There’s still work to be done. Close to 40% of payment terminals in the U.S. aren’t yet contactless. And there are major holdouts, such as Walmart Inc. and Nordstrom Inc., that have been hesitant to accept the technology because it would also mean accepting mobile-payment options that may compete with their own offerings.
‘Snowball Effect’
“I expect that as customers get used to it and merchants see that customers are delighted by the experience, the reality is that adoption will start to take off,” Visa CEO Kelly said. “Our experience around the world is that the first 10% is the hardest 10% to get and, after that, there’s a snowball effect and it really takes off.”
The New York subway’s transition alone could be a boon for Visa and rival Mastercard Inc. Analysts at Mizuho Securities USA led by Thomas McCrohan said in a note to clients this week that it could add $40 million in annual revenue for Visa and $27 million for Mastercard once OMNY is fully implemented, in 2021. The two card networks could see an additional 2.5 billion transactions from the subway each year after the transition, the analysts estimated. Mastercard expects more than 20 cities across the U.S. to add the technology to their transit systems in the next few years.
JPMorgan is on track to have half its cards converted to contactless technology by the end of 2019, Bhatia said. While the lender was initially focused on adding the functionality to its credit cards, it will begin adding it to its debit cards later this year as well.
“The biggest reason that things are moving at this pace and not immediately is there are only so many vendors that can make them,” Bhatia said. “There’s huge demand from us and others in the industry too.”
This article was provided by Bloomberg News.