Can and Will U.S. Follow London's Contactless Transit Initiative?

by Mercator Advisory Group 0

Transport for London, the England city’s transit agency, last month rolled out contactless card readers on all of its 8,500 buses, enabling riders to charge their fares directly to their own credit card accounts. Most transportation agencies that support contactless payment offer proprietary transit cards that access prepaid accounts riders can load using traditional payment cards. Transport for London says it expects riders also will be able to use their own credit cards for direct access to the underground Tube and aboveground trains by the end of the year.

From an article in the Atlantic:

In theory, this is exciting news for London commuters who loathe change-scrabbling, but even more so for credit card companies, who will now ostensibly have access to data about where and when people are traveling to different parts of the city. In practice, however, this will be an interesting test case for the future of contactless payments in public transportation systems, particularly in the U.S. Will public transit riders really use contactless credit cards enough to meaningfully change the way that people pay for their transportation? And what can and will credit card companies do with the resulting data?

Expect similar activity in the U.S. to evolve at a slow pace, given that relatively few consumers today hold traditional payment cards that have contactless chips. Various U.S. tests involving direct contactless payments for transit are under way, including one involving New Jersey Transit, the Metropolitan Transportation Authority and Port Authority. During a recent six-month test, less than a quarter of a percent of the systems’ ridership used the payment option. The Chicago Transit Authority and its sister suburban agency Pace last fall announced plans to begin accepting open-loop cards for fares later this year.

Click here to read more from The Atlantic.

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