Visa Inc. is letting commuters in New York and New Jersey use their handsets to pay for bus, subway, train and taxi fares.

The company is letting New York Tristate area riders pay using Visa payWave-enabled cards and mobile phones. Visa’s contactless payment mobile application is now accepted in the New York City subway, the Port Authority Trans-Hudson (PATH) rail system, New Jersey Transit busses, Newark Liberty Airport’s AirTran and New York taxis.

“Visa’s working to bring mobile contactless payments to consumers in the U.S. by transforming mobile phones with a microSD slot into Visa mobile payment devices,” said Dave Wentker, San Francisco-based head of mobile contactless payments at Visa.

“The mass transit trial in New York allows Visa and the transit agencies to test Visa payWave-enabled mobile phones and cards as a way for mass transit riders to pay for subway, train and bus fares,” he said. “For transit agencies, this pilot allows them to reduce the cash handling costs and ticket distribution, allowing them to focus on their core business of getting people where they need to go.

“As a result, transit agencies can streamline their operations and decrease their investment in custom-built fare systems, cash-handling costs and fare card lifecycle costs.”

Visa is a global payments technology company that connects consumers, businesses, financial institutions and governments in more than 200 countries and territories to digital currency.

Ride the mobile payWave
The programs in New York and New Jersey are part of Visa’s long-term strategy of extending the speed, security and convenience of Visa acceptance to new locations.

As part of this strategy, Visa has brought payment services to commuters in the world’s most populous areas, including Kuala Lumpur, Seoul, Singapore, London and Paris.

In driving acceptance at the mass transit fare gate, Visa is providing riders with an alternative way to pay with the goal of eliminating the time-consuming step of searching for cash to buy a ticket while minimizing cash-handling costs for transit operators.  

The pilot program in New York uses Visa payWave technology, which is based on a small electronic chip embedded in a mobile phone or payment card that communicates securely with contactless readers at the fare gate and on the bus.

Transit riders pay by holding their Visa payWave-enabled mobile phone or card near the designated reader at the fare gate.

As part of the company’s ongoing effort to add ever greater utility to its core credit, debit and prepaid payment products, Visa is working closely to integrate its electronic payments network, VisaNet, with mass transit fare collection systems.

Contactless mobile payments in New York and  New Jersey
As part of Visa’s participation in the New York transit program, Visa is testing both payment cards and smartphones enabled with Visa payWave.

The mobile technology, which was developed by DeviceFidelity, transforms many smartphones with a microSD slot into a Visa payment device. 

“Visa has been trialing mobile NFC payments for the past two-plus years,” Mr. Wentker said. “Trials confirmed the great benefit mobile payments will deliver to consumers and financial institutions.

“However, the lack of NFC-enabled mobile devices has prevented mass adoption in the U.S. market,” he said.

“Visa believes that the technology developed by DeviceFidelity has the potential to accelerate the delivery of mobile payments in the U.S. market.”

The NYC transit trial covers 28 stops along the Lexington subway line in Manhattan, letting commuters pay with a wave of their mobile phone or card enabled with Visa payWave technology.

Visa payWave is also accepted at most PATH rail stations in New York and New Jersey, on several MTA bus lines in New York City, on select NJ Transit bus routes in northern New Jersey and at Newark Liberty AirTrain Station in New Jersey.

In addition to subway, trains and buses, more than 10,000 New York City taxi cabs have already installed Visa payWave terminals, letting tourists and locals pay by waving their phone or card in front of terminals found in the back seat of the cab.

With the number of merchant locations in the U.S. accepting contactless payments at approximately 150,000 and a number of mass transit systems gearing up to accept contactless payments at the fare gate, Visa is confident that contactless mobile payments will start making their way into the mass market soon.

Visa believes that by the end of first quarter next year, its mobile contactless technology will be commercially ready.

“However, ultimate roll-out of the technology will be driven by financial institutions and in alignment with their own mobile strategies,” Mr. Wentker said.

“This means contactless payments may be offered as one of many mobile financial services offered by financial institutions to their consumers,” he said.

“Other services may include real-time Visa transaction alerts delivered via SMS, mobile coupons or location-based merchant offers, and mobile banking.”

Final Take

Dan  Butcher, associate editor, Mobile Commerce Daily