MC, Citi to Test Contactless Transit Card

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Some New York City subway riders will soon be able to use a contactless MasterCard International card to pay their fare at the turnstile.

MasterCard, the New York Metropolitan Transportation Authority, and Citigroup Inc. said Monday that they plan to test a contactless payment system for six months starting this spring.

Commuters in Washington have been using stored-value contactless fare cards since 1999, but the New York test will involve authorizing transactions across the MasterCard network as people walk through the turnstiles. Citi will issue credit cards and debit cards linked to a bank account.

With the MTA, “everything is about timing and getting the consumer through the turnstile quickly,” said Cathleen Conforti, the global manager of MasterCard’s PayPass contactless cards.

Ms. Conforti said the MTA specified to MasterCard how fast the turnstile transaction had to be before it would allow the test to begin. Steve Frazzini, the chief officer for automated fare collection program management and MetroCard sales in the MTA’s NYC Transit unit, said the payments must be authorized within 300 milliseconds.

MTA officials have said that people are unwilling to wait at the turnstile for even a few seconds while cards are authorized.

The test will be with a group of Citi customers. The MTA will temporarily install contactless-card readers at 73 turnstiles in 25 stations along the MTA’s Lexington Avenue line — its 4, 5, and 6 trains.

Ms. Conforti would not say how MasterCard was able to keep its transaction times low.

However, Aaron McPherson, a research manager for payments at Financial Insights Inc., said that because of the small amount of each transaction, it would make sense if they were delayed or aggregated. The standard New York subway fare is $2.

MasterCard, of Purchase, N.Y., and Citi, of New York, are testing a contactless card for Washington commuters. It has a standard magnetic stripe for general purchases and a contactless chip linked to a stored-value account.

Greg Garback, the executive officer for finance with the Washington Metro Area Transit Authority, said that since 1999 the transit system has been offering stored-value contactless cards that could only be used for transportation; in November 2004, Citi and MasterCard began issuing the combination card.

He said that 1.5 million of the dedicated-use cards have been issued, and that the MasterCard test will not involve more than 20,000 cards. That test is scheduled to run through mid-2007.

Ms. Conforti said New York MTA riders would also be able to buy rides in advance by loading a prepaid account linked to their card, and would receive discounts for buying several fares. The cards will also function as standard credit or debit cards that can be used at other merchants.

Dan Schatt, a senior analyst for the Boston market research firm Celent Communications LLC, said the New York test would be significant since it does not require consumers to go through the “extra hurdle” of preloading their cards.

However, he said that using contactless cards for transit is especially difficult for banks and card associations. “The gold standard is public transport,” Mr. Schatt said. “There is no other situation that has such an intensive volume attached to it, and time pressure.”

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