Thursday, May 23, 2019
Mass transit customers in New York City will soon have a new way to pay for riding the subway and bus systems: contactless credit and debit cards issued by banking giant Chase. Beginning May 31, 2019, riders will be able to tap their cards to pay to enter several subway stations and all buses serving Staten Island instead of purchasing and using fare cards. Over time, all New York City subway lines and bus routes will accept contactless card payments, Chase and Visa stated.
Chase Merchant Services is also working with the New York Metropolitan Transit Authority on an upgrade to the fare machine system (dubbed OMNY) to support contactless card acceptance, the two companies reported. Visa said the New York MTA will be the first U.S. transit agency to implement contactless payments using its global transit framework.
But New York won't be the only city offering public transit riders the option to pay using contactless cards. Mastercard stated it is working with transit agencies in 16 metropolitan areas, including Boston, Denver and Los Angeles, to support contactless card acceptance. "Transit is an important catalyst for quick and broad adoption of contactless," said Linda Kirkpatrick, executive vice president for U.S. merchants and acceptance at Mastercard said.
"Customers have been quick to adopt tap to pay, and we've already seen it exceeding digital wallet use for customers who have contactless cards," said Abeer Bhatia, president of card marketing, pricing and innovation at Chase. "Now they will be able to tap to pay for their daily transit needs, and experience how quick and easy it is to checkout thanks to contactless cards."
Dan Sanford, global head of contactless payments at Visa, said, "Contactless payments have shaped the way consumers pay all over the world, saving valuable time and delivering a fast, easy and secure way to pay. We are excited to be working with Chase and the MTA to improve New Yorker's daily routines with an easier way to not only get around, but also to pay for things they buy every day."
Al Putre, OMNY program executive at MTA, added, "This is another example of our sustained investment to help New Yorkers move around the city and find new ways of making it easier to get to where they want to go."
Contactless cards use near field communication (NFC) to communicate with POS terminals, or as is the case in New York, with transit turnstiles. EMV chips, which many credit and debit cards now contain, are designed to support contactless payments. However, most POS devices at U.S. retail locations have not been upgraded to support NFC. And some major retailers (most notably Walmart) have said they prefer not to move to contactless card acceptance.
Aiming to reverse the trend, Visa and Mastercard have mandated that all POS devices be able to support contactless payments by 2020. Visa has said it expects the number of contactless cards issued in the United States to rise to 300 million by the end of 2020, up from 100 million now. Chase and leading card issuers Bank of America Corp. and Wells Fargo & Co. have all revealed plans to migrate all their card portfolios to contactless cards. Chase already has issued close to 20 million EMV cards, according to Bhatia.
Visa CEO Al Kelly, in an interview with Bloomberg Television, said the card giant is optimistic about consumer adoption. "I expect that as customers get used to it and merchants see that customers are delighted by the experience, the reality is that adoption will start to take off," he told Bloomberg.
A recent survey by Auriemma Research seems to lend credence to this assertion. The survey found consumers are more inclined to use contactless cards than mobile wallets. Only a third of consumers with mobile payment-enabled smartphones have used the devices to make payments, compared with 59 percent of contactless cardholders who have tapped those cards to make a payment, according to Auriemma's latest Mobile Pay Tracker.
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