U.S. should follow Canada with EMV Dual-Interface payment cards

Last updated: 19 March 2014

As you may remember, in 2005 U.S. card issuers launched contactless card technology that lets you pay at the point-of-sale with only a wave of your card.  Fast and easy, yes, but the cards never really took off to widespread adoption.  I’m still a big proponent of contactless technology, and the speed and convenience it offers, and I think there is still a great chance for contactless to be successful here.  How?  Through the EMV technology that is coming to the United States.

Last week, at the Cardware 2012: Payments Insights conference in Canada, I heard a lot about Canada’s success issuing dual-interface EMV cards to consumers.  Most of the MasterCard-branded cards there are equipped with dual-interface technology, containing both contactless and EMV contact smart card technology so consumers can choose the way they want to pay. Installing a payments infrastructure that accepts contactless payments also paves the way for mobile NFC payments, too.

A testament to how well contactless payments are doing in Canada: a recent report from Research and Markets found that contactless payments will account for significant transaction volumes and values by 2016, and mobile payments will follow. By 2016 almost 80% of the smart phones in Canada will be NFC-enabled – another reason contactless payments will gain popularity.

Now, in the United States, issuers have a 2015 deadline to start issuing EMV chip cards or face taking on fraud liability.  So now they have to choose – should they issue dual-interface cards, or simple contact EMV cards?

George Peabody, director of emerging technologies for Massachusetts based Mercator Advisory Group Inc., recently told ISO&Agent Weekly: “Issuers are at a crossroads, as they need to decide what technology approach to take with cards, and the need to look at both EMV and NFC is complicating the question.”

Peabody said it costs less to issue contact-only EMV cards, so many issuers will go this route.  I think this would be a mistake, as it is an ideal time to offer dual-interface cards, giving consumers more choice and more convenience.  It will also get consumers in the habit of waving and paying, and thus will ready them for NFC mobile contactless payments.

The United States is in the midst of a payments revolution, and it’s not the time to go the lowest-cost route.  Now is the time to go with the most innovative, convenient, and flexible payment choice – dual-interface EMV cards.  It’s worked well for Canada, and I think it would be the ideal fit in the United States, too.