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BART Pilot Allows Users to Pay for Mass Transit Fares With Mobile Phones

San Francisco mobile phone-based pilot allows users to pay for mass transit fares and food.

A group of San Francisco Bay Area Rapid Transit (BART) riders now can pay for their fares using their mobile phones. From Jan. 30 to May 30 of this year, the group of 230 consumers will participate in a pilot that will allow them to "swipe" their Sprint mobile phones at BART fare gates to pay for their rides.

Participants also are able to use the phones to download content from "smart" advertisements located on BART station walls from Sprint and Jack in the Box restaurants. The smart content includes special offers and directions to the nearest Jack in the Box, where riders can use their mobile phones to pay for their meals. "Consumers have all the functionality in their handsets that they would have in their leather wallets," says Barry McCarthy, president, First Data Mobile Solutions (Greenwood Village, Colo.), which is providing the stored-value technology and payments infrastructure for the pilot.

According to McCarthy, the trial is unique because it encompasses payments, stored-value data for merchants and marketing messaging. Trial participants, selected from existing Sprint Nextel (Reston, Va.) customers, received Sprint trial phones from Samsung that include embedded near-field communication (NFC) smart chips. The phones, which came with an initial stored value of $48 worth of BART rides, will be reloaded automatically -- and wirelessly -- when the stored value drops below $10. The phones in the trial can be reloaded using credit cards or cash presented at Sprint retail locations.

U.S. contactless-enabled merchants

Hold the Bank

Although many providers are contributing to the pilot -- from the maker of the fare-collection equipment (Cubic Transportation Systems) to the NFC chip manufacturer (NXP Semiconductors) -- one notable entity absent from the trial is a bank. "Banks may think that anything to do with payments is solely the domain of financial institutions, but as we move into the future, there are many more players that will play a role in payments," McCarthy asserts. "The message to financial institutions is that there [is more competition] now."

While McCarthy says the BART trial likely will become a model for future mobile payments initiatives, Nick Holland, a senior analyst with Boston-based Aite Group who authored a report on the viability of contactless payments in the United States, says not so fast. When a mobile carrier comes together with a credit card company and a bank, according to Holland, "then it's something that is going to take [hold]."

In his report, Holland says a "card network/issuing bank would subsidize the cost of [mobile] handsets, essentially paying the mobile operator to ... promote the devices," and help drive adoption. Ultimately, however, the success of mobile payments will depend largely on merchants deploying the necessary infrastructure, Holland says, noting that only .5 percent of merchants currently can accept contactless payments.

First Data's McCarthy says BART retrofit every station to accept mobile payments, and every Jack in the Box in the San Francisco Bay Area now accepts mobile payments. First Data supports contactless payments at about 7 million merchant locations in the United States, McCarthy adds.

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