The British government and a trade association are trying to nationalize open loop contactless payments for transportation, a project of staggering scope designed to provide seamless rider transactions for buses, trains and local mass transit systems.

"We are building on the success of the [Transport for London] contactless projects that were also facilitated between the government and payment card industry," said Briony Krikorian, a principal policy advisor for the U.K. Cards Association, which represents the country's entire payment card acquiring market and a vast majority of credit and debit issuers.

The Smart Cities Partnership, which covers regions outside of London such as Yorkshire and Nottingham, is also part of the initiative, with funding coming from the national Department of Transportation.

Mobile wallets, which can include open loop cards and transit-specific cards, provide a way to integrate and automate ticketing among different transportation modes. But interoperable open loop transportation payment systems, including regional initiatives in parts of the U.S. and Canada, have been slow to develop, hamstrung by infrastructure challenges and consumer adoption of contactless payments.

The U.K. initiative would be national, including Scotland and Wales, and include government support and card participation, which Krikorian said should contribute to its success. The card association and the government are creating a framework that will allow any transportation operator in the U.K. to operate a contactless payment system that would work similar to the London system and would also be interoperable. Trips can be linked together via a single payment that can cover fare for long-haul trains, commuter rail, metro, tram and bus travel.

"Rather than buying a ticket at a machine, you are at the gate with a contactless debit or credit card; you tap that and go straight through rather than having to use a card or a paper ticket," Krikorian said.

The initiative is not a mandate like EMV was, and local transit systems have to opt in. The national system would not be a rip-and-replace project for local transportation systems, but would serve as another option beyond legacy payment modes to make it easier to navigate distinct transportation systems.

"We can provide encouragement to implement this as part of their customer payment package," Krikorian said.

The change would not require a major adjustment for riders, who typically use a smart card for contactless payments. Contactless cards are also widely accepted in the U.K. for other types of payments.

The London transit system has been gradually deploying contactless payments for several years. Late in 2014, it opened its system to card payments.

And after some early hiccups with the speed of NFC, London deployed the technology in 2014 and it's now the primary way people pay to use London's Underground and other transit modes in the metro area.

A national interoperable system would be welcome, said Alex Stewart, the director of international business for Bytemark, which is supplying the technology for a newly launched single ticket mobile app that covers different bus operators in Scotland. The Scottish system would allow riders transferring between different operators' lines to use the same app to pay their fare for the entire trip.

"There is a hunger for app payments in the U.K.," Stewart said. "The nice thing is people don't have to worry about the different operators' fares."

One hurdle to interoperability is security protocols, which can differ between systems, Stewart said.

"It's not a problem that they're trying to make the system secure, but it's being done by bits and pieces," he said.

The national open loop payment system will require transit systems in the U.K. to deviate from the path on which they evolved, according to Gareth Lodge, a London-based senior analyst at Celent.

"Each [operator] had started its own ticketing solution in the past, but almost without exception, it started as a closed loop system, in the same way as a store card works," Lodge said. "That was because the cost of an open-loop system was too expensive and the requirements too hard."

To extend the London system nationally will be a challenge, Krikorian said. Different systems have different ways of taking payments, ranging from existing contactless systems to card turnstiles to older paper-based ticket systems. And on some longer trips, staff still manually punch tickets after the passengers board.

"In London there's a gated environment. In Manchester you have inspectors, for example," Krikorian said, adding local projects would be necessary to upgrade the systems to accommodate contactless payments.

There are also large differences in fares between municipal mass transit and long haul train travel, as well as disparities in how train and bus networks are classified that will require cooperative agreements between systems that are more about culture than technology.

"In the U.K. train systems are a franchise system and are nationally regulated. But buses have open competition. So it's very complex," Krikorian said, adding risk controls will be developed to manage open loop systems. "In an open loop environment, you don't know how much a longer trip is going to cost. That's also the case with smart cards, but the smart cards are preloaded with funds, whereas bank cards are not."

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