In the US, "regulation" usually means "a rule or order issued by an executive authority or regulatory agency of a government and
having the force of law". Of course, YMMV.
It's already happened. That's one of the reasons I'm surprised Target is so resistant, as they took a serious hit to their bottom line a couple of years ago. We haven't shopped there since except to take advantage of a big sale on a specific gift item, and we paid cash.
It's not the "country". It's the
merchants, and to a lesser extent: the issuing banks. One of the reason NFC was quickly adopted in Canada was the elimination of secondary authorization (PIN or signature) for small amounts.
That was a decision by the banks (about 5 of them dominate the industry in Canada) to encourage credit card usage for small amounts at fast food and coffee merchants. I don't know if the merchants received incentives to upgrade to NFC, but they certainly benefit simply by shaving a few seconds off every transaction.
Banks in other countries have done the same. But, the US simply doesn't have an oligarchy of banks that can move the market in that direction. And as I've pointed out before, processing an NFC transaction actually costs
more at some transaction processors in the US. Hopefully, that will change, but that's the domain of the transaction processing networks (the middlemen between the merchant and the issuing bank).
It would have to be on Apple Pay transactions, only. I doubt that Apple would be willing to pay 10 cents/$100 for contact-less card transactions in which Apple Pay was never used.
But, as you wrote, think it through properly: the bank doesn't pay the merchant directly. They pay the transaction processor. The transaction processor then pays the merchant, after deducting their contracted fee. For instance:
https://squareup.com/pricing
Square's pricing is simple: 2.75% for card-present transactions (which includes Apple Pay). Don't forget that they can't tell the difference between an Apple Pay and contact-less card transaction: only the bank knows that.
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And the answer is pretty simple: because they haven't yet enabled the use of the chip readers. That's a "business decision" made by corporate, not the cashier or the store manager. I'll guess that fraud at a grocery store isn't high enough to warrant a wholesale change at this time.
If that were true, there would have been no need to put up the sign and stop people from trying to insert the card.
If a chip reader is enabled, you HAVE to insert a chipped card. Attempting to swipe it will generate an error message, at least in the places I've tried. After doing that once or twice, I started looking for the slot.