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Bank of America is about to begin a limited push to reissue select Visa cards with contactless technology, Bloomberg reports. This month, the firm will send out 4 million contactless-enabled cards to customers in Boston, New York, and San Francisco.
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This news follows both JPMorgan Chase’s and Wells Fargo’s announcements to begin offering customers contactless-enabled cards this year, creating a trifecta of the country’s top banks that could significantly expand contactless penetration in the US.
Bank of America’s conctactless tactic differs from other US banking giants, which are taking a slower approach but in more markets. Both JPMorgan Chase and Wells Fargoare planning to give contactless cards to new customers and upgrade existing customers upon card expiration — unlike Bank of America’s decision to undergo a mass rollout in select markets.
BofA will measure usage in the three cities and evaluate trends before deciding whether it should pursue a broader rollout. The bank picked Boston, New York, and San Francisco because the cities have contactless-enabled public transit and wide merchant acceptance, giving customers a best-case scenario for maximizing adoption and engagement.
BofA’s tactic could be a smart way to roll out technology that isn’t yet proven among customers.
- US consumer interest in contactless isn’t rising in tandem with penetration yet.Contactless penetration hovered below 40% in the US at the end of last year, though Visa expects it to surge from 100 million at the end of 2019 to 300 million at the end of 2020. Despite rising penetration and increasing merchant support (80 of the top 100 have enabled contactless), customers aren’t biting: Just over half of contactless-enabled customers have used the technology at least once, largely because they don’t think it’s easier than inserting a card or they’re uncertain about merchant acceptance, per TSYS.
- Testing interest in best-case scenario markets could help banks assess appetite before making any other moves.In markets where contactless has taken off, like the UK, transit payments and wide acceptance have been key to enabling habit formation. By focusing on markets with similar conditions in the US, Bank of America can see how consumers who are most apt to use the technology might respond to it. For banks, contactless is expensive: The cost could hover around $3.50 per card. And though contactless can increase spend and decrease fraud, the upgrade doesn’t come with the same impetus as the EMV liability shift did four years ago, which required firms to either make the shift or assume responsibility for fraud losses. By assessing consumer appetite ahead of a broad rollout, banks can take a more measured approach to reissuing cards and create a plan that limits costs and ensures ROI.
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Source: Business Insider – feedback@businessinsider.com (Jaime Toplin)