payments have been deployed and adopted successfully around the world. However, despite the fact that the payment networks have been championing this technology in the United States since 2005, adoption lagged. The absence of a critical mass of contactless-enabled cards and point-of-sale (POS) terminals impeded migration, and the anticipated business opportunity was never realized.

Despite this slow start, contactless technology remains in the spotlight, as the convenience and security it offers are too substantial to ignore. The U.S. market is also now seeing new drivers – the introduction of NFC-enabled mobile payments with Apple Pay, Android Pay and Samsung Pay, merchant reterminalization to support EMV, the desire for faster transaction speeds, and the use of contactless bank cards for transit – that are increasing the value of contactless payments for consumers, issuers and merchants.

This white paper addresses current questions about the adoption of contactless payments, including: how contactless fits into today’s payment industry; what is currently different from earlier adoption attempts; and why now is the ideal time to go contactless. The white paper focuses on mass adoption of contactless EMV payments using both cards and NFC-enabled mobile devices, which leverage the EMV chip transaction infrastructure currently being implemented in the U.S. It describes the benefits of contactless payments for consumers, issuers and merchants, outlines the benefits of dual-interface card issuance for issuers and summarizes implementation considerations.

The overall goal of the white paper is to provide a fresh look at contactless payments in the current U.S. payments environment that is embracing both EMV and NFC-enabled mobile devices.

About the White Paper

The Smart Card Alliance Payments Council developed this white paper to describe the value propositions of contactless EMV payments for issuers and merchants. Participants involved in the development of this white paper included: Advanced Card Systems; American Express; Bell ID; Capgemini; CH2M; Chase Commerce Solutions; CPI Card Group; Discover Financial Services; First Data Corporation; Fiserv; Gemalto; Giesecke & Devrient; GlobalPlatform; Ingenico Group; Metropolitan Transportation Authority (MTA); NXP Semiconductors; Oberthur Technologies; Quadagno & Associates; TSYS; Verifone; Visa Inc.; Wells Fargo; Xerox.

About the Smart Card Alliance Payments Council

The Smart Card Alliance Payments Council focuses on facilitating the adoption of chip-enabled payments and payment applications in the U.S. through education programs for consumers, merchants, issuers, acquirers/processors, government regulators, mobile telecommunications providers and payments service providers. The group is bringing together payments industry stakeholders, including payments industry leaders, merchants and suppliers, and is working on projects related to implementing EMV, contactless payments, NFC-enabled payments and applications, mobile payments, and chip-enabled e-commerce. The Council’s primary goal is to inform and educate the market about the value of chip-enabled payments in improving the security of the payments infrastructure and in enhancing the value of payments and payment-related applications for industry stakeholders. Council participation is open to any Smart Card Alliance member who wishes to contribute to the Council projects.