DADDY, WHAT WAS CASH:

The US has long been a laggard when it comes to payment technology. But several factors, from changes in how fraud liability is handled to the biggest credit card issuer's embrace of contactless technology, are now coming together (paywall) for a reboot. Even the Federal Reserve is contemplating how best to upgrade the country's payment plumbing to make it real-time and available 24 hours a day.

Britain's experience with contactless payments shows how it gives physical cash a run for its money. Spending using contactless cards rose to £3 billion ($3.8 billion) in 2017, up from £117 million in 2014, according to the UK Cards Association. A CMSPI consultancy case study of a large fast-food chain found that contactless payments catch on quickly, "cannibalizing both cash and card payments." The study showed that contactless transactions increased by 64% in one year to account for 27% of all purchases, while cash declined by 11%.

"In the UK, contactless payments have been key in digitizing low-value high-frequency payments," Bernstein research analysts wrote in a report this month. [....]

The US, encumbered by entrenched interests and aging transactions systems, has been slow to change. But the massive data breach in 2013 at retail company Target helped spur the shift away from the magnetic stripe, an older and more vulnerable way of processing payments. Since then, a change in fraud liability (pdf) has given merchants, like stores and restaurants, an incentive to switch to EMV chip technology that's more secure. Merchants, instead of card issuing banks, have been on the hook for fraudulent magnetic stripe payments since 2015. While the US has lagged behind in NFC and contactless payments, "that is rapidly changing"  given the recent overhaul in payment terminals, Bernstein wrote.

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