Establishing contactless card payments in taxicabs in Barcelona, Spain provides another indication that La Caixa Bank intends to make the city a case study for new payment methods.

La Caixa, a card issuer and Spain's largest acquirer based on retail merchant market share, completed an agreement last week with Barcelona's Metropolitan Taxi Institute that will provide nearly 5,000 taxis with contactless card-reading terminals over the next several months.

The initiative comes under the framework of the "Barcelona Tap-and-Go Contactless" project carried out by La Caixa and Visa Europe, and supported by the Barcelona city officials.

In January, La Caixa initiated the project by saying it would distribute 1 million Visa PayWave debit cards to its customers by the end of June. In addition, the bank planned to install 17,000 contactless payment terminals at large and small merchants, as well as 500 ATMs from Tokyo-based Fujitsu Ltd. capable of accepting contactless cards. 

At that time, Visa Europe stated its support for the project was based on advancing the use of its contactless debit cards, but also as a way to educate consumers about contactless payments for the future transition to mobile payments.

The contactless technology is safer for taxi drivers and small merchants because it means they would be dealing with less cash, La Caixa states on its website. The payment method is particularly helpful for the physically disabled, who find it easier to use ATMs with contactless technology, and it increases transaction speeds at the point of sale as well as ATMs for all customers, the bank stated.

The project illustrates to other countries and cities across the globe how all of the moving parts must work together to attempt making contactless payment the ubiquitous method in an entire city, says Zil Bareisis, a London-based senior analyst for the research firm Celent.

"Barcelona is certainly on the way to becoming a poster city for contactless payments," Bareisis says.

Much of the project's ultimate success has to do with the active role played by La Caixa because it is such a prominent issuer in Spain, Bareisis adds.

"But the active involvement and collaboration from many parties, including public authorities such as the city council, certainly helps," he adds.

London is likely to keep a watch on the Barcelona project, considering the effort Visa Europe made to encourage contactless payments with smartphones during London's 2012 Summer Olympics.

"My impression is that contactless and Near Field Communication technology in London has been largely driven by commercial companies, particularly Barclaycard, and the networks, such as Visa and MasterCard," Bareisis says. "It will be interesting to see whether that momentum will continue now that the Olympics are over."

After the Olympics, Visa Europe released promising statistics for contactless payment in the UK, saying the test resulted in the volume of contactless transactions to double in the 10 weeks leading up to the Olympics.

Visa issued Samsung Galaxy S III NFC-enabled phones with the Visa mobile application to 726 staff members, partners, Visa-sponsored athletes and journalists to make contactless payments at terminals in and around the Olympic village.

Each person issued a phone used the device to make an average of 15 transactions during the Olympics, Mary Carol Harris, head of mobile at Visa Europe, told attendees at an industry conference last month.

Harris said six times the number of contactless transactions took place during the Games compared to the same time period in late July and early August in 2011.

Contactless payments at Olympic venues accounted for 20% of all on-site Visa transactions of less than £20 ($31.40 US during Olympics), Harris said.

Visa's project with La Caixa in Barcelona calls for consumers to use a PIN only when making contactless purchases of more than 20 euros ($26 US).

MasterCard Inc. announced a similar project last week in the United Arab Emirates in which the card brand plans to partner with Network International, a major acquirer in the region, to install more than 1,000 point of sale terminals to accept contactless PayPass technology for chip-based cards, smartphones and wristbands.

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