Just as the U.S. market shifted from the muscle memory of swiping their credit card to dipping it into an EMV card acceptance device, it is time for new training. Get ready for the wave as the country’s largest commutation system, the NYC Metropolitan Transit Authority ditches their paper Metrocard. Bloomberg writes today about the shift to contactless payments.
When it comes to mass transit, New York City is a leader. More than 5.6 million daily riders, 472 stations and more than 600 miles of track, it is a credit card network’s dream, just for the transaction volume. Built on the backs of imigrants in the early 1900’s. I’m sure there was more than one “Riley” on the crew.
Ironically, there are no subway’s in Mastercard’s hometown of Purchase, NY or Visa’s place in Foster City, CA, but both firms have been effective in propagating card usage anywhere in the world. Discover, located in Riverwoods, IL is close to Amtrak, the US’ national train system though New Yorker’s can take the famous “A” train from Washington Heights to the American Express Tower.
Bloomberg points out the importance of efficient passenger processing at the turnstyle:
- “The credit card and banking industries are working in parallel with us,” says Patrick Foye, president of the Metropolitan Transit Authority. “This is where transactions—not only in transit but outside transit—are increasingly going to be in the United States.”
- “We have seen customers use contactless for more and more of those payment experiences where they are on the go and that tends to be amounts that could be smaller and more and more of those frequent use cases,” says Manan Mahadevia, managing vice president of rewards and spend strategy at Capital One.
However, for transaction volumes, card issuers will throw away their black cars and get out into the field.
Visa’s recent estimate might seem aggressive, but remember the U.S. market re-carded 500 million plastics to integrate EMV. The shift to contactless is timed well as the market gets into the re-issuance mode after 5 years of shifting to EMV
- Visa Inc. predicts 100 million of its cards in the U.S. will be converted to contactless by the end of 2019. Some issuers, such as American Express Co. and Capital One Financial Corp., have already begun the transition. Capital One’s Quicksilver, Savor and Venture card portfolios are already enabled for tap-to-pay as is AmEx’s recently retooled gold card.
- The transition to chip cards in the U.S. sparked months of consumer frustration because the checkout process got longer and store clerks had little training on the new technology.
The biggest reason: efficiency at the point of sale.
- …contactless transaction should take no more than 2 seconds, while chip transactions can take anywhere from 10 seconds to 39 seconds.
Get ready for another change. Next time, we will probably be looking at biometric solutions, but for now, enjoy the tap dance.
Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group