Can the US draw lessons from Czech contactless card adoption?

Costumer scanning phone to pay

As contactless payments gain wide adoption in Europe, there are questions around how quickly the technology will scale to U.S markets.

The Czech Republic, for example, has seen wide adoption based on infrastructure upgrades from both payment providers and retailers. According to a report released today by data analytics firm GlobalData, increased adoption of contactless cards by Czech Republic consumers drove the annual number of card payments to 1.1 billion in 2018, up from 483.7 million in 2014. The number of card payments made each year is expected to reach 1.9 billion by 2022.

“The technology has been supported by wide merchant acceptance and improved payment infrastructure, with around 90% of the country’s point-of-sale terminals now supporting contactless payments,” Nikhil Reddy, payments analyst for GlobalData, said in a statement.

Around 70% of all card payments in the Czech Republic already are contactless, according to the European Payments Council. Meanwhile, GlobalData said the number of contactless cards in the Czech Republic is expected to increase from 10.3 million in 2018 to 11.8 million by 2022.

Jamie Topolski, director of payment card products at Fiserv, told Bank Innovation he would expect to see more contactless cards hitting the market in the U.S. by the beginning of 2020. However, he doesn’t expect it to reach the massive wave of adoption seen with the U.S. rollout of EMV chip technology in 2015.

“There is no set deadline in this case that everyone’s striving to meet,” Topolski said, noting that the rollout of contactless will depend more on factors like card re-issuance cycles. “Chip expirations are starting to hit just now and will accelerate into 2020, so this is a perfect opportunity to make the investment in contactless,” he added.

Topolski said the U.S. is actually “right on track” when it comes to contactless adoption, as other markets typically have pushed the technology out with the second generation of EMV-enabled cards. “The U.S. was late to the EMV game, but that was because of relatively low fraud rates,” he explained. “We’re equally fast on contactless.”

Topolski said contactless will enable incremental transaction volumes, opening up revenue opportunities for banks and other financial institutions that are able to win the fight for top of the wallet. The staying at the top of the wallet, however, is a matter of convenience and effective marketing, he explained.

The physical card is still the most common way a customer interacts visually with their financial institution, Topolski noted. “People don’t tend to walk into branches much anymore, but the card still gets pulled out quite often,” he said.