In a close-up shot of a table, there is a plate of muffins to the left and a tray with a teapot to the right. In the middle, a person’s hand is holding a tap-to-pay card hovering over a card reader.
In a close-up shot of a table, there is a plate of muffins to the left and a tray with a teapot to the right. In the middle, a person’s hand is holding a tap-to-pay card hovering over a card reader.
April 17, 2019

‘Tap-to-pay’ cards deliver speed and convenience

With the rollout of contactless payment cards, analysts report Wells Fargo is among the U.S. industry leaders in bringing the speed and convenience of tap-to-pay cards to customers.

With the recent introduction of contactless tap-to-pay consumer credit and debit cards, Wells Fargo is at the forefront of making the latest generation of payment cards available to customers, according to the author of an upcoming research report on card technology.

Aite Group senior analyst Kevin Morrison said the company is one of a handful of early adopters of the new point of sale credit and debit cards, which can cut transaction wait times in half and eliminate swiping/inserting at the checkout counter of millions of merchants worldwide.

At a merchant’s checkout counter, a female customer places her payment card on top of the card reader as a male clerk smiles across from her.
Contactless cards provide customers with a seamless checkout experience.

“Wells Fargo has been out front and ahead of the majority of banks with this technology,” said Morrison, author of a soon-to-be-published research report on the contactless market. “The bank has been working on it longer than most in the U.S., which helps them understand its complexity and how to help customers make a smooth transition to the change.”

“It’s all about the speed of the transaction. Literally, it is tap and go with contactless cards.” — Mark Ranta

The company announced on April 2 it would phase in the introduction of contactless credit cards, beginning immediately for new consumer cardholders and for all existing consumer cardholders as their current cards expire. Newly redesigned consumer debit cards with the contactless feature will begin rolling out this summer. Later this year, customers will be able to tap to initiate an ATM transaction at most of Wells Fargo’s more than 13,000 ATMs. In addition, Wells Fargo will introduce small business credit, debit, and prepaid cards in 2020.

Visit this site by Visa® for a video explanation of what happens when you tap and pay.

By going contactless with its card portfolio, Wells Fargo expects to give customers more convenience and security, said Beverly Anderson, head of Wells Fargo Cards and Retail Services. With 78% of major merchants now equipped to handle contactless transactions, U.S. customers will be able to catch up with those in many other countries that have already adopted the new cards, she said.

“Our job is to make the payments experience as seamless as possible for our customers,” she said. “For years, consumers around the globe have demonstrated great affinity for tap-to-pay cards. Wells Fargo consumer credit card holders can now enjoy the same secure, expedited checkout experience.”

‘It’s all about the speed’

For most consumers, the world of contactless cards will not look dramatically different from what they’ve seen in recent years, as EMV® chip-enabled, reader-inserted cards have become the norm. Contactless cards also have an embedded chip built on the same secure EMV technology, but instead of inserting it, customers simply tap the card or briefly hold it close to the terminal, which processes the encrypted, secure purchase.

“The result is a streamlined, faster experience for consumers,” said Ed Kadletz, head of Wells Fargo Deposit Products Group, who leads its debit card business.

“The rollout of cards with the contactless feature will further expand the use of the tap-to-pay technology,” he said. “And that will help it become a natural behavior among consumers.”

Faster is always better when it comes to the consumer checkout experience, said payment software executive Mark Ranta in an article on Transactions using current chip-enabled cards can take up to 30 seconds to complete; contactless cards can do it in 13 to 15 seconds, said Ranta, head of digital banking solutions for AGI Worldwide of Boca Raton, Florida.

“It’s all about the speed of the transaction,” he said. “Literally, it is tap and go with contactless cards.”

Despite the American consumer’s need for payment speed, it may be surprising that the U.S. trails so many other leading countries in the adoption of contactless technology. Currently, only about 5% of the country’s payment cards are contactless, compared to 100% in Canada and 70% in Australia, said Morrison of Aite Group.

Why is the U.S. lagging behind these countries? Morrison points to a series of major data breaches that occurred in 2013, which prompted a widespread call for greater payment card security. The result, he said, was an industrywide race by card issuers to adopt embedded-chip cards that could be inserted in secure readers at the time of purchase. It was a massively expensive project, he said, that put the U.S. behind the curve in adopting the more advanced contactless cards, which incorporates a chip and an antennae in the plastic to enable tap access.

Now, with Wells Fargo and other big players committed to contactless technology, small- and mid-size banks will follow their lead, Morrison said. As many as 90% of U.S. banks now have a strategy for going contactless, he said. According to his estimate, about 20% of all cards issued in the U.S. will be contactless by the end of 2019, and 60% by the end of 2020.

Rising to the challenge

“All the banks know this is the direction that they need to go,” Morrison said. “The big question is how long it will take for customers to accept the change.

“We implemented EMV chip and the concept of ‘dipping’ at the point of sale less than four years ago,” he added. “Now we’re introducing a new payment technology in an inconsistent environment where not all readers will be immediately ready and not all the cards consumers carry will be contactless-enabled.”

That means banks must rise to the challenge by communicating with their customers, informing them about the timetable for the changes, and setting their expectations, Morrison said. For a company like Wells Fargo, which has worked on contactless strategy for years, it should go much more smoothly than for those who are late to the game, he said.

“When I began my research a couple of years ago, I talked to Wells Fargo and they were already far along in their work,” he said. “They had a pilot and testing in place, and they were thinking about their long-term strategy to help customers adapt and adjust to contactless cards.”