Innovation and flexibility aren’t attributes often associated with public transportation. But by deploying cutting edge open payment ticketing technologies, transit operators can give their customers greater flexibility and create a more engaging transit network.
New technology has made paying for goods and services as simple as the tap of a bank card or wave of a smart device at the point of sale.
As the implementation of this new banking and mobile technology grows at consumer level, more businesses in every sector are starting to see the benefits of opening their payments channels. Retail, FMCG and fast food businesses that have naturally low value, high-volume payments have been among the quickest to roll out these new systems.
But it’s in the passenger transport sector where the desire for speed, simplicity and payment flexibility could see open payments systems deliver a significant impact on ridership and customer satisfaction.
Outdated and clunky transit ticketing systems can be a disproportionate drain on resources and a major cause of frustration for commuters. While traditionally, transport authorities have been reluctant to adopt the latest technology, there are some forward-thinking operators around the world leading the way.
In recent years, cities from London to Cape Town and Salt Lake City have piloted and launched new transit payment and ticketing systems that allow passengers to use contactless credit or debit cards, mobile devices or even their student card or other ID card, to pay for their journey.
These new automated fare collection (AFC) solutions are called ‘open-loop’ or account-based systems provide a greater degree of flexibility than previous transit ‘closed-loop’ or cash-based schemes.
Closed-loop transit systems often rely on proprietary payments structures that allow commuters to pay their fare and authorise access to travel using smart cards or tokens that are only valid within that scheme. These systems have pretty much become the standard in modern transit networks due to some efficiencies over older paper-based and magnetic ticketing systems. But they do lack flexibility and commuters are forced to use a smart card that is specific and only valid on a particular transit network.
In an open-loop system, the user can pay for travel using their existing credit, debit or pre-paid card, Near Field Communication (NFC) mobile device or any other NFC enabled payment media, eliminating the need to carry a separate transit specific card.
The shift to EMV as the contactless card standard of choice, coupled with the global adoption of contactless payments has overcome two major hurdles to open payments in transit: creating a clear global standard for developers to design to ensures worldwide interoperability; and building trust in contactless payments – which helps with acceptance amongst customers and businesses.
The US is the last of the G20 nations to commit to EMV, joining more than 80 other countries including Australia, Canada, Brazil and much of Europe and Asia in doing so. It is estimated that more than 45% of the world’s payment cards now use the EMV standard (around 1.62 billion cards) and that 76% of payment terminals are also EMV enabled (around 24 million terminals).
The world’s biggest smartphone companies have also invested heavily in their own NFC/EMV payment platforms with the launch and adoption of Apple Pay, Google Wallet and Samsung Pay growing around the world.
This recent push by the global tech giants could mean the long-awaited mobile payments revolution is coming sooner rather than later, and transit operators need to prepare.
Open architecture fare collection systems are rapidly becoming a focus in large urban cities with growing public transportation needs due to their scalability, ease of integration and the opportunity to partner easily with other surrounding regional transit partners.
Steve Gallagher is CEO of Vix Technology