JPMorgan Wants Card Customers to Pay With a Tap
November 14 2018 - 4:17PM
Dow Jones News
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 the option of tapping them at stores'
payment terminals rather than inserting 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 new contactless
cards will retain a chip, which generates a unique one-time code,
that 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 and is changing cards for U.S.
consumers who request it.
Write to AnnaMaria Andriotis at annamaria.andriotis@wsj.com
(END) Dow Jones Newswires
November 14, 2018 16:02 ET (21:02 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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