Public transport users long for a simpler payment experience. Here's how to give them what they want

People want a more convenient, frictionless experience of mass transit systems that reflects their increasingly digital lifestyle, according to a recent Visa survey.[1] Respondents highlighted four key frustrations:

·??????Not knowing how much to pay for their fare (44 percent)

·??????Long payment queues (52 percent)

·??????Cash-only payments (41 percent)

·??????Needing different tickets for each different types of transportation (47 percent)

Even more interesting, perhaps, is that fact that 27 percent of respondents said they would use mass transit systems more if payments were easier. Operators have a clear and actionable opportunity to create better payment experiences that will help get more people on board.

What form do better payment experiences take?

One thing we've seen during the pandemic is people quickly becoming comfortable with contactless digital payment options. Visa recently reported a 30% year-over-year growth in global contactless payments[2]. And in a recent back-to-business survey conducted by Visa, 65 percent of consumers expressed a preference for contactless payment options, with half saying contactless payments felt safer.[3]

When it comes to contactless transactions for transit fares (known as open-loop tap-to-ride) Visa global volumes have increased nearly six times since the global low in April 2020.[4] That rate of growth outpaces the number of returning riders, indicating that a higher proportion of riders than before are tapping to ride where the option is available.

What's so great about open-loop tap-to-ride?

Open-loop tap-to-ride meets riders' desire for a simpler, more convenient way to pay for journeys made on public transport. When your contactless EMV? bank card (or your mobile phone or wearable device with its digital wallet) is your ticket to ride, using public transport becomes effortless. You don't have to carry cash, queue to buy a ticket, understand the fare structure, or get hold of the closed-loop card or app for each transit system you use. Instead, you can simply tap to ride on any mass transit system in any city where that option is available.

For riders concerned about health and safety, open-loop tap-to-ride means there's no need to touch a ticket machine, or handle cash or paper tickets. For those who would take a taxi or their own car to avoid queuing and crowds at stations or bus stops, open-loop tap-to-ride can streamline the public transport experience and make it a more attractive proposition. And for people commuting to work less regularly than before, open-loop tap-to-ride helps ensure they still benefit from the best-value fares they previously got with a season ticket or travel pass.

There's little doubt that the pandemic has accelerated years of change into just a few months, and that contactless is fast becoming many people's preferred way to pay. Mass transit operators that roll out open-loop tap-to-ride solutions alongside existing payment options can take advantage of this preference to support their post-COVID recovery. A further benefit is a reduction in operating costs, as contactless payment transactions cost less to manage than paper tickets and proprietary systems.

Tap-to-ride on transit systems can also help boost the local economic recovery. Visa research shows it can bring a 15 percent lift in transactions to merchants in the surrounding neighbourhoods.[5]

And for transit operators concerned about inclusivity, contactless payments can be made using prepaid EMV? cards. In this way, open-loop tap-to-ride can provide under- and unbanked individuals with the same enhanced experience as other riders, while potentially acting as a gateway to the broader financial system.

How to adopt open-loop solutions

For transit operators who are ready to capitalise on the digital and contactless payment opportunity, there are four main components to consider:

1.???The terminals or validators at stations and on buses need to be enabled for contactless payments.

2.???Those terminals or validators connect to a back-office system that aggregates the number of taps a rider makes during the day and calculates the best fares.

3.???The back-office system sends the financial transactions to a payment gateway, such as Cybersource.

4.???The payment gateway connects to the acquirer banks that authorise the transactions at the issuer banks.

So while the solution is simple at the front-end for riders to use, there's quite a lot of complexity behind the scenes. Tokenisation is a central capability for enabling the frictionless rider experience, as well as helping to protect against fraud and supporting transit operators compliance with data protection regulations.

For a successful solution rollout, transit operators should work with proven payment experts and solution providers who have a track record of innovation and reliability, and combine technological expertise with global and local transit knowledge. Operators should also be aware that implementing contactless tap-to-ride solutions can be a lengthy, but that Cybersource — working with trusted partners — can make it happen in a matter of months.

And looking to the future, we believe that open-loop tap-to-ride lies at the heart of the bigger urban mobility picture. It offers the seamless payment experience that makes it feasible for cities to integrate multiple transport types into coherent door-to-door journeys, enabling them to realise their vision for Mobility as a Service.

If you're a transit operator or solution provider, feel free to contact me to hear more about Cybersource capabilities that support open-loop tap-to-ride, and about some of the projects we're involved in around the world.

Bringing the experience to life

We’re helping transport operators worldwide support a simpler, safer urban mobility experience. Most recently in Portugal, we worked with partners to introduce the first contactless payments for public transport in Porto. In the US, we’ve partnered with California operators to enable tap to ride – for example, on a selection of bus routes in Santa Barbara. Whilst in Japan, we’ve helped enable contactless payments on a variety of bus, train and subway routes across cities such as Osaka, Fukuoka and Hokkaido.

To find out about these implementations and more please do contact me.

?[1] Source: Visa Study: The Future of Transportation Mobility in the Age of the Megacity.

[2] Source: Visa Q2 Earnings call transcript, April 2021

[3] Source: Visa Back-to-business Study:https://usa.visa.com/dam/VCOM/global/run-your-business/documents/visa-back-to-business-study.pdf

[4] Source: VisaNetdata 2021

[5] Source: MST riders can now tap to pay with Visa | Mass Transit (masstransitmag.com)

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