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PayPass Subway Trial Starts In New York

Can contactless technology stand up to a New York City subway rush hour? A six-month trial to see how well MasterCard PayPass cards work in the New York subway system started this week. The trial is backed by MasterCard Inc., Citibank and its Citi Cards division, the Metropolitan Transportation Authority, and MTA New York City Transit.

The trial will measure how cardholders use their contactless smart cards or key fobs to pay for transit fares at 30 stations on the Lexington Avenue subway line. The transit agency hopes to speed up boarding times, says Lawrence G. Reuter, president of MTA NYC Transit. "We're doing it for the convenience of the customer," Reuter tells Card Technology. "It allows them to use a fare-payment mechanism that most carry with them now."

The trial includes an estimated 100,000 cards, based on the number of Citibank cardholders who live near the subway line, says Art Kranzley, MasterCard's group executive for advanced payments. However, any Citibank PayPass cardholder can use their card to buy their subway ride on the Lex, he says. They also could use a free Citibank-branded key fob, available on request from the bank, says Amy Radin, chief innovation officer in Citi's global consumer group.

Participants will be able to pay their $2 transit fare two ways. The prepaid option sets aside a certain amount, with automatic replenishment when the balance falls below a preset level. The card must be registered on a MasterCard Web site set up for the trial. With the pay-as-you-go option, the card does not have to be registered. In both options, transactions are recorded and viewable on monthly statements.

The trial could portend a much larger move by the transit system, Reuter says, because the existing fare system is due for a revamping in the next three to four years. New York transit riders now pay with a magnetic stripe fare card. The Lex line serves much of Manhattan's tony Upper East Side with busy stops near the Wall Street headquarters of American Express Co. and JPMorgan Chase & Co., two issuers with their own contactless programs. (2006-07-12)

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