Seven years ago, when Visa first started working on bringing contactless payments to London’s Mass Transit system, the landscape for tap and go cards looked very different. The technology, Visa’s Global Head of Urban Mobility Nick Mackie told Karen Webster in a recent conversation, was still in its most nascent stages of deployment — outside of Europe the contactless cards essentially didn’t exist, and within Europe 1 out of every 400 payments in Europe made via contactless.
Seven years down the line, the landscape has shifted. In Europe, contactless card-based payments have come to dominate face-to-face payments.
“In London, you will see consumers standing at terminals and tapping even when they know the merchant doesn’t take contactless because it has just become that ingrained a habit,” Mackie said.
And while the progress in the U.S. has been much slower — and contactless payments have yet to have their big mainstream breakout moment — there is reason to believe it is on the horizon. As of its last earnings call, Visa announced that 8 out of 10 of its largest issuers would be putting contactless cards into the hands of their customers, and as of Wednesday (Oct. 30) they announced in has 100 partners now enrolled in its global transit partner program.
“This program is aimed at offering our technology partners with a toolkit built around our standards and the best practices we’ve collected over the last seven years for standing up and implementing open-loop contactless payment schemes for transit for payments more quickly and cost-effectively than we’ve seen in the past,” Mackie explained. The target goal for partner enrollment was 50, he told Webster, which means this week's announcement marks both far greater than expected initial success in terms of recruiting and the fact that Visa has essentially brought “every player that is worth talking to in the transit vertical into a direct dialog on how we can expand this at scale.”
And that scaled push, he noted, is critical both for the future contactless payments worldwide — but also for transport systems and the customers who use them.
Why Contactless Was Made To Run On Mass Transit’s Rails
The power of transit to ignite contactless, he noted, is unsurprising given how well the use cases match-up. A customer trying to catch a train values, above all things, efficiency and speed in making it to the train. Waving their card at a terminal as they keep right on running for the bus is going to end much better than having to stop and pay cash or to load up their closed-loop metro transit card. It’s why so many customers have so many transit cards jammed into their wallets and lining the bottom of their bags — it’s faster and easier just to buy a new one than to try to figure out if one of the seven already in the bag works.
“Convenience means removing the guesswork — consumers just want to travel. Imagine if to use a Starbucks card you had to guess exactly how many cups of coffee you would want in a day and load it up with that proper amount or risk having to go through a much longer slower process,” Mackie said.
That’s not to say closed-loop systems will immediately go the way of the typewriter or the beeper — he noted that for some time they would likely exist side by side, and consumers will have the choice of what they prefer. But for public transit operators — the wins are as obvious as the commuter wins. Customers will move more smoothly and be more likely to use public transport because it is easier to do so while spending less time either managing cash payments or a closed-loop system that has to handle the entire commuter load.
For Visa, he noted, the push into transit is the next natural evolution of their payments platform, particularly around developing contactless. Travel and transit are in Visa’s DNA, according to Mackie, and making mobility easier has always been a key part of what they do. With contactless, particular contactless married to tech mass transit, they can do it better and deliver better experiences for all parties involved in the journey.
The Contactless Train’s Gathering Speed
Major metros in the U.S. and around the world, Mackie noted, know they want contactless payment capacity and when putting together the competitive bids to build them, the crucial differentiator that Visa is hoping to offer technologists is a turnkey solution that can be set to work very fast.
Because what they’ve learned most critically in their last seven years in this market is how fast contactless payments can move once consumers start using it to commute — and then wanting to use it everywhere else.
“It’s what we’ve seen everywhere, and mark my words we will see the U.S. will be no different. This will be the big battleground going forward.”
Visa’s goal is simple — arm the combatants as well as possible going in to get the solutions integrated and into consumer’s day-to-day experience. The response they've seen, Mackie said, has been “staggering” both among consumer and major metros looking to enter the conversation. And while he was tightlipped about what new is coming to the pipeline in 2020, he was quite firm that there would be an awful lot to watch in this part of the payments ecosystem.
“The future looks intensely busy. Look for even more exciting updates from us in about a year’s time.”