Building Acceptance Not Always Easy for New Payments Tech

By Maria Bruno-Britz

Visa recently announced that it plans to install its swipeless credit card technology in New York City cabs. Visa payWave readers will be situated in the back of the taxis to allow passengers to pay with the wave of a card, and even include a tip.This sounds like a great idea for the convenience aspect alone. I usually try to have as close to exact change as possible when paying a cabbie, so the fact that I could pay with a "wave" seems ideal to me. By the way, the readers will also accommodate traditional "swipe" transactions.

That said, have you ever gotten into a cab (not necessarily in New York) that claims to accept credit card payments? I'd like to know what the reaction of the cabbie was. On the three occasions I did so (I believe it was in Orlando), the drivers were very quick to point out that either the reader didn't work or that they weren't accepting credit card payments-period.

I applaud Visa for its efforts. It's probably working with the NYC Taxi & Limousine Commission to help outfit cabs with the devices. But I'd like to know how the cabbies took to this announcement. I can't say I blame them for wanting cash payments, especially for their tips. Cash is tangible. They can hold it in their hands. Credit cards are a new animal to them as "merchants," however. What kind of battle will Visa have on its hands in implementing this technology, or, more appropriately, in getting the cabbies to accept the technology?

Acceptance seems to be the clincher when any new technology is introduced in the payments space. Speaking about the merchant/retailer side of things alone, innovative programs that would provide consumers with added convenience and security (and, it follows, increased merchant loyalty) are often stymied by the inability of the merchants to accept them. Often what is at issue is the cost of upgrading their infrastructure at the point of sale. Look at smart cards, for example. Chip card proponents have been pushing for this technology to be introduced in the U.S. for payments to replace mag stripe cards for years. However, given the millions of dollars that merchants would have to spend to upgrade their infrastructure, chips cards haven't caught on in this country. No one has made a sufficient business case to convince merchants to make the leap and provide this potentially more secure technology to customers.

If Visa is able to pull off its plan with NYC cabs, I think it would be a big win for the payments industry. This is not just about the perceived speed of contactless payments-it's about the move toward cashless transactions for those payments under $25. Cards (contactless and otherwise) are gaining acceptance at fast food restaurants, for example. So why not cabs too?