Having Put out 20 Million Contactless Cards So Far, Chase Tackles New York Mass Transit

Two powerful forces for making contactless cards a routine feature of daily life are acceptance by mass-transit systems and backing from the biggest issuers. On Wednesday, that combination came into focus with an announcement from Visa Inc. that starting May 31 users of the 20 million contactless credit cards JPMorgan Chase & Co. has pumped out so far will be able to use them to tap and pay for fares on New York City’s subway lines and bus routes.

“In other markets where contactless has been readily adopted, contactless transit acceptance has driven the adoption curve,” says Thad Peterson, a senior analyst at Boston-based consultancy Aite Group who follows contactless payments.

Chase’s merchant-solutions unit has also worked with the city’s Metropolitan Transportation Authority to install new contactless technology to ease card payments, according to the announcement. The MTA is the first U.S. transit agency to adopt contactless payments using a global transit framework developed by Visa, the payments network said. The framework allows consumers to use any Visa contactless card, mobile device, or wearable for fare payment, Visa 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 Chase’s Abeer Bhatia, president of card marketing, pricing and innovation, in a statement. “Now they will be able to tap to pay for their daily transit needs, and experience how quick and easy it is to check out thanks to contactless cards.”

The new service will start with all Staten Island buses as well as subway stations along the 4/5/6 lines between the Grand Central-42nd Street station and the Atlantic Avenue-Barclay’s Center station. All subway stations and bus routes will accept contactless cards “over time,” according to the announcement.

Chase announced in November it would begin issuing contactless credit cards early in 2019, with tap-and-go debit cards to follow later in the year. Wednesday’s transit news is the first indication of how many cards the megabank has issued so far.

With 20 million of the cards now in consumers’ hands, many of them in the New York City metro area, and with daily use becoming available on the MTA, much will depend on how well the system works. Some observers see other metro transit systems following the MTA’s move. Wednesday’s announcement “will kickstart contactless adoption in New York and will accelerate adoption in other transit-intensive markets as other transit authorities follow suit,” says Peterson, in an email message.

In part, this could be a result of the ease of contactless credit cards relative to the media available so far. Riders have encountered a number of frustrations with prepaid transit cards on the New York system that the new credit cards could solve, the Visa release says.

More than two-thirds of riders have missed a train while standing in line to reload a card, for example, according to a Visa survey of more than 1,000 New York transit users. Also, some 83% have had trouble getting the cards to work at turnstiles, the survey indicated.

“One of the really big deals in [Wednesday’s] announcement is that there is no enrollment or registration involved.  Consumers simply pull out their card and pay, and that’s the ultimate expression of friction-free payments in the physical world,” Peterson notes.