Last week, Visa reported that its volume on purchases less than $25 in small ticket segments totaled $27.3 billion in the first six months of the year, an increase of 17 percent over the same period in 2005. Those transactions were performed almost entirely using traditional magnetic stripe cards, not contactless cards.
According to Visa, “The double-digit growth indicates that Visa payment cards are increasingly being used instead of cash and checks for everyday purchases less than $25.”
I recently wrote a post critical of payments analysts who position contactless cards as the only way to address the low value cash payments market. Analyst seem to be unaware of Visa’s No Signature Required program and MasterCard’s Quick Payment Service program, both of which compete directly with contactless for the exact same merchant categories.
I don’t know how much purchase volume is performed using contactless cards, but hundreds of millions of magstripe cards are certainly producing far more low value transactions than ten million or so contactless cards.
Visa’s No Signature Required program is working. Analysts need to evaluate the impact this program will have on contactless deployments.