Ingenico gets on board with transit for digital diversification

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Transit systems have become an outlet for new payment technology for both challenger fintechs and incumbents, with terminal maker Ingenico targeting North America for open loop transit payments in the next year.

Paris-based Ingenico has spent the past two years managing changes to its own business and the larger merchant acquiring industry. The company has been developing new checkout options to respond to the growth of checkout-free retail and the impact of firms like Square and Stripe following a management shakeup at Ingenico in 2018.

While that churn’s been happening, Ingenico has made tracks with transit systems looking to reduce the cost of ticketing — placing its open OP2GO system in Rio de Janeiro, Taiwan, Madrid and Rome metros in 2019.

OP2GO uses card readers in collaboration with Visa to support contactless payments for closed- and open-loop cards, inspection devices, a payment gateway and acquiring services.

“People are using more contactless technology, phones, cards [and] wearables to make purchases, so they’ll want to use this stuff for transportation,” said Venceslas Cartier, global head of transportation and smart mobility at Ingenico. “We’re looking to answer that demand.”

Madrid metro
Madrid's metro is one of several using Ingenico's OP2GO system.

Paper-based tickets cost about 10 cents per journey for most transit systems, and Ingenico’s goal is to reduce this to about 4 cents, Cartier said.

“It’s a good approach for us,” Cartier said. “The volume can be very high, we’re talking about billions of transactions and a focus on hardware and transaction management.”

The U.S. lags behind Europe and Asia in transit coverage, with comprehensive rail transit limited to New York, Chicago, Boston, Philadelphia and Washington.

Yet these systems, and smaller ones such as those in Denver and Austin, have embraced new payment concepts to boost ridership. Denver, for example, has added Uber as a partner in anticipation of consumers using Uber to book transit as an alternative to ride-sharing at the airport.

New York’s contactless fare trials have exceeded expectations in tests, and the migration of transit systems from internally-controlled ticketing and payments an open system has become a major play for merchant acquirers.

Apple has made transit part of its usage targets for Apple Pay, and has deployed its new Express faster biometric authentication feature in London and New York transit networks. Mastercard is a partner of Apple Card, which also has a transit component.

Outside of the U.S., transit plays a role in the broader smart cities movement, which aims to link transportation, merchants, and government services to digital ID and contactless technology.

In just the past few days, Mastercard and Masabi have deployed mobile ticketing in Bucharest, and Transport for New South Wales reported contactless trips on Sydney area transit systems passed the 30 million mark since launching in 2017.

“As the transit authorities try to reduce the cost of ticketing, they’re looking to open payments,” Cartier said.

Masabi has detailed the challenges of getting transit systems to not only update ticketing systems, but also upgrade in a manner that creates standardized payment and ticketing automation that works across systems.

Ingenico contends its readers offer “retail” contactless payments in addition to the existing closed-loop readers, which can promote interoperability for all payment and transit schemes, as well as compliance with transportation and payment industry standards and protocols.

Ingenico has collaborated with transit-oriented technology firms such as Cubic, Conduent, VIX and others to promote interoperability among systems. Ingenico has additionally been a member of Visa Transit Ready program since 2018, and has worked with Mastercard in implementing MC’s rules for transportation, and with Apple to accept Apple’s Express.

The open-loop options for firms such as Masabi and Ingenico would make that progression easier, but increasing the role transit plays in the lives of most Americans is still a challenge.

“In order for transit to be a catalyst, however, it needs to have a significant percentage of the population using transit on a regular basis, and that isn’t the case in the U.S.,” said Thad Peterson, a senior analyst at Aite. “In transit heavy markets like New York, Chicago and Boston, I would expect that transit will accelerate contactless usage but not so much in Houston, Atlanta or Las Vegas. If manufacturers focus on transit heavy markets around the globe there’s an opportunity, but in markets like the U.S. where transit coverage is inconsistent, the opportunity is much less.”

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Point-of-sale Payment processing Ingenico