Baseball Takes a Swing at Contactless Cards

  This is the contactless card's rookie year in Major League Baseball, and with the opening of the 2006 season this month team executives say they have high expectations that the league will hit a homerun by enabling consumers to pay for their cotton candy and sodas more quickly and easily inside ballparks.
  Baseball for years has allowed issuers to offer fans magnetic stripe affinity cards with their favorite teams' logos, but few stadiums actually accepted plastic for payment at their vendor and souvenir stands. Even teams that do accept credit cards believe contactless cards could bat cleanup because of their potential to put up big sales numbers.
  "We experienced a 15% to 18% increase in sales with credit cards versus cash," says Marty Greenspun, chief operating officer for the Los Angeles Dodgers. "With contactless cards, we expect more of a lift this year because they are easier to use."
  Though less than half of the baseball league's 30 teams have announced that their stadiums will accept contactless cards this season, the situation is fluid.
  At C&P's deadline, MasterCard Inter-national and Visa USA were working hard to pitch acceptance of contactless cards, which use a computer chip to transfer card data to payment terminals using radio frequency identification technology.
  MasterCard, which also was renegotiating its league credit card contract with Major League Baseball Properties, has been talking with clubs about PayPass, the name of MasterCard's contactless payment technology, says John Brody, the league's senior vice president of corporate sales and marketing. MasterCard expected to have PayPass terminals installed at 10 or more stadiums by the time the season opened.
  Visa also has been discussing contactless card deals with an undisclosed number of teams, says Brian Triplett, vice president of Visa Commercial Solutions.
  Besides the Dodgers, the San Francisco Giants, Texas Rangers, San Diego Padres, Philadelphia Phillies and Atlanta Braves have stepped up to the plate to announce they will accept contactless as well as mag-stripe cards in their ballparks.
  The teams like the speed of contactless payments, which eliminate the need to swipe cards in readers. Also contributing to the transaction's quickness are new Visa and MasterCard rules that waive requirements that cardholders sign transaction slips when purchases are less than $25.
  Contactless cards are expected to be mutually beneficial for the league and the card industry.
  "It's an issue of speed and convenience," says Brad Alberts, Rangers vice president of sponsorship sales. "[The contactless card] can cut 30 seconds to 45 seconds off a person's wait in line, depending on the circumstances." So rather than be stuck for an inning or two waiting in line to buy hot dogs, fries and beer, fans can be in their seats when their favorite slugger smashes a line drive into the left-center field gap to score two runs.
  Purchases made with a contactless card are 25% faster than paying with cash, says Paul Walters, Hypercom Corp. vice president of emerging technology products. Phoenix-based Hypercom manufactures the Optimum L4100 contactless payment terminal, which the Giants are installing in AT&T Park's vendor and merchandise stands.
  The Giants announced in February that the ballpark's approximately 84 concession and merchandise stands will have approximately 100 terminals that accept contactless MasterCard and Visa cards beginning with the team's April 6 home opener against the Atlanta Braves.
  Clerks working the counter enter the amount owed into the cash register, which is integrated with the L4100. Cardholders then hold their cards within an inch or two of the reader that faces the customer to complete the purchase.
  Wireless Next?
  Soon, vendors in the stands will begin using the Hypercom M2100 wireless terminal to accept contactless payments at AT&T Park, says Neil Hudd, Hypercom senior vice president of product development and marketing (see story page 22).
  The Rangers, who play their home games at Ameriquest Field in Arlington, Texas, near Dallas, announced in January that the team would accept Chase Card Services' contactless blink card at 200 points of sale, beginning with the Rangers' April 3 home opener against the Boston Red Sox. Chase Paymentech Solutions LLC, a Dallas-based company that installed 200 VeriFone Omni 3750 terminals at Ameriquest Field, says the device accepts MasterCard- and Visa-branded contactless cards. Chase has not gone through the terminal-certification process for American Express Co.'s ExpressPay contactless card.
  The Padres, who play their home games at Petco Park, installed 290 terminals that accept blink and other contactless cards at the ballpark's portable and fixed concession stands, says Jim Ballweg, Padres vice president of corporate sales. "We're excited about this because people with cards spend more," Ballweg says. The Padres have accepted credit cards since 2004 when Petco Park opened.
  Workmen tested the contactless payment terminals March 11 and 12 in time for the World Baseball Classic. Petco Park hosted the tournament's semifinal and final games March 18 and 20. The Padres' regular season opened April 3.
  The Braves, Padres, Dodgers, Phillies and Rangers are taking similar approaches to promoting contactless cards.
  Chase Card Services, the card-issuing arm of J.P. Morgan Chase & Co., is marketing the Rangers Ultimate Fan Rewards MasterCard to the team's 10,000 season ticketholders, says Alberts. "It's logical to target our season ticketholders because they are our best fans," he says. Chase also has the rights to set up four booths throughout Ameriquest Field during the team's 81 home games to sign up fans for blink, Alberts says.
  To spark interest in the card, the Rangers are offering cardholders several rewards programs. The Rangers' marketing campaign coincides with Chase's announcement in January that it will issue more than 800,000 blink cards in the Dallas/Fort Worth area. Some 500 merchant locations in 32 Texas counties will accept the cards, Chase says. At the beginning of February, Chase, a Visa and MasterCard issuer, had issued 6.5 million blink cards nationwide with PayPass capability.
  In San Diego, Chase is replacing Padres' fans mag-stripe cards with Chase's MasterCard-branded blink card, Ballweg says. Chase also will market a contactless card to the more than 26,000 Dodgers' season ticketholders and to anyone else who attends Dodgers' games, the team says.
  Chase rival MBNA Corp. has an affinity card agreement with the Phillies, and MBNA will issue contactless credit cards to fans. And Citizens Bank, a Phillies' partner, will re-issue its debit cards as PayPass debit cards. In addition to PayPass, the Phillies are accepting AmEx ExpressPay and Visa contactless cards at the team's 27 fixed and 40 portable concession stands that have 255 contactless points of sale.
  MBNA also has an affinity card agreement with the Braves. MBNA replaced 25,000 of the Braves' magnetic-stripe cards with PayPass. "MBNA reissued cards to fans who applied and have been approved for the Braves' affinity card," says Mike Plant, the Braves' executive vice president of business operations.
  Unlike some other teams, the Giants do not plan to market a card with the Giants logo to the teams' season ticketholders. Instead, the Giants will rely on banks to introduce contactless cards throughout the Bay Area.
  "All consumers who have a contactless card can use them at AT&T Park," says Triplett of Visa, which provided financing to construct AT&T Park. The Giants have accepted mag-stripe credit cards at 90% of AT&T Park's vendor locations since the park opened in 2000, says Jason Pearl, the team's vice president of corporate sponsorship.
  The Giants are one of 24 teams with which MBNA has individual card-issuing agreements. Chase is MBNA's only competitor for baseball's business, and Chase issues cards for the Rangers, Padres and Dodgers as well as the Minnesota Twins, Detroit Tigers and Arizona Diamondbacks.
  The Pittsburgh Pirates in March signed a five-year affinity card-issuing agreement with MBNA, says Brian Warecki, the team's director of business communications. The Pirates are considering the use of contactless cards at PNC Park, the team's home stadium, but that probably would not occur this season, Warecki says.
  Though the Phillies,' Giants', Rangers' and Padres' strategies regarding contactless cards differ, their goals are the same. They want to score with fans by making them aware that their stadiums' vendors accept credit cards, says Gail Sneed, director of strategic consulting for Maritz Loyalty Marketing. "They are building up awareness of card acceptance, particularly contactless card acceptance," she says. "If a fan at a San Francisco Giants' game sees someone using a contactless card, he may think he needs one and will go to a bank that issues the card."
  Card acceptance at baseball stadiums will be a major change for some ballparks, says Brody of Major League Baseball. "Five years ago, there would have been very little you could have done with a credit card in a stadium," he says.
  Indeed, some training and education will be necessary, as acceptance of credit cards after decades of not accepting them confuses both fans and stadium concession-stand employees, says Dennis Brown, the Phillies' marketing executive.
  Before moving to Citizens Bank Park in 2004, the Phillies played their home games for 30 years at Veterans Stadium. Vendors there never accepted credit cards. When the Citizens Bank Park opened, vendors could accept credit cards, but not everyone got the message. "When I attempted to use my credit card at one of the concession stands, I was told they didn't accept credit cards, and I knew they did," Brown says.
  Over the years, though, teams gradually have upgraded their stadium infrastructures or constructed new ballparks that are wired to accept credit cards. Last year, for example, the Dodgers began accepting Visa, MasterCard and American Express cards at their stadium's merchandise and concession stands.
  And the cards helped the Dodgers post excellent results. "We experienced a 15% to 18% increase in sales with credit cards versus cash," says Marty Greenspun, Dodgers chief operating officer. "With contactless cards, we expect more of a lift this year because they are easier to use."
  The Dodgers have installed 300 PayPass-accepting contactless terminals at Dodger Stadium's concession and merchandise stands, Greenspun says. In addition to MasterCard, the terminals accept Visa contactless as well as American Express ExpressPay contactless cards.
  The card associations are pushing card acceptance in the stadiums because the industry covets Major League Baseball's educated, high-income fans. "Baseball is a great property," says Tom Murphy, MasterCard's vice president of sponsorships. "It's big, and the fans have sizeable incomes."
  The Giants, located in expensive San Francisco, may be atypical, but their numbers are impressive. The Giants say their fans' average annual household income is $109,000. Moreover, 37% of Giants-game attendees have household incomes that exceed $100,000. Giants fans also are an educated group. Some 74% of have attended college, and 21% have gone to graduate school.
  Major League Baseball also benefits strongly from its association with MasterCard, but the benefits are discussed only in the most general terms. "MasterCard's agreement provides Major League Baseball with significant financial income and exposure," says the league's Brody.
  But the Rangers' Alberts believes the relationship helps card issuers score more than the teams. "The Rangers' affinity card is a very lucrative business," he says. "I feel we should form a bank and issue our own cards."
  With baseball executives worrying about how long fans have to wait in line at concession stands, Maritz's Sneed believe baseball stadiums and contactless cards are a perfect fit. "If you have 50 items that you want to buy at Target, a contactless card isn't going to make much of a difference," she says. "But if you're standing in line with a bag of popcorn and a Coke, you want the line to move fast."
  The card industry is promoting contactless card acceptance during a period of change for the league. MasterCard, the official card of Major League Baseball since 1997, was negotiating a new agreement with Major League Baseball Properties.
  Contract Limbo
  MBNA, which issues MasterCard-branded cards on behalf of baseball teams outside their television territories, also was negotiating a new league agreement. Both the MasterCard and MBNA contracts expired at the end of the 2005 season, and the league was scheduled to announce new agreements before the 2006 season began in Chicago April 2, says Major League Baseball's Brody.
  If the experiences of team affinity cards are an indication, teams' success with contactless card rollouts could be determined by their fan support. Issuers have learned that the success of a card program depends on the team's annual home-game attendance.
  "It's the key factor in determining the success of a team's affinity card program," says Todd Lamberton, director of affinity relationship management at Chase Card Services. "If a team wins the World Series, there will be a blip in applications. But successful card programs depend on a team's yearly attendance."
  As an affinity card issuer, MBNA says it signs up applicants at the teams' stadiums during spring training and regular season games. MBNA says its representatives attend more than 2,100 games annually.
  If the Rangers are an example for the league as a whole, fans keep affinity cards in their wallets more as a souvenir than for use in initiating payments. In 2004, the last year MBNA issued the Rangers' affinity card, the team had 15,259 active cardholders. But 36,000 individuals had a Rangers' credit card and never used it, the Rangers' Alberts says. Chase now has an affinity agreement to issue cards for the Rangers.
  With more teams accepting contactless cards, card activation and usage could rise, but there are costs. The Giants' Pearl says Visa is helping to pay for the Hypercom terminal installation. Alberts says it will cost the Rangers $100,000 to install communications cables for its contactless card readers, but a Chase spokesperson says the card issuer is footing part of the bill. The Padres and the Braves say MasterCard is helping pay for their costs to accept contactless cards.
  The card industry, though, does not have to do all of the rallying to support contactless card acceptance, as teams that have accepted credit cards are providing relief. The Braves and Rangers, which did not accept credit cards, consulted with the Dodgers' Greenspun about the benefits of card acceptance, he says.
  Contactless cards are changing the way teams regard the card industry, says Chase's Lamberton. "We have reached a new age," he says. "Teams once looked at us as a sponsor. Now they see us as a partner in their business that can bring fan loyalty and make the team prosper."
  A small but growing number of major league baseball teams are reworking their lineups to accept contactless cards. Time will tell if the moves become a hit with their fans as well as other teams.
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