Blog: 5 Payments Trends to Watch in 2015

By Randy Vanderhoof, Smart Card Alliance

Earlier this month, we held our annual Smart Card Alliance Payments Summit in Salt Lake City. It was our most exciting yet, particularly because of the point we’ve reached in our payments journey. With the U.S. migration to EMV chip technology, developments in mobile and contactless payments in retail and transit, and a focus on layered payments security, there are a lot of great themes to watch in 2015. Here’s a snapshot:

1. Accelerating Chip Card Issuance

The U.S. migration to EMV chip technology continues to gain momentum as we get closer to the Oct. 1, 2015 fraud liability shift date. In just one year, the number of EMV chip cards in the market is projected to leap from 120 million chip cards in 2014 to 600 million by the end of 2015.

With this significant change, we already can see a noticeable shift in the conversation from “what are chip cards?” and “why are they coming to the U.S.?” to “how and when do we start using chip technology?”

2. Merchant Readiness for Chip

Speakers highlighted two main merchant trends for 2015: We’ll see a substantial number of POS terminals enabled for chip by the end of the year, and merchants continually are being urged to get started now, because it’s going to take longer than they think to develop, certify and implement chip technology.

3. Transit as an Enabler for Contactless

With 27 million transactions every day, public transit has the potential to help drive contactless card and mobile payment acceptance in the U.S.

Transport for London (TfL) is a great example of what can be achieved with contactless in transit. TfL has logged 30.6 million transit journeys paid for via bank-issued contactless cards in 2014, including cards from 57 countries. In a typical week TfL sees 1.2 million contactless transactions using 100,000 new cards. In the U.S., speakers from public transit agencies large and small said open contactless and mobile payments are definitely part of their future plans.

4. Layered Security with EMV, Encryption and Tokenization

While EMV chip technology is hard at work securing in-store payments from counterfeit card fraud, many conference speakers are looking ahead to emerging initiatives for tokenization and encryption. While there was consensus that chip technology needs to be established first and these security layers need to be added, the road map is unclear. The creation of standards for these technologies are definitely things to watch for this year, and their adoption will be important for securing the payments ecosystem.

5. Apple Pay and NFC

This isn’t the first time NFC was a hot topic at our conference, but the early buzz and success around Apple Pay suggests 2015 could finally be the year for NFC to really take off. Speakers said that for a mobile wallet to be successful, it must include the issuers and merchants and be easy for the consumer to use. It seems Apple has met these goals.

Apple Pay’s use of Touch ID biometrics and tokenization also has raised the security standard for mobile transactions while making a seamless consumer experience. Because of just how safe and easy it is, we may see Apple Pay take off and other NFC mobile wallet developers emulate the implementation.

For 2016, our Payments Summit will move to Orlando, April 5-7, 2016, and will run concurrently with the ICMA Card Expo, which explores trends and recognizes excellence in card manufacturing. Our association has a lot of work to do in the year ahead to keep pushing secure payments technology forward. And, it will be interesting to see how these themes play out in a year’s time.

Randy Vanderhoof has been the executive director of the Smart Card Alliance since 2002. The multi-industry trade association works to stimulate the understanding, adoption, use and widespread application of smart card technology. Randy can be reached at [email protected].

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