Tap, tap — who’s there? Contactless payments in the Mariana Islands

BY MAUREEN N. MARATITA
Journal Staff

The rise of contactless payments in Guam and the Northern Mariana Islands has been a quiet commercial revolution, and practically a secret.

In the U.S. mainland, Europe, and Asian countries the take up is visible, and predictable. At airports, on public transport, in supermarkets, retail outlets, and quick service restaurants terminals are ready and waiting as you go to pay.

Contactless payment devices are everywhere in developed countries. In restaurants your server may well bring a handheld payment terminal to you. Some restaurants are contactless payment-only venues.

But just ask in Guam, and you will find that contactless payment is accepted in some local restaurants, typically available at the cash register. Some “mom and pop” stores and small businesses are further ahead in accepting them than larger businesses.

Consumers like the speed, convenience and security of a form of payment they can use for large and small purchases, and the comfort of a contactless payment post-pandemic.

For Guam, more venues offer contactless payment than you would know, because there is no wide expectation that you will pay by tapping your card, and rarely are such services promoted verbally or with signage.

The experience varies, with several businesses that do business in Guam and Saipan offering contactless payments at all their locations. Some businesses in Guam that accept contactless payments still require the customer to sign a receipt.

So how safe are contactless payments?

During a contactless payment process, payment information is limited to a transmission of 10 centimeters or 3.9 inches, and each transaction has a unique code. Despite lingering concerns, FAQs on various sites underline the security of contactless payments. As a good example, see usa.visa.com, where Visa also shares its own statistics on contactless payments.

In any event, consumers worldwide have taken up contactless payments with enthusiasm, generating the ongoing development of contactless payments, their security and the ability to conduct more frequent and larger transactions. And among them are the visitors from island tourist markets (See the tourism story in this issue).

Financial institutions obviously play a big part in offering contactless options in the first place, not only noting consumer trends but being proactive in meeting customer demand.

Gerard A. Cruz, president and CEO of Community First Guam Federal Credit Union; told the Journal his members have had access to ‘tap’ cards for well over a year, through a contactless debit card. A credit card
is now also being processed to become contactless.

Community First members created the demand for contactless cards, Cruz said, after their off-island travel. More and more people are seeing contactless cards in action as they travel, he said.

“We thought we’d better get on that technology, so we did.”

Progress doesn’t happen overnight, he said.

“There is a learning curve that surrounds this new technology. It’s like that with every new technology.” He gave the example of Remote Deposit Capture, which allows checks to be scanned into digital photos, and sent to financial institutions to be posted and cleared electronically. Uptake was initially slow, he said. “Then people found out that there were protective measures.” As the concept became more familiar, protective measures were slowly removed, he said. “So too with contactless payments. … I think the vendor has discretion to set the limit,” he said.

Community First has not experienced any incidents of fraud. Cruz said U.S. consumers have 60 days to “identify a charge that is fraudulent,” as mandated by the Federal Reserve’s Regulation E, which implemented the Electronic Fund Transfer Act, to protect and reimburse consumers.

Ultimately, he said, “Our members find it very convenient to ‘tap’ and go.”

Bank of Guam began introducing merchant terminals to accept contactless payments in June 2014. It issued contactless enabled credit cards in November 2018, and contactless-enabled debit cards in October 2019. 

Maria Eugenia H. Leon Guerrero, executive vice president, and chief operating officer at Bank of Guam, said there are two parts to contactless transactions. “There’s the card side and the terminal side. The two sides have to meet.”

Bank of Guam’s credit and debit cards are Near Field Communication-enabled, but also continue to carry the EMV chip, as evidenced by the hologram on the cards. EMV stands for Europay, Visa, and Mastercard, the credit card companies that spearheaded the development and widespread adoption of this chip technology developed in the mid-1990s. Leon Guerrero said, “That’s a whole other technology.”

A payment processor receives the information from a payment gateway and communicates between the credit card scheme, acquirer and issuer.  Leon Guerrero said, “In terms of our card processors, they are U.S.-based.” She said of that chain, “I am very certain that it’s safe.” Aside from the Federal Reserve’s consumer protection, she said in the case of any fraud, “Visa and Mastercard have a zero-liability guarantee.”

Still, Leon Guerrero said, consumers should check their statements, despite those guarantees. “It doesn’t absolve everyone from responsibility.”

As to merchants, she said, “The other party is the merchant. That is key.” While Bank of Guam supplies the terminal, what happens then lies with the merchant. “They don’t all have the same point of sale systems,” she said.

Leon Guerrero said of its customers, “Our biggest reach is on the debit card side.”

This gives those Bank of Guam customers a certain advantage at a terminal, if a pin number is requested, as it would be the same pin number they use to access an ATM with the card.

For those people who don’t have a pin number with a credit card, Leon Guerrero said these can be requested from Bank of Guam, or any financial institution.

Leon Guerrero said there’s background to why the customer experience for contactless payments is so inconsistent, “especially when comparing the adoption in Europe vs. Asia vs. United States.”

She said, “The answer is rooted in each region’s adoption of EMV compliance standards. Contactless transactions really took off after EMV compliance standards were implemented.

“Europe was the first to embrace EMV in the early 2000’s because it was mandated by their regulators as a way to reduce counterfeit fraud, and thus, adoption was swift and widespread.

“In the U.S. as well as in Asia-Pacific, although EMV compliance was not mandated by country regulators, the incentive to adopt EMV standards was a liability shift for fraudulent transactions.  Essentially, in the event of a dispute the non-compliant party would be liable for fraudulent transactions. 

“In the U.S., the liability shift became effective in October 2015.  Because the decision to invest in EMV compliance was left to card issuers and merchant acquirers, the awareness and adoption of contactless payments was gradual and fragmented.”
Why isn’t the use of contactless payments being promoted in Guam and the Northern Mariana Islands?

Leon Guerrero said, “A lot of that is educational.” Both financial institutions and merchants should play a part in that, she said.

First Hawaiian Bank first issued contactless cards in Hawaii in June 2020, according to its site.

Edward G. Untalan, executive vice president and Guam-CNMI region manager of First Hawaiian Bank, said, “First Hawaiian Bank was among the first to issue “tap and go” contactless debit and credit cards.”

FHB is an advocate of the use of contactless cards. Untalan said. “We have long recognized the benefits of the technology — speed, ease, and security, and know that this is important to our customers. We have supported our merchants to adopt this new technology and now only offer contactless point-of-sale options that provide increased efficiency and security.”

Bank of Hawaii introduced its contactless debit cards in February 2021, according to its site.

Which companies in our region are fully contactless payment enabled? Here’s a snapshot.

• American Grocery: Juni Nutum, accounting manager, “We are fully ‘tap’ enabled in our stores.”
• Don-Don-Donki Guam: Uta Miyazawa, marketing manager, confirmed the store can accept contactless card payments. “We accept Apple Pay too.”
• IPE&E Holdings LLC, which does business as Shell gas stations in Guam and the NMI: Camille Denight, marketing business partner, “We have that feature in all our service stations. We do have customers that use that feature. Some banks require a pin or a zip code; some will let you bypass that.” 
• Mobil Oil Guam and Mobil Oil Marianas: Sergio Alves, retail sales manager, “The Guam and Saipan service stations all have the “contactless” feature, and with this specific feature no signature is required. You can also find this feature available outside at the service stations that have “pay at the pump”/Crinds at their site.”
• South Pacific Petroleum Corp., which does business as 76 gas stations and Circle K convenience stores: Robert E. Koeppen Jr., CEO, “SPPC has the capability of “Tap to Pay” at all our locations. You can do this at the pump and in the convenience store. We also have the capability to use your phone, if you have a payment app on your phone.”
• Subway Restaurants: Jackilou Ontimara, general manager, said all Subway Restaurants in Guam and Saipan are contactless payment enabled. The chain has a $25 limit for “non-signatory receipts,” she said.
• Other companies offer contactless payment, but still require a signed receipt.
• Hilton Guam Resort & Spa: CJ Urquico, marketing and communications manager, “We offer tap-to-pay options, including Apple Pay, Google Pay, etc. However, signatures on receipts are still required.”
• Hyatt Regency Guam: Madelaine Cosico, director of sales and marketing, “We still ask guests to sign the receipts. We experienced some guests disputing charges, so we need to have some proof.”
• Pay-Less Markets Inc.: Katherine R. Calvo, president/CEO, “We do have contactless smart card readers in all our Pay-Less stores.” A signed receipt is required. Calvo said, “We do accept Apple Pay.”
• Not offering contactless payment:
• Baldyga Group, which does business as Anemos, Karera at the SandCastle, The Beach Bar, Tao Tao Tasi, and Zoh: Mark S. Baldyga, chairman and founder, “We are not currently doing contactless, but we are looking into it.”
• Dusit Thani Guam Resort: Marissa E. Borja, cluster director of marketing and communications, “Although we don’t have it up and running just yet … contactless payment is currently being worked on.”
• Home Depot Guam
• Kmart Guam
• Pacific Islands Club Guam: Ben E. Ferguson, general manager, said the resort is considering introducing contactless payment next year.

Statistica in cooperation with Juniper research in May 2023 said that in 2022 the top countries for the number of contactless card transactions were China, 86.81 billion; the United States, 20.47 billion, and the U.K., 5.3 billion.

South Korea saw 2.53 billion transactions and Japan 2.08 billion in 2022.

According to Mastercard the first contactless card payments were introduced in 2004. But the rise of contactless payment cards has been driven “in large part by the growing availability of contactless as a payment option, and changing customer behavior post-pandemic,” Mastercard said.

Some 51% of Americans use contactless payment, either a tap and go card or mobile wallet like Apple Pay or Google pay, according to a Mastercard poll released in June.

Half or 50% of U.S. consumers worry about the cleanliness of signature touchpads and 72% of U.S. consumers prefer to skip signatures altogether, the poll said.

According to Visa’s 2023 Global Travel Intentions survey, 97% percent of Asia Pacific travelers said they will bring credit, debit, or prepaid cards on their trips, with just 17% saying they intend to bring destination currencies, compared to the previous 2020 survey, when79% percent said they intend to bring cash.

The Visa survey was conducted by 4SIGHT Research & Analytics in April to June 2023 and surveyed 15,467 respondents across Australia, Hong Kong, India, Indonesia, Japan, Mainland China, Malaysia, New Zealand, Philippines, Singapore, South Korea, Taiwan, Thailand and Vietnam.

As an example of the pervasiveness of contactless cards in Europe, an estimated 91% of debit cards and 89% of credit cards issued in the U.K. (England, Scotland, Northern Ireland, and Wales) in 2021 had contactless capabilities, according to U.K. Finance. Most residents have more than one debit card (the most popular form of payment) and use one for daily purchases, U.K. Finance said. Mastercard and Visa lead the U.K. market. Credit cards are the mainstay in industries like entertainment, travel, tourism, and hospitality. As the popularity of contactless payments grew, more U.K. businesses introduced contactless options at point-of-sale, particularly during COVID-19.

The U.K.’s Barclays Bank said 80% of 85- to 95-year-olds in the U.K. now pay with contactless cards.

The U.K.’s Financial Conduct Authority and the Treasury sets transaction limits “after public consultation and in discussion with both the retail and banking sectors.” That was first set at £30, rose to £45, and is now £100 since October 2021 ($128.61 at a rate of 1.29 dollars to the pound sterling on July 31). The contactless threshold for multiple transactions increased in October 2021 from £130 to £300.

In the U.S. mainland and other countries such as the Philippines banks have already introduced contactless transactions at ATMs for accountholders. mbj

EDITOR’S NOTE: We welcome additional comments from financial institutions. If your business offers contactless payment in Guam or the NMI and to share the news, email managingeditor@glimpsesofguam.com.