The first time is a charm. In fact, the first time must be a charm.
No, we are not talking about first dates or so-called “meet cutes” in movies. We are talking about consumer acceptance of contactless payments in the U.S. — specifically, the use of such payments for mass transit in New York City. It’s an unforgiving environment where people are famously told not to look too long at other riders, so you can imagine the frustrations in store if those payments should fail while someone is trying to catch a subway to work.
In an new PYMNTS discussion, Dan Sanford, Visa’s global head of contactless payments, talked with Karen Webster about the May 31 launch of a contactless payments pilot involving the Metropolitan Transportation Authority (MTA) in New York City and Chase. The MTA, according to Visa, becomes the first U.S. transit agency to implement contactless payments using Visa’s global transit framework. That means riders can use any Visa credential — whether it’s a Visa contactless card, mobile device or wearable — to pay for rides (along with other retail purchases, of course).
In reality, and for the time being, this effort is about contactless cards more than other payment forms, but the impact could still be significant. “This is really going to change New Yorkers’ daily lives,” Sanford said.
Mass Transit Experience
That might sound like PR hype, but think about it from the point of big-city consumers — the rush for a bus or subway is often fraught with anxiety and anticipation, and there are always those times when a closed-loop fare payment method is out of funds right when that rush hour train is pulling into the station, or times when the contact fare technology sputters a bit, delaying the line past the turnstiles and causing people to miss their trains. Indeed, according to Visa statistics, 67 percent of riders have missed a train while waiting in line to reload a fare card. In addition, 83 percent of consumers said they’ve had trouble getting their fare cards to work at turnstiles, and 66 percent have left funds on transit cards (the definition of leaving money on the table).
The pilot that starts May 31 involves the 4/5/6 lines between the Grand Central-42nd Station and the Atlantic Avenue-Barclays Center Station, as well as all Staten Island buses. Over time, all New York City subway lines and bus routes will accept contactless payments, Visa said.
But for that contactless future to advance, the technology has to work the first time, a vital step in making contactless payments a daily, even mundane habit for more consumers. Sure, this pilot only applies to big-city residents — and visitors to New York City, of course — but every successful contactless effort pushes the ball (chip?) forward, so to speak. As Sanford told Webster, the best messaging Visa can do around contactless is just directing consumers to places where it’s been implemented — including retail stores, not just mass transit stations — and make sure it works.
Moving Past EMV
The ongoing push toward more contactless payments in the U.S. comes as merchants and payment services providers move past their work of shifting to the EMV payment standard. Globally, of course, tapping to pay with contactless cards has already taken off: According to figures from Sanford during the PYMNTS interview, 48 percent of “face-to-face transactions” outside the U.S. involve contactless payment cards or other contactless payment methods.
But the U.S. is moving toward contactless with increased speed, at least according to many observers. Visa recently said that 80 out of Visa’s top 100 merchants by transactions in the U.S. currently offer customers the ability to tap to pay at checkout. As well, 11 out of the top 25 U.S. issuers are now rolling out newly available contactless cards.
For mass transit — upon which tens of millions of U.S. consumers rely daily — the path has largely been set by Transport for London, which operates mass transit for the U.K. capital. When it moved from closed-loop payments to open-loop contactless, Sanford said, “it just blew past everyone’s wildest expectations of just how quickly” consumers would gravitate to such payments in a busy, high-energy, little-room-for-error environment. Now, he said, “New York is leading the charge in the U.S.”
Whenever mass-transit systems change over their payment methods, there is often a period of time when station agents need to be on hand to educate consumers about using the new fare options. That could also be the case in New York City in the coming weeks, Sanford said. But success with contactless there — enabling consumers to pay not only for fares, but also such goods as coffee and snacks — could go a long way toward promoting other uses of contactless in other parts of the country.