Open payment: just how did the New York pilot fare?

Last Thursday, Fast Company published an article which revealed some statistics from MTA New York City Transit’s involvement in the 2010 tri-agency regional open payment pilot. This is the first time the agency has shared statistics from the pilot—and so far, the agency’s partners in the pilot, the Port Authority and NJ Transit, are keeping quiet.

At first glance, the stats look miserable: in such a large and tech-savvy city, how could so few people have used the open payment pilot? But as Fast Company points out, when you look at the released data, there are “few angles that offer apples-to-apples comparisons”. In fact, there’s a lot to keep in mind when considering the pilot’s performance.

The first point to consider—one which Fast Company does a good job of highlighting—is the small scope of the trial, considering the size of New York City’s subway and bus networks. In the subway, the only stations equipped for the pilot were those along the Lexington Avenue Line. While the Lexington Avenue Line may be the system’s busiest, there were still plenty of subway and bus riders left out of the pilot.

Beyond that, the pilot wasn’t just about convincing riders to give up their MetroCards. As the MTA’s Aaron Donovan explained, the point of the trial was not to convert huge numbers of riders to open payment, but simply prove the technology could be made to work in the harsh transit environment of New York City. As Donovan described, the pilot proved the viability of a regionally interoperable system, as well as that the system could be operated securely, and that the equipment would indeed stand up to the physical environment.

The next point to consider is that market penetration for contactless credit and debit cards, along with NFC-enabled mobile phones, is still generally poor. Worse, many associate contactless payment not with convenience and speed, as the industry would prefer, but rather fraud and “hackers stealing your credit card number right through your wallet”. The fraud concerns aren’t entirely unfounded; Kristin Paget’s recent demo has shown that. Logically, the risk of fraud shouldn’t stop people from using contactless payment cards—but who ever said consumers are logical?

On the subject of malfeasance, there’s a third point to consider: open payment asks people to get their wallet (or, worse, their mobile phone) out at the turnstile, and that by itself is a risky proposition.

When the chief of the Metro Transit Police Department, Michael Taborn, is featured on a continuous loop in Metro stations warning passengers to keep electronic devices out of sight, lest they be snatched right out of their hands, it’s going to be hard for WMATA to encourage passengers to pay for their transit fares using an NFC-enabled device. For that matter, it may even be hard to convince them to get their wallets out at the faregate.

At this point some open payment advocates would ask “how about a key fob?”, but the reality is that few banks offer key fobs or other form factors with their contactless credit and debit cards. Beyond that, changing the form factor doesn’t solve the underlying problem; it’s what the payment device represents.

If you lose a MetroCard, or a SmarTrip card, or any of the other stored-value cards used by transit authorities around the country, you have lost the value on the card, and nothing more. But if you lose a contactless payment device, whether it’s a fob, or a card, or an NFC-enabled mobile phone, you stand to lose a lot more. Sure, you should get your money back, eventually, but as anyone who’s ever lost their wallet or been a victim of credit card fraud can tell you, it can be an arduous process.

Getting riders to adopt open payment in substantial numbers will take a much larger marketing effort than New York’s open payment pilot featured. It’ll also take industry cooperation—both to get contactless-enabled cards and devices in users’ hands, and to convince them that their money is safe.

If you’re looking to find success or failure in the trial, look past the ridership numbers, because rider adoption simply wasn’t the point of the trial. For the MTA, the pilot was a success. The pilot proved that neither steel dust, nor sweltering heat, nor mammoth potholes could kill Verifone’s equipment, and that Cubic’s turnstiles, which are almost 20 years old, could be adapted to accept the new hardware. The pilot proved that agencies whose cooperation on fare collection had historically been limited could work together to provide riders with an integrated fare collection system.

So, are these results the final verdict on open payment? Hardly. While this pilot proved certain key principles in New York, cities evaluating open payment today still have a lot to consider. There’s still the debate between closed-loop and open-loop reloadable cards, and the issue of migrating existing proprietary fare media, like WMATA’s SmarTrip and Chicago’s Chicago Card, both of which currently use the now-discontinued GO CARD. WMATA intends to adopt the MIFARE Plus as a stopgap solution, but the cards will still be tied to the proprietary Cubic Nextfare system. There’s also the matter of financing open payment systems, and the serious considerations surrounding unbanked riders.

Finally, let’s not forget that one of the partners in the open payment pilot has actually kept their part of the pilot running: NJ Transit continues to accept contactless cards; that may be the clearest indicator of success so far.