Visa tests smartphone payments in mass transit

Visa credit cards are displayed in Washington October 27, 2009. REUTERS/Jason Reed

NEW YORK (Reuters) - Visa Inc is participating in a test program started by rival MasterCard Inc that will let consumers pay for some New York subway tickets by tapping a credit card or a smartphone at the turnstile.

MasterCard said in June that it was working with New York and New Jersey mass transit agencies on a six-month pilot program to test “contactless” payments on certain commuter routes.

The program allows consumers to buy a subway, bus or train ticket by tapping or waving their credit or debit card, or a sticker attached to the back of their phone, over a turnstile electronic reader, instead of buying a separate ticket.

The program was initially exclusive only to MasterCard users, but is now open to Visa. The world’s largest credit and debit card processing network plans to say on Tuesday that consumers can now use their Visa cards, or in certain cases their smartphones, to buy some subway, train or bus tickets in New York and New Jersey.

Visa told Reuters in August that it was working with Bank of America Corp to test smartphone payments in New York.

Bank of America’s New York pilot-enabled phones “can be used for contactless payments on mass transit,” spokeswoman Tara Burke said on Monday.

Visa also started a separate test of contactless transit payments in Los Angeles this month, the company plans to say on Tuesday. Consumers in that program will have to buy special prepaid debit cards, which they can tap to ride a subway or bus, and which can also be used to buy goods or services from other retailers.

Reporting by Maria Aspan, editing by Dave Zimmerman