The COVID-19 pandemic has led the United States down a fast-track of innovation in almost every sector. Seismic levels of disruption brought on by this public health crisis have ushered in an era of advanced technological adoption that once seemed years away—but is now the status quo. From the shift to EMV-enabled payments cards and the rapid expansion of contactless transactions, continued investment in the future of emerging payments technologies will only better serve the demands of consumers. In the case of mass transit, adoption of new contactless electronic payment technology provided great economic value to struggling mass transit systems while providing consumers with a new level of safety and convenience, increasing their confidence in mass transit systems as we adapt to and recover from the pandemic.
Over much of the last year, tens of millions of Americans have shifted preferences, choosing to have their groceries delivered, work remotely, and rely more on online banking and payment systems. Some merchants, especially small businesses deemed “non-essential,” transitioned to a “card only” payment method to stay in business and accommodate consumer and employee safety concerns over cash. Approximately, 40% of Americans say they have used cash less frequently in 2020 since the onset of the pandemic.
Prior to the COVID-19 crisis, mass transit systems played an integral role in the daily lives of tens of millions of Americans who rely on subways, railways, and buses for their daily commutes. After months of sparse ridership, as cities slowly begin the return to normal activity levels, transit systems are looking to deliver safe, efficient, and reliable service to their customers.
For example, at the end of December, the New York City Metro Transit Authority (MTA) announced that it had completed the implementation of its contactless payments system. Now, every MTA subway station and bus in all five boroughs will sport a One Metro New York (OMNY) “Tap and Go” system. These systems eliminate burdensome turnstile and ticket booth lines, cut costs associated with printing tickets, while reducing the cost of fare collection by an estimated 30%.
While it is important for any mass transit system to accept multiple forms of payment, cash acceptance poses significant challenges. A Boston Federal Reserve study found that the cost of handling cash totaled approximately 22.9% of operating expenses for transit systems, while credit and debit card acceptance cost a mere 3.5%. Card acceptance significantly reduces costs associated with counting, storing, safeguarding, and transporting cash and limiting losses from mislaid or stolen cash. Furthermore, research conducted by Xerox outlined in a survey that approximately 65% of travelers worry about not having enough money to pay with cash-based systems, and another 43% find ticketing machines difficult to use.
For years, the payments industry has added value to both consumers and businesses through its investment in enhanced security technology such as EMV chip technology, contactless cards, and biometric authorization that has allowed different sectors to engage in crucial innovation. The new trends in payments accelerated by COVID-19 will have a lasting benefit to consumers in the conduct of their everyday lives. In an era where consumer satisfaction is essential, a system of contactless payments that is faster, safer and more efficient guarantees progress for all parties involved.