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The Metropolitan Transit Authority (MTA) in New York City unveiled One Metro New York (OMNY), its tap-to-pay system for subway and bus fares, which will go live on May 31, according toBloomberg.
Here’s what it means: OMNY is launching as contactless cards are finally rolling out on a large scale in the US.
- OMNY is going live for select routes and will later expand to cover the entire MTA subway and bus system. Subway and bus riders in New York City will be able to tap to pay using their contactless credit card, debit card, or mobile wallet, initially restricted to the 4/5/6 subway line at select stations, but the fare options will become available across the entire subway and bus system by the end of 2020.
- And major issuers have started issuing contactless cards. Chase beganissuingcontactless credit cards with Visa earlier this year and is on track to convert half of its cards to be contactless-enabled by the end of the year, with plans to issue contactless debit cards as well. So far, Chase issued close to 20 million contactless cards, per Abeer Bhatia, president of card marketing, pricing, and innovation for Chase. Meanwhile, Wells Fargo — the top debit card issuer in the US by purchase and transaction volume —announced that it will begin issuing contactless credit and debit cards. As contactless penetration widens because of widespread issuance, the US could be on the verge of a contactlessboom: Visa predicts the number of contactless cards issued in the US will rise to 300 million by the end of 2020 from 100 million at the end of this year.
The bigger picture: Enabling contactless transit payments in a major city could feed into habit formation around contactless payments in the US — mirroring the effect contactless transit had in other markets.
- OMNY could encourage habit formation around contactless cards and mobile wallets in the US. In London, for example,half of all transit payments are made with contactless cards. And transit payments helped to popularize contactless cards and encouraged adoption of mobile payments, with nearly 1 in 8 contactless trips in the city made using a mobile device. “Mass transit is a really terrific use case for tap and pay: People commute 10 times a week. It gets them in the habit of using the card to tap and go,” Visa CEO Al Kelly told Bloomberg Television. Alleviating frustration associated with commuting and limiting wait times by offering a contactless option could help showcase the benefits of going contactless and serve as a jumping off point for everyday usage outside transit.
- The proliferation of contactless payments could ultimately boost volume for card networks and issuers.This could add $40 million in annual revenue for Visa once OMNY is fully implemented in 2021 and the firm could see an additional 2.5 billion transactions from the subway each year, according to Mizuho Securities estimates. Meanwhile, banks issuing the cards could boost profits by $2.4 billion by transitioning to contactless cards, as these transactions largely will supplant cash usage, particularly for transit, per research from A.T Kearney.
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