Subway To Accept Contactless Payment as it Preps for Google Wallet

The giant Subway sandwich shop chain has said it will accept contactless payment at more than 7,000 locations in the United States, as it gears up to support the Google Wallet.

Subway, the largest restaurant chain in the United States in terms of outlets with more than 24,000 locations, is only committing to accepting contactless at about 30% of its U.S. sandwich shops for now, a spokeswoman told NFC Times.

MasterCard Worldwide announced the Subway rollout today, saying that the 7,000-plus stores will be ready to accept MasterCard's PayPass contactless payment application by the end of the first quarter of 2012. The terminals will also accept other major contactless payment brands, including Visa payWave.

The rollout is a boost for PayPass, which is accepted at about 140,000 merchant locations in the United States, including about 12,000 McDonald’s restaurants.

“It is definitely a big step forward in that category of merchants,” Mario Shiliashki, MasterCard’s senior vice president and group head, U.S. emerging payments, told NFC Times. “Our goals aligned with Subway’s–a convenient, fast and ultimately better (checkout) experience.”

But the Google Wallet launch and the prospect for contactless-mobile payments in general–not contactless payment from cards–are driving Subway’s move to accept PayPass and the other major contactless applications in the United States.

Both Subway and MasterCard are participating in the Google Wallet, which officially launched Sept. 19. Subway is one of 22 merchants so far supporting the wallet or planning to do so, according to Google. A Subway spokeswoman indicated the 7,000 stores would be concentrated in five cities, New York, San Francisco, Chicago, Los Angeles and Washington, D.C. These are the cities where Google Wallet is first rolling out.

“This initial 7,000-store rollout is aimed to gain consumer acceptance of mobile payments and to address any technical issues that may come up,” the spokeswoman told NFC Times. She added that the purchasing cooperative for the 7,000 franchised Subway outlets that is overseeing installation of the contactless terminals views the rollout as sort of a trial run. It will “look to the results to drive a decision regarding future rollouts.”

She added, however, a larger rollout could take place in 29 states.

The 7,000-plus stores would not accept contactless mobile coupons or other offers from NFC phones at first, waiting until “we have a bigger mobile footprint,” she said. That might mean Subway is waiting for more phones to support the Google Wallet. At present, only Google’s own Nexus S 4G, sold through wallet partner Sprint, can run the wallet. And only four merchants at present accept coupons or other nonpayment applications in the Google Wallet.

While the contactless card rollout in the United States began more than six years ago, the technology has yet to take off in the United States. Backers are counting on the day when consumers can access their contactless payment, offers, ticketing and other applications in such NFC-based wallets as the Google Wallet and a similar wallet planned by the Isis mobile operator joint venture to spur interest among both consumers and merchants.

MasterCard’s Shiliashki said mobile offers and other nonpayment incentives on NFC phones will be important in helping to excite consumers and merchants, but he added that “offers is not necessarily the first thing that merchants in quick-service restaurants look to.”

They are also interested in speed and convenience, he said.

Subway has more than 35,000 locations worldwide, making it perhaps the largest restaurant chain of any type in terms of outlets. 

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