So far, there have been 2 main obstacles for smartphones to accept card-present paymentf transactions in retail locations :
- Security on the PIN entry on the phone
- The necessity for additional hardware to read EMV chip transactions.
However, recent trends show that both of these obstacles will probably not be an issue anymore in the coming years.
As per Visa figures, the U.S. now has the most contactless cards of any market globally at 175 million, with nine of the top ten U.S. issuers actively rolling out new contactless cards to customers. U.S. consumers have been quick to adopt these new cards; not only do more consumers have cards, but they are also using them regularly as contactless card transaction growth continues to accelerate.
This shows that almost all U.S adults will have a contactless card in the near future.
If that is the case, merchants will not need anymore to have an additional device connected to their mobile phones to accept EMV contact card transactions, which is an additional cost and hard to maintain for them.
Another good news is that the fast-rising of e-wallets, particularly ApplePay, which enables consumers to use consumer device CVM (i.e Passcode or fingerprint) rather than entering the PIN on the mobile phone.
As per recent search by PYMNTS.COM, the share of sales with ApplePay and other wallets (i.e Wallmart Pay) is on the rise.
With the COVID impact, consumers are looking to limit interaction during checkout and don’t prefer to enter their PINs on the merchant device. This will likely be another important factor to lead consumers to use their e-wallets for payment transactions in retail stores and use their consumer device CVMs for verification.
As of the 2019 year, 34.2% of U.S adults have eligible devices to perform an ApplePay transaction. With other mobile wallets (SamsungPay, AndroidPay), this rate should be around 50%.
As of the 2019 year, 51% of sales from merchant locations are eligible to accept ApplePay or WalmartPay. This rate is on the rise as of 2020 and especially after COVID. According to the Visa, 60% of Visa transactions are performed in a merchant capable to accept contactless payments.
Based on these trends, we can estimate that as of 2021-2022 years, we will have 60-70% of US adults have the capability to use Consumer Device CD CVM for the transactions, and 70-80% of merchants will have the capability to accept transactions from an e-wallet.