Payments

For American Express, contactless transit payments may pave the way for broader acceptance of the technology

  • Earlier this summer, the MTA rolled out contactless payments for its riders in New York City.
  • American Express sees this as a harbinger to broad rollout of contactless in the US.
close

Email a Friend

For American Express, contactless transit payments may pave the way for broader acceptance of the technology

Unlike Europe and Asia which enjoys broad usage, contactless payments in the US have taken a different route. The US has lagged much of the world in the move toward contactless.

That may change as contactless payments make their way to subways and buses around the U.S. Earlier this year, New York City’s Metropolitan Transit Authority, North America’s largest transportation network, rolled out a transit payment pilot called One Metro New York. OMNY now allows for contactless payments on selected subway lines and bus routes and by late 2020, contactless should be available throughout the entire New York City subway system and all MTA bus routes.

As commuters become more familiar with contactless as part of their daily travel, they may use the payment form for other purchases. “Once consumers have the daily experience in their transit systems, they’re more likely to tap and pay at a coffee shops and other merchants on the way to and from work,” said Liz Karl, vice president of payments consulting at American Express.

“This is what happened in other countries,” she said.

The UK and London, in particular, are a strong example of how contactless adoption can be accelerated by bringing it to transit payments. Contactless began to be introduced on buses in 2013 and expanding into the Tube in 2014. In a June report, UK Finance found in 2018 that contactless payments increased 31 percent in the UK, accounting for 19 percent of all payments. Much of this growth was driven by uptake into UK public transportation.

When surveyed, many international cardmembers said that their daily commute was the driving force for using contactless, according to Karl. “Transit was the tipping point,” she said.

Karl’s New York-based team works directly with merchants and payment service providers to enable new payment capabilities. American Express supports contactless in 84 countries and issues contactless cards in 60.

American Express is working with OMNY to allow its cardmembers to contactlessly pay for rides on the MTA via a digital wallet or using a contactless card. To do that, it is collaborating with Cubic Transportation Systems, a leading provider of transit fare solutions, to integrate contactless payments with the MTA and accelerate similar programs with other transit authorities worldwide. Working with Cubic, transit authorities can seamlessly accept American Express for their contactless transit entry.

Adoption of contactless payments requires many parties to come together. Issuers need to replace or issue new cards, payment networks must enable the capability, many new terminals are rolled out but need software upgrades, and merchants need to accept them.. With so many different players in the US market and given the size and scale of the market, rollout of contactless took longer than other markets.

One thing that’s helped pave the way for contactless was the move since 2015 to EMV at the point of sale. With that migration came new devices that work with EMV and are enabled to work with contactless.

In June, the payments company also made a decision to go all-in on contactless — all new and replacement American Express consumer cards are contactless.

“Issuing cards before sufficient terminals were in the market would have been premature,” said Karl. “Transit agencies in New York, but also in Miami, Dallas and Boston, have determined it is the right time to launch contactless. So the time is right for American Express to issue those cards.”

By late 2020, contactless should be available through the entire MTA subway and bus network. Alongside this move, American Express is working with merchants like Whole Foods, Sports Authority and Petco to enable their contactless acceptance. Over the last few months, Target, Speedway, and 7-11 rolled out contactless, too.

Merchants differ by category as to how quickly they’re moving toward contactless. So, while retail may be one of the first industries to be prepared, gas stations will take longer given that they’re owned as franchises and contactless will need to be rolled out location by location.

“Another thing we think about when we rollout is that contactless requires a behavior change for merchants and how they interact with consumers,” Karl said.

“They have to work closely with their cashiers and sales clerks, too, to educate them on new processes.”

0 comments on “For American Express, contactless transit payments may pave the way for broader acceptance of the technology”

Member Exclusive, Payments

Cheat Sheet: What it means when the Federal Reserve goes down

  • The Federal Reserve payments system went down yesterday for a few hours.
  • The outage impacted ACH payments, interbank transfers, and payroll.
Zoe Murphy | February 25, 2021
Payments

‘Making the browser and a superior wallet work better, together’: Opera’s Krystian Kolondra

  • The browser Opera has 380 million users globally and 50 million in Europe.
  • The firm is integrating payments and cashback into the browser and has broad fintech ambitions.
Zachary Miller | February 24, 2021
Payments

Behind Shopify’s move to embed payments on Facebook and Instagram

  • Shopify landed a partnership with Facebook to expand seller checkout through Shop Pay on Facebook and Instagram.
  • According to Shopify, 28 percent of young online shoppers made purchases through social media.
Rimal Farrukh | February 16, 2021
Payments, Podcasts

‘Tech is global but local payments determine who’s a winner or loser’: PPRO’s Simon Black

  • PPRO is freshly off a $180 million investment round.
  • The local payments firm's CEO joins us on the Tearsheet Podcast.
Zachary Miller | February 15, 2021
Payments, Podcasts

Behind Klarna’s massive growth in the US with David Sykes

  • Klarna hit 15 million users in the U.S., more than doubling over a year ago.
  • And now, with a Super Bowl ad, the firm has set its sights even higher.
Zachary Miller | February 04, 2021
More Articles