The transit card may be on its way to joining tokens in the dustbin, as huge contactless payment deployments in cities like Beijing add flexibility for commuters and reveal the broader utility of Near Field Communication.
Gemalto is deploying an NFC mobile payment system for the Beijing mass transit system in partnership with China Mobile. The project is of massive scope on at least two fronts: China Mobile is one of the world's largest telcos with a subscriber base of about 800 million, and the initial deployment in Beijing will serve about 22 million commuters.
"The Beijing deal represents the next step in NFC use in the transit environment by removing the need to get specialized cards like the Oyster (London) card, and allowing consumers to easily make payments with their phone or contactless-enabled payment card," said Tristan Hugo-Webb, associate director of the International Payment Advisory Service at Mercator Advisory Group
The recurring nature of the transit payment can demonstrate the benefits mobile payment technology, which can encourage adoption for other types of payments, said Jean-Claude Deturche, the senior vice president of mobile financial services for Gemalto, which hopes the Beijing deployment will lead to other projects of similar size.
China Mobile is using Gemalto's Gemalto's UpTeq Multi-tenant SIMs, which can host other services such as couponing, loyalty and access controls. Gemalto also has a separate telco partnership in Taiwan, and is involved with the telcos behind the Softcard mobile wallet in the U.S.
In China, Gemalto hopes to build a single mobile payment download that can be used to pay for travel across the country.
"All of the big cities in China have similar infrastructure," Deturche said, adding Gemalto was not ready to say which deployments would follow the Beijing project.
Beijing posed challenges, Deturche said. The collaboration between the mobile operator and transportation authority had to be managed, as did the variety of mobile devices the consumers use to execute payments, he said.
"Each of these phones requires a different type of SIM card," Deturche said, adding the testing period for the project took about six months, which was longer than normal. "In a way we have been fortunate that there was formal infrastructure already in place to accept contactless payments."
Other transit systems are moving away from cash toward contactless and mobile payments. London's transit system is incrementally removing paper-based payments from different transport modes, and is also expanding beyond its traditional reloadable card accounts, after some initial reservations about using NFC for transit payments.
"Transit is arguably one of the best situations for NFC technology because it relies on speed and efficiency to get customers through the system," Hugo-Webb said.
And NFC use in transit systems can be a catalyst for greater contactless use, Hugo-Webb said.
"It's not surprising that the U.K. has become a global leader in contactless payment volume given that consumers have had years of experience with the Oyster card," Hugo-Webb said. "It would not be surprising to see contactless use in China really start to take off in the next year or two."
The only thing hampering NFC payments outside of transit systems is the lack of terminals that are NFC enabled, which is a global issue, Hugo-Webb said. "While in China the number of contactless enabled terminals is growing, it still represents very much the minority of terminals overall. So while the Beijing deal is great for NFC, the full effects of the announcement won't be felt for a couple years."