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Wells Fargo announced that it will begin rolling out contactless credit and debit cards.
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New cardholders will receive contactless cards upon opening accounts and existing cardholders will receive contactless cards when their current cards expire. Debit cards will gain contactless capability this summer. And cardholders will be able to contactlessly withdraw money from all 13,000 Wells Fargo ATMs, 10,000 of which are already equipped with NFC technology.
Here’s what it means: Wells Fargo joins the other first-time contactless issuers in the US that have recently moved in on the opportunity.
- The US has historically lagged been behind other countries with contactless card issuance: Just about 5% of US cards are currently contactless-enabled, compared with markets like Canada, where 95% of cards are contactless and over half of adults call themselves “regular” users. Issuing these cards on a mass scale and showcasing their convenience can drive the payment method’s popularity in the US to reflect other markets, like the UK, where contactless cards surpassed other payment methods to become the most popular.
- But major banks and card networks are seemingly moving in on contactless — all at the same time. Visa and Chase started issuing their contactless credit cards in the US earlier this year. Visa, in particular, has been pushing into US contactless payments as major transit systems like the New York City MTA prepare to update their infrastructure to support the payment method. Further, Mastercard is partnering with issuers — including Capital One, Citi, Santander, HSBC, and FIS, among others — that represent “two-thirds of Mastercard’s total US volume" to issue contactless cards over the next two years.
The bigger picture: Contactless payments are well positioned to take off in the US as major issuers all jump on board.
- US merchants are already equipped to accept contactless transactions. Seventy-eight of the top 100 US merchants currently accept contactless payments through NFC technology, according to Visa, which is the same technology used to accept mobile wallets. And over two-thirds of "everyday transactions," like those made at quick-service restaurants, drugstores, and grocery stores, occur on contactless terminals. So, once the cards are issued, consumers will automatically be able to begin utilizing the contactless functionality almost everywhere and form habits around it quickly — particularly with debit cards, which 44% of US consumers say is their preferred payment method.
- And offering contactless could allow Wells Fargo to boost volume. Wells Fargo is the top debit card issuer by purchase and transaction volume, so its contactless cards will reach a considerable portion of the population, which can accelerate adoption of and ultimately boost volume. Wells Fargo’s debit card purchase volume increased 8% annually, while its credit card purchase volume grew 5% annually in Q4 2018; the firm can accelerate volume in both credit and debit via contactless as convenience can influence consumers’ choice in payment method. Further, US banks have the potential to generate $2.4 billion in incremental card-related earnings over the next five years by introducing contactless cards, which Wells Fargo could capitalize on.
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See Also:
- Federal Bank is partnering with Ripple to enable blockchain-powered remittances
- Grab is considering spinning off its financial services unit
- China might open its card market — but is it too late?
SEE ALSO: These are the top 20 US banks ranked by the mobile banking features consumers value most
Source: Business Insider – feedback@businessinsider.com (Rachel Green)