Is BofA Going Contactless and Replacing Current Cards?

[Anonymous]

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@yfan wrote:

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@Anonymous wrote:

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I'm not disagreeing about the reasons for chip terminals, but the US is a big enough market that Verifone and Ingenico (the most common terminal providers in the US) among others would easily have sold chip terminals without NFC hardware if retailers demanded it--even if sold nowhere else. Apple Pay coming out at the right time simply made that a much harder thing for retailers to justify doing.

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Sure, but why would merchants demand a non-NFC terminal, with or without Apple Pay? It's no skin off their backs so why would they want something other than what was by then the global standard for payment terminals anyway (NFC and chip reader)?

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If they could work out a cost savings to do so, why wouldn't they, even if it was only like $10 per terminal or something? Unlike other countries, merchants own the terminals in the US (and in a lot of cases, run their own software/integrations on them as well, something that also isn't common elsewhere). This includes whatever software is needed to actually enable the contactless interface. 

Plus, it's still somewhat expected for cashiers to handle the payment process for customers in the US, so as soon as it became obvious that the US wasn't going to do PIN, it became much harder to justify any customer facing stuff without something potentially causing demand for it--such as mobile wallet use. For instance, I doubt Tender Greens would have a contactless reader if Apple Pay wasn't a thing, as they still swipe for customers otherwise.

[yfan]

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@Anonymous wrote:

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@yfan wrote:

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@Anonymous wrote:

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I'm not disagreeing about the reasons for chip terminals, but the US is a big enough market that Verifone and Ingenico (the most common terminal providers in the US) among others would easily have sold chip terminals without NFC hardware if retailers demanded it--even if sold nowhere else. Apple Pay coming out at the right time simply made that a much harder thing for retailers to justify doing.

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Sure, but why would merchants demand a non-NFC terminal, with or without Apple Pay? It's no skin off their backs so why would they want something other than what was by then the global standard for payment terminals anyway (NFC and chip reader)?

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If they could work out a cost savings to do so, why wouldn't they, even if it was only like $10 per terminal or something? Unlike other countries, merchants own the terminals in the US (and in a lot of cases, run their own software/integrations on them as well, something that also isn't common elsewhere). This includes whatever software is needed to actually enable the contactless interface. 

Plus, it's still somewhat expected for cashiers to handle the payment process for customers in the US, so as soon as it became obvious that the US wasn't going to do PIN, it became much harder to justify any customer facing stuff without something potentially causing demand for it--such as mobile wallet use. For instance, I doubt Tender Greens would have a contactless reader if Apple Pay wasn't a thing, as they still swipe for customers otherwise.

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Other countries still use PIN and US terminals all have chip and pin capacity with the pin turned off by software.

I'd argue there would be no cost advantage to non-NFC vs NFC-capable terminals. In fact, it is more likely that there would be a cost disadvantage by requiring hardware different from the global standard. By far, most payment terminals are not sold in the US. Mass production of the global standard in hardware is much cheaper than creating a separate batch for the US. After that, software can be used to customize.

[Anonymous]

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@yfan wrote:

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Other countries still use PIN and US terminals all have chip and pin capacity with the pin turned off by software.

I'd argue there would be no cost advantage to non-NFC vs NFC-capable terminals. In fact, it is more likely that there would be a cost disadvantage by requiring hardware different from the global standard. By far, most payment terminals are not sold in the US. Mass production of the global standard in hardware is much cheaper than creating a separate batch for the US. After that, software can be used to customize.

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Actually, a lot of them do have PIN support. The lack of asking for it is typically controlled more by the card itself rather than the terminal, although some (like restaurants) do disable PIN at the terminal level so that they don't have to bother with a separate workflow that will almost never happen.

Also, there are a significant number of EMV capable devices sold mostly/only in the US that don't have PIN pads at all. For instance, Square's chip readers were US only for quite a while simply because they didn't support PIN; they recently got some sort of special approval to be able to ask on the mobile device's display for countries that need it (like Australia), although that's still disabled for US hardware/software (and likely always will be). Other examples include Toast and Clover POS systems as mentioned above (though at least in the case of Clover, you can buy a PIN pad to get PIN support). I don't think having US only devices would have been that much of a burden for Verifone or Ingenico, especially since they sold swipe-only stuff long after the rest of the world started adopting the chip.

BTW, speaking of software, enabling contactless very well introduced a significant software cost (time, money, etc.) for a lot of merchants since they typically aren't using whatever the bank or terminal vendor provides (due to heavy use of POS integration and other factors). That's even less of a motivator for merchants to bother with HW capable of it without something that could cause customers to demand it.