JPM JP Morgan Chase and Co

By AnnaMaria Andriotis 

Americans just got used to paying with chip cards. Now, JPMorgan Chase & Co. wants them to tap at checkout instead.

The bank will soon begin issuing cards with a contactless feature, allowing consumers to tap them at stores' payment terminals rather than insert them. The bank said the change, announced Wednesday, is meant to simplify and speed up the in-store checkout process.

JPMorgan isn't the first U.S. bank to issue such cards, but its move could be a tipping point for the rest of the industry to follow suit. The bank is among the biggest U.S. credit-card issuers by purchase volume, and it plans to add the feature to all its Visa Inc. credit cards and debit cards. More broadly, the change underscores the card networks' campaigns to encourage consumers to ditch cash, even for small purchases.

A big change to the card industry came about three years ago, when issuers began rolling out chip-based cards in the U.S. Those cards, with embedded security chips, are more secure compared with cards that can only be swiped. But they also led to consumer complaints about the slowness of in-store transactions. Major card networks later decided to stop requiring consumers' signatures, in part to save time at checkout.

Abeer Bhatia, president of card marketing, pricing and innovation of JPMorgan's credit-card division, said inserting chip cards at checkout wasn't customer friendly. The card's chip, which generates a unique one-time code, will still be read at the terminal.

Transactions that involve inserting chip cards take an average of about 10 seconds, according to Visa, and tap transactions take an average of a second.

Only about half of chip-based terminals at U.S. merchant locations accept contactless payments, according to research and advisory firm Aite Group, though that is up from 33% in 2016.

"If there's a flood of contactless cards in the market next year, that may drive up interest by the merchants" to accept card payments with a tap, said Thad Peterson, senior payments analyst at Aite.

Visa is the largest U.S. debit and credit card network, and J.P. Morgan is among its largest card issuers. Visa said that no other large bank on its network has moved to make the switch for all its cards.

The new cards could also deal a blow to the mobile wallets that have launched in recent years. One of their main selling points has been that they are easier to use for in-store payments than chip cards, though they have largely failed to take off with consumers.

JPMorgan customers whose credit cards are up for renewal and those who sign up for new credit cards will be among the first to receive contactless cards starting in the coming weeks. The bank will also make this switch for debit cards starting in the second half of the year.

Other issuers in the Visa and Mastercard Inc. networks already have the feature on some cards. A Mastercard spokesman said issuers representing two-thirds of its U.S. consumer purchase volume have committed to reissuing contactless cards over the next two years.

Citigroup Inc.'s Costco credit card has been contactless enabled since it was introduced in 2016. Capital One Financial Corp.began adding contactless technology to some of its credit cards last year. American Express Co. has added the contactless feature to its Hilton credit card and some others.

Write to AnnaMaria Andriotis at annamaria.andriotis@wsj.com

(END) Dow Jones Newswires

November 14, 2018 15:23 ET (20:23 GMT)

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