Mastercard Targets Mexico City, Where Cash Is King Ali Withers - Bloomberg
go to original August 17, 2017

Mexico City is joining major cities across the globe by taking its first step toward cashless public transportation. Or at least Mastercard hopes so.

This November, the card company will introduce a contactless, transit-enabled debit card for Mexico City’s Metro, the Sistema de Transporte Colectivo, allowing riders tap-and-go payment tied to their bank accounts. It’s an effort by Mastercard to capture millions of daily cash transactions while helping the government promote broader participation in the financial system.

There are a few problems, however. A large contingent of Mexico City residents don’t have bank accounts. And any expansion of the initiative beyond the Metro would be hobbled by the fact that a large number of business only take cash.

A normal ticket on Mexico City’s heavily subsidized Metro, the fifth-largest in the world, costs 5 pesos ($0.25), which makes it the cheapest. Riders can choose between buying a paper ticket or a refillable card that can hold up to 120 pesos, but both options are only able to be purchased in cash from a staffed ticket booth.

Mastercard says it will update existing software in the Metro’s turnstiles so card-readers can differentiate between refillable cards and debit cards. Mastercard’s beneficence is part of an investment strategy, one with an eye toward revenue that would come with a cultural shift away from cash. The card company rolled out a similar partnership in Colombia with Bogotá’s express bus service, TransMilenio. Mastercard says it has issued 1.5 million cards there and is in talks with 16 additional Latin American cities.

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