Mexican bank Banamex this week launched the initial phase of the first major countrywide contactless-payment rollout that includes the issuance of 100,000 PayPass contactless credit and debit MasterCards and the deployment of several thousand terminals to 1,900 merchants in Mexico City.

By end of this year, the bank expects to have issued 1 million contactless cards and to have deployed 12,000 payment-acceptance systems, according to VeriFone Systems Inc., whose terminals Banamex is deploying as part of the first part of the rollout.

"They are like the trendsetters for the Mexican country, and I'm sure other banks will follow," Erick Lopez Sanchez, VeriFone country manager, said in an interview regarding the bank.

A Banamex representative could not be reached to comment by deadline. The bank is part of Grupo Financiero Banamex and a member of Citigroup. Banamex says the initial card rollout will involve holders of Travel Pass Platinum Elite, BSmart and Perfiles credit cards.

For purchases of less than 250 pesos (US$15), contactless payments will require no signatures, resulting in quick service in fast-food restaurants, bookstores, pharmacies, magazine stands and other types of businesses, Banamex said in its release.

Though it does not have an exclusive deal with Banamex, VeriFone is the sole provider of terminals for the initial stage of the contactless initiative. As the bank continues its countrywide rollout and issues requests for proposal for additional terminals, it may choose to deploy other vendors' hardware as well, Sanchez says.

The bank is deploying VeriFone's VX 520 terminal to merchants using traditional standalone countertop systems and the VX 820 advance PIN pad to larger retailers that integrate payment systems to electronic cash register systems. Both terminals can read contactless chips.

About 90% of the terminals Banamex traditionally deploys are VeriFone devices, Sanchez says. He declined to disclose the price of the Banamex contract.

The bank automatically will provide contactless terminals to all new merchant customers and replace older models with contactless devices as they come up for routine replacement. Banamex similarly will reissue cards with contactless chips as part of the routine replacement cycle, Sanchez says.

As the country's top issuer and acquirer, the bank chose to start the rollout with Mexico City because, at 25 million residents, it has about a quarter of the country's overall population, Sanchez says.

Moreover, Mexico City has a lot of young residents, many of whom are open to accepting new ways to pay. As such, it was important for Banamex to be the first to launch a broad contactless initiative, Sanchez adds, noting the bank also was the first to deploy payment terminals and issue magnetic-stripe cards in the country.

Eventually, Banamex plans to support Near Field Communication initiatives, which the VeriFone terminals will be able to support, Sanchez says. "They are paving the way to do that," he says. "This is the first step."