Dallas' transit system has launched a two-year project to enable contactless payments, a move the project team hopes will boost transit use and mobile wallet adoption, two areas in which supporting infrastructure is growing faster than consumer adoption.

In Dallas, ticketing and transit payments technology company Vix will deploy its account-based contactless acceptance technology, allowing Apple Pay, Android Pay and other Near Field Communication-based mobile wallets in addition to agency-issued transit cards. Vix hopes that by making payments easier, transit ridership will increase.

"Payment is a huge factor; what we found in Utah and Seattle was customers said ease of payment is a very important issue," said Doug Thomas, a general manager at Vix, whose other clients include transit systems in Salt Lake City and Seattle.

In Salt Lake City, Vix was part of early transit payment tests of Softcard (formerly Isis), the telco-led contactless mobile payment initiative that has since sold its technology assets to Google. Vix also recently won a contract in Malaysia to unify that country's transit systems into a single ticketing system.

The DART project is underway and is expected to be complete by March 2017. The payment modes will include agency-issued transit cards, financial institution-issued contactless cards, mobile wallets including Apple Pay, Android Pay and Samsung Pay, mobile tickets and other NFC-capable cards such as student IDs that can execute payments.

The open loop options such as network-branded contactless cards and mobile wallets would decrease reliance on the transit system's existing ticketing infrastructure. In turn, this could encourage greater use of the transit system, as well as make it easier to use for occasional business travelers in addition to regular commuters.

"The main benefit of contactless cards is riders from out of town don't have to purchase a transit card," Halden said.

Outside of New York, rail-based mass transit system is not widely used in the U.S. Dallas is the seventh largest light rail network in the U.S. with about 100,000 daily boardings. But there are numerous new rail transit projects and expansions underway, suggesting mass transit use will increase going forward.

At the same time, major mobile payment initiatives from Apple, Samsung and Google are making contactless mobile payments more prevalent than in the past, though consumer use is still relatively low.

Contactless mobile payment provides another option for riders, though overall uptake of has been low thus far in markets where Vix works, such as Salt Lake City, the company said.

"There haven't been that many of these cards issued," Halden said. "We see a slight bump with the launch of Apple Pay and Android Pay, but it's still a low percentage."

But Vix hopes the popularity of mobile apps can contribute to the use case for contactless transit payments.

"Imagine a world where you can buy a ticket to ride a bus in Dallas and book an Uber car to take you the last mile, and do all of that on your smartphone,” said Doug Thomas, a general manager at Vix.  "That is the goal here."

Mobile transit payments and broader contactless adoption have paired well in other markets, according to Halden. "Particularly in Europe and Canada, there's a convenience associated with contactless payments, and transit is the perfect use case for that method," he said.

In New York, riders still primarily use agency-issued preloaded magnetic stripe cards to pay, though the Metropolitan Transit Agency is considering other, more modern options.

A source who's worked on contactless ticketing deployments globally said New York was preparing to request proposals for a mobile contactless payments pilot. The MTA did not comment on specific technology such as NFC, but said it was pursuing a smart card option.

In an email, Andrea Popp, an MTA staff analyst, said a mobile app that allows a user to check agency card (MetroCard) balances or add value cannot be accommodated because "security and privacy issues make the concept prohibitive…we have explored the mobile refill model, but our legacy systems make this a less than ideal option vs. moving toward a bank-issued smart card. This is the program that we have piloted with both Visa and MasterCard and which we hope to implement to replace the outdated MetroCard model."

Improvements to transit payments could result in faster boarding and more people will be exposed to contactless payment technology, said Ben Jackson, director of Mercator Advisory Group's Prepaid Advisory Service.

"The struggle will be getting that education to carry over to the retail setting," Jackson said. "Retailers will need to let customers know that they can pay that way, because people won't want to risk looking silly by tapping their cards in places where it won't work."

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