Merchants getting in touch with contactless payment systems, Jupiter says

Contactless payments—waving a payment token such as a mini-card near an equipped point of sale reader to transmit transaction information to the token holder’s bank—is rising among merchants, according to new findings from JupiterResearch. More than 50 U.S. merchants are currently using contactless payment systems, many of which process credit authorizations over the Internet, and the value of such payments is projected to rise from about $500 million last year by $79 billion by 2010.

Merchants adding such contactless payment systems are looking to replace cash payment for speedy convenience purchases--adding to the speed already provided by Internet-based transactions--so it comes as little surprise that merchant brands already offering contactless systems as a payment option include McDonald’s, 7-11, and Walgreens, as listed in Jupiter’s report, “U.S. contactless payments: primed for supply, but industry must coordinate to reach non-users.” While the earliest users represent national brands, other retailers are now experimenting with contactless payment as well: for example, Meijer Stores offers such a system.

Pitched to customers as a convenience, contactless payment systems have a degree of penetration into as many as 30 major metropolitan areas, Jupiter says. Yet to drive growth to projected levels and compel more consumers to drive more of their cash purchases through contactless cards or tokens, card issuers must address a number of barriers to wide adoption. Among them is consumers’ concern about the security of such transactions.

According to Jupiter’s report, “41% of non-users of contactless products would try them if first made comfortable that transaction information is secure. Making this assurance stick will be a top priority for issuing banks, payment networks, and accepting merchants.”