Contactless Payments and NFC in the United States

While early pilots for contactless payment cards indicated a significant value proposition for issuers, merchants and consumers alike, cash remains the dominant form of payment transactions in the United States. This is attributable largely to merchant trepidation of interchange costs on low-value transactions. Still, card networks have provided little incentive for merchants to implement contactless payment technology, and have failed to remove the financial barriers that make accepting contactless payments prohibitive to merchants.

"It is widely accepted that a strategy of proliferation, even at a loss, is key to gaining traction for contactless payments," says Nick Holland, senior analyst with Aite Group and author of this report. "A solution would be for card networks and issuers to provide a contactless-specific category of interchange and fees for merchants. Once uptake levels have reached critical mass and contactless payments are entrenched, fee structure can be altered to afford networks and issuers greater opportunity for revenue generation."