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MasterCard Worldwide announced on Thursday that taxis in New York City are accepting contactless cards in a program that will include 5,000 vehicles by December. The bank card network also said a so-far undetermined number of Las Vegas cabs will take place in a contactless pilot in Las Vegas that has already started and is expected to be completely rolled out by year's end. The New York project is the largest yet involving taxis and follows the deployment in November of contactless readers in 1,600 Philadelphia taxis, which also involved MasterCard and its PayPass contactless payment platform. The cabs in New York are part of a general, multivendor deployment of customer-service technology to all of the more than 13,000 taxis in the city that began in May under the supervision of the New York City Taxi and Limousine Commission (TLC). The back-seat installations include credit and debit card acceptance along with screens showing maps and other information. The decision to install the systems, however, has drawn mixed reviews from taxi drivers, according to a recent account in The New York Times, which outlined complaints from some operators about processing fees and excessive noise from the information systems, which include news shows and other programming. According to the TLC, total credit and debit card transaction fees are expected to run 3.5% to 4%; owners are not allowed to pass on more than 5% of this cost to drivers. The extension of contactless payment to taxis brings the wave-and-pay technology to a transit segment where cash is dominant and where time savings are highly valued. Contactless transactions in taxis are 45 seconds faster than cash and 15 seconds faster than conventional card swipes, according to estimates by VeriFone Holdings Inc. VeriFone Transportation Systems, a unit in which the San Jose, Calif.-based terminal maker is the majority shareholder, is supplying wireless systems for the 5,000 contactless taxi systems in New York as well as for the Las Vegas and Philadelphia contactless deployments. The other shareholder is TaxiTronics, which services more than 8,000 taxi meters in New York. As with other contactless payments, taxi transactions under $25 require no signature. The contactless taxi terminals also process card swipes. With contactless, short-range radio waves replace card swipes, allowing chip-and-antenna inlays in cards to send card-account data to terminal-based transceivers. Currently, about 19 million cards and fobs equipped for contactless transactions have been issued in the U.S. They are interoperable on platforms built by Visa USA and American Express Co. as well as MasterCard. About 32,000 merchant locations have been equipped so far to accept contactless devices. The taxi deployments may help expand potential consumer adoption of the technology. A recent study from Javelin Strategy & Payments, a Pleasanton, Calif.-based researcher, predicted consumer adoption of contactless payment would increase by only about 1 million devices by 2012 unless issuers, acquirers, and the networks found ways to expand acceptance into merchant categories beyond fast food and convenience stores, where contactless first took hold (Digital Transactions News, July 9). If more merchant types started taking contactless, the study said, adoption could instead reach 50 million devices over the next five years. With recent installations at vending machines, contactless acceptance has now extended to a number of non-storefront venues heavily dependent on cash.
