For TCF, It’s Full Speed Ahead With Contactless Payments

With about 18 months of experience with contactless debit cards under its belt, TCF Financial Corp. says it’s all-in for so-called dual-interface cards and mobile payments as the number of U.S. merchant locations accepting contactless payments continues to grow.

The Wayzata, Minn.-based company’s TCF Bank began supporting the major mobile wallets—Apple Pay, Android Pay (recently rebranded as Google Pay) and Samsung Pay—in 2015. Those wallets enable tap-and-go transactions at point-of-sale terminals equipped with near-field communication technology. In September 2016, in the wake of the card networks’ EMV liability shifts, TCF also began converting its Visa-branded top 20 debit card portfolio to dual-interface cards. Such cards support both contact EMV chip card transactions as well as contactless EMV transactions through NFC.

“Providing dual-interface debit cards was an evolution of our payment solutions that provided our customers flexibility and security in a single offering,” Brent Farka, senior vice president and director of product management at TCF Bank, tells Digital Transactions News by email. “It truly empowered our customers to pay for purchases in the way that best meets their needs.”

Farka would not reveal the number of dual-interface debit cards TCF has issued, nor the number of contactless transactions. But he says TCF is sticking with dual-interface and re-issuing such cards as existing ones hit their normal expiration dates. In addition to distributing new cards the traditional way, in the mail, TCF also offers instant issuance of debit cards in its branches.

“Customers have responded favorably to our dual-interface debit cards,” Farka says. “They tell us that they like the flexibility, security, and convenience of paying by chip or simply waving their card to pay in a contactless transaction.”

Backers see dual-interface cards and NFC-equipped smart phones as tools to convert cash payments into electronic transactions. Melanie Gluck, vice president of solution sales and tokenization at Mastercard Inc., tells Digital Transactions magazine for an upcoming story about contactless payments that the average U.S. contactless Mastercard transaction is under $23.

That average is a clear indicator that contactless is capturing formerly cash transactions; Mastercard’s average U.S. debit card purchase in 2017’s fourth quarter was $39.18. And for issuers such as TCF, more transactions mean more interchange revenue.

While card manufacturers and payment processors say they’re getting more inquiries about dual-interface cards from issuers, they’re still being cautious about actual demand. Scott Scheirman, president and chief executive of Littleton, Colo.-based card manufacturer CPI Card Group Inc., said at the company’s most recent earnings call that CPI was “not factoring dual interface into our 2018 plans in a meaningful way.”

Yet a key driver of demand for such cards—places to use them—is rapidly expanding thanks to EMV. About 95% of new EMV point-of-sale terminals come with NFC capability, although it is up to the merchant to activate that function. Some 2.7 million U.S. merchant locations are now live for contactless, according to Visa Inc.

“We expect to see more merchants adopt and offer contactless payments as time goes by,” says Farka. “One of the most important factors is that retailers not only upgrade their POS terminals, but understand the value of encouraging customers to perform contactless payments.”

Farka says that TCF also expects “consumers will continue to shift more transactions to contactless payments as they become more comfortable with the technology, just as we have seen our own customer use grow.”

TCF has 320 branches in Illinois, Minnesota, Michigan, Colorado, Wisconsin, Arizona, and South Dakota. The bank does not issue credit cards directly, but offers them on an agent basis through First National Bank of Omaha.