Contactless faring well

The Smart Card Alliance's 2009 Payments Councils Summit was held in Salt Lake City at the end of February 2009. The primary focus of discussion was the adoption of contactless electronic fare collection in major U.S. cities. The SCA's Transportation Council listed many accomplishments and elected a new steering committee and officers.

Reports of headway made into contactless adoption in the transit arena were:

• The Utah Transit Authority recently implemented contactless fare collection involving third-party paid passes and contactless credit and debit cards.

• New York's contactless fare collection system has moved to a second phase in which all types of contactless cards will be accepted, Steve Frazzini, Chief Officer of AFC Program Management for New York City Transit, told summit attendees.

• Transit authorities from Tucson, Ariz., and Philadelphia said they also plan to roll out contactless fare collection systems.

• In Los Angeles, the Transit Access Pass card solution addresses underbanked and unbanked passengers with a card that can also be used for general POS purchases, said Jane Matsumoto, a project manager for the Los Angeles County Metropolitan Transportation Authority.

A foothold in transit

Craig Roberts, the UTA's Program Manager for Electronic Payment, is the new SCA Transportation Council Chair. He said, "We are seeing more transit agencies understanding the security and convenience that accepting contactless credit and debit cards directly as fare payment brings to travelers, as evidenced by the presentations we heard at the summit."

Transit systems seem to be the vanguard for contactless both in this country and abroad. "Accepting contactless bank cards means the transit operator acts like a merchant – selling transportation to the customer," said Randy Vanderhoof, Executive Director of the SCA. "They avoid all the overhead of converting bank issued currency (cash or card sales) into transit currency for using the system.

"We have just scratched the surface in some new payment card acceptance markets, like vending machines and taxi cabs. I can see on-street parking and gated parking facilities increasing in acceptance of contactless, particularly when they serve the mass transit systems in the area."

Vanderhoof noted that this is a new frontier for the bankcard and transit sectors. "The technology issues are pretty much solved, but the cost of converting the transit reader infrastructures and fees associated with bankcard usage and bad debt are still being worked out by both industries," he said.

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