HSBC presses its advantage as contactless-only issuer

NEW YORK — As major U.S. cities continue to implement contactless tap-and-go acceptance to collect transit fares, at least one bank sees this trend as an opportunity to put its cards on center stage.

HSBC USA, which has issued only contactless cards since late 2015, has hired professional dancers to stage three flash mobs Tuesday to highlight how consumers can use the bank’s contactless credit and debit cards to pay their fares at some subway stations in New York City, among other locales.

Nancy Armand, senior vice president of personal financial services and wealth marketing at HSBC USA, said the bank started to bring attention back to its contactless card portfolio in May when the region’s Metropolitan Transportation Authority soft-launched its new system, called OMNY, at some subway stations and on Staten Island buses.

Even though HSBC has a complete contactless card portfolio (it's one of the few U.S. banks that can say that), most customers are unaware that their cards are contactless, Armand said. The $177 billion-asset unit of the global giant HSBC Holdings finished converting to contactless when the U.S. EMV conversion officially started nearly four years ago.

The flash mob is “a great way to bring both fun and education at the same time,” Armand said.

HSBC hosted the flash mob in front of its flagship branch on Fifth Avenue, just steps away from Bryant Park and close to the Grand Central Station subway stop with contactless acceptance.

Some three dozen dancers wearing red-and-white HSBC T-shirts put on a two-minute show in an area that roughly 25,000 people walk by every hour, according to the bank.

HSBC also placed signage behind the dancers promoting contactless, and also had employees on hand passing out information about the bank and cards.

The majority of U.S. banks opted not to include contactless when they reissued cards with chips several years ago. However, large issuers are getting on board with contactless issuance.

JPMorgan Chase is in the process of converting its card portfolio to contactless by the end of the year. The bank also has signage at the turnstiles inside subway stations reminding commuters to use their contactless card to pay their fare.

Bank of America in the last few weeks has reissued credit cards with contactless technology to New York customers in anticipation of the MTA's rollout of open fare acceptance to all subway stations and buses by the end of next year. In all, Bank of America reissued 4 million credit and debit cards to residents of New York, Boston and San Francisco, based on those cities' density of contactless-accepting merchants and transit systems.

In the New York tri-state area alone, HSBC USA has some 1 million open retail credit card and debit card accounts.

“We’re happy to take the lead on this one because the technology has had a lot of fits and starts in the industry,” said Pablo Sanchez, the head of retail banking and wealth management for HSBC USA. “The MTA is a great place that legitimizes the use of it.”

By the MTA’s standards, OMNY already is a resounding success.

Since May 31, transit riders have used their contactless cards and mobile wallets to pay for more than 1 million rides at subway stations along the 4, 5 and 6 lines between Grand Central Station in Manhattan and the Barclays Center in Brooklyn, as well as on Staten Island buses.

The MTA said transit riders used OMNY in the first three days more than 18,000 times, far more than the 7,000 taps it expected in the first week.

Mobile wallet transactions make up 80% of all OMNY transactions, according to the agency.

Apple is doing its part to raise awareness and has plastered some participating stations with ads showing commuters how to use Apple Pay for transit payments.

Even though contactless cards are still a new technology to many consumers in the U.S., the format is much more mature in other countries. So it's unsurprising that 62% of OMNY taps come from cards issued in Canada, France, Germany, Great Britain and Italy, according to figures from the MTA.

Sanchez said OMNY’s early success is an indication that consumers want financial institutions “to take the tension out of the payments” process.

“What consumers are saying to all financial services companies is to make this stuff easier,” he said. “This is something you should be good at, and that’s why we are comfortable taking a lead position on this.”

The MTA’s OMNY effort is not New York’s first foray into contactless transit payments.

In 2006, Mastercard began piloting a contactless payment system in New York with cards issued by Citi.

The MTA never fully committed to such a system until years later, after cities such as London and Chicago implemented successful programs.

Similarly, many banks once committed heavily to contactless issuance in the United States, only to drop their efforts as consumers and merchants failed to widely adopt the format. Chase was among the technology's biggest proponents, having heavily marketed its own "blink" cards for many years before finally retiring the brand (and the cards) in late 2011.