By Nick Starai
Network Merchants Inc.
Change is on the payments horizon in the United States. Consumers making card-present payments will soon be able to simply tap and go. To date, contactless payment adoption has been minimal in the United States; only about 3 percent of U.S. transactions processed through the NMI platform are contactless. Several factors, however, may result in 2019 becoming a pivotal year for contactless payments:
If the United States follows the same pattern of adoption that has occurred in other countries, contactless payments could be the preferred payment method in just a few years. For example, NMI data shows that in 2013, the number of contactless transactions on its platform from the UK totaled about 1 million. In 2015, the London Transport System began accepting contactless payments, and in the next few years, UK merchants put technology and processes in place to meet consumers' demand for this easy, convenient way to pay.
In 2017, credit card payments exceeded cash payments in the UK, partially due to contactless payments. And by 2018, the number of contactless payments in the UK rose to 96 million, making the UK the largest contactless market in the world.
With contactless cards on their way to consumers and transit systems upgrading terminals to accept tap-and-go payments, it won't take long for U.S. consumers to experience how quick and easy payments can be – and expect that same convenience wherever they make purchases.
NMI has tracked the growth of contactless payments in the United States, with consumers using cards and mobile wallets. In 2016, U.S. consumers made just over 100,000 contactless payments per year, but that number grew to about 2.2 million in 2018.
Analysts predict rapid growth in the next few years. Global management firm ATKearney forecasts a 30 percent increase in U.S. card transactions within the next three years, based on consumer behavior patterns in other countries after contactless card issuance. ATKearney also anticipates that by 2022, 70 percent of all domestic consumer transactions will be card-based, increasing about 8 percent from 2017.
Merchants will fall into two categories during this time: those ahead of the curve and those who need to catch up. All signs indicate that in the very near future, customers will expect the convenience of tap-and-go payments. Are you ready to help merchants address this need?
Nick Starai is chief strategy officer and one of the co-founders of NMI who played an integral role in the formation and launch of the NMI payments platform in 2001. He drives the strategic direction of the company and supports NMI's enterprise clients and overall partner success. He also brings 17 years of experience in the payments and technology industry. Contact him by email at hello@nmi.com, phone at 844-378-2146 and via Twitter @NMIpayments.
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