Contactless Cards Set to Deliver Substantial Benefits

  • July 26,2018
  • Category

Payments Journal
July 23, 2018

Speed and convenience of contactless cards drive consumer behaviors 

US consumers still conduct nearly 50 billion cash transactions a year (26 percent of all consumer payments) with a value of $1.6 trillion (16 percent of all consumer spending). A.T. Kearney’s global study shows that rolling out contactless cards could drive a significant lift in the number of transactions per card well beyond the natural card payment trajectory prior to the promotion of contactless cards.

The study reveals several compelling findings:

  • In the US-like countries studied, contactless card adoption has translated into five to 40 new transactions per card per year.
  • Consumer card transactions increased up to 30 percent over the three years after rollout.
  • Globally, contactless usage has been particularly strong at high-transaction-volume merchants with low average ticket sizes where checkout speed and convenience matter (food and grocery, quick-service restaurants, restaurants, and drug stores and pharmacies).
  • In the United States, A.T. Kearney forecasts at least 70 percent of all consumer payment transactions will be card-based by 2022, compared with an estimated 62 percent in 2017.

The US market is ready for contactless

For merchants, contactless cards provide a way to increase the speed of service, grow sales volume by serving more customers during peak hours, reduce the time and money spent on cash handling, and improve customer loyalty. As a result of the 2015 migration to EMV contact chips, US merchants have largely enabled the terminal infrastructure to accept contactless cards:[1]

  • As of March 2018, 48 percent of Visa face-to-face card transactions took place at contactless-enabled merchants.
  • Seventy percent of merchant locations have hardware that is capable of accepting contactless payments.
  • More than 95 percent of new terminals shipped are contactless-capable.

From consumers’ perspective, contactless cards are not a new way to pay but rather a faster, more convenient way of paying with a card—a method that many already prefer.

“It is a myth that US consumers and merchants are not ready for contactless,” says Monica Gabel, an A.T. Kearney principal who led the research effort. “Our readiness metrics suggest that the time to promote contactless adoption is now.”

Contactless card growth expected to accelerate through 2020

Given merchants’ readiness, consumers’ interest in improving the point-of-sale experience, and banks’ high level of interest, A.T. Kearney anticipates seeing significant contactless card issuance momentum over the next 12 months. The potential to accelerate the shift to contactless card-based transactions represents a compelling economic opportunity for US banks while at the same time reducing operating costs through streamlined cash-handling operations:

  • By introducing contactless cards, banks could generate more than $2 billion in incremental card-related earnings over the next five years.
    • The incremental number of card transactions and amount of payment volume that migrate from cash transactions will allow banks to generate incremental revenues and earnings (net issuing costs) from rolling out contactless cards.
  • Banks could achieve industry-wide cash-handling cost savings of up to $22 billion through 2022, or 6 percent of annual consumer banking operating expenses.
    • As cash transactions migrate to cards—and decrease the amount of cash activity in the retail marketplace—banks can reduce their cash-handling costs, streamline their cash-related operations, and capture significant operating savings.
  • Banks could achieve a stronger market leadership position.
  • Meaningful strategic benefits can be accrued by banks that launch contactless cards early and position themselves as innovators and leaders. Leadership in contactless rollout and promotion could result in market share gains through stronger customer acquisition, a greater share of wallet, and increased customer loyalty.


With compelling economic and strategic benefits and growing industry understanding of those benefits, a wave of US banking industry commitment to contactless should begin in 2018 and roll through 2019 into 2020. The US banking industry’s embracing of contactless will yield significant benefits to consumers, merchants, and all participating banks.