Dumping New York MetroCards will end the U.S. contactless pay slump

Contactless payments in the U.S. have not taken off, but a deployment in New York may change that.

Once contactless has fully filtered into the mainstream, and the rollout of contactless on the New York subway is a great example of this starting to happen, we can expect to see the rate of adoption in the U.S. accelerate dramatically, possibly reaching the current European levels and as much as 50% of all in-store payments by 2023.

The U.S. has lagged behind many western European markets, including the U.K., in rolling out contactless. According to consumer research we undertook last year, only 3% of American consumers are currently making contactless card payments versus 54% in the U.K. Transport for London (TfL), which operates the London Underground and the city’s overland train system, has had it in place for almost five years.

But this doesn’t mean that there isn’t an appetite among U.S. consumers and businesses to adopt the technology.

John Taggart/Bloomberg

Our research among small-to-medium-sized businesses in the U.S. and Canada actually indicates that over 60% plan to accept NFC within the next two years.

However, contactless cards may not have the same relevance in the U.S. as they do in the U.K. This is because NFC-enabled mobile wallet technology is already migrating payment preferences away from cards to smartphone and wearable technology.

Adoption may therefore grow slowly initially in parallel with mobile wallets, and although a user base will be established, we won’t see a rapid increase in usage for about two years, which is the natural pattern for new technology that’s still unknown to most U.S. consumers.