Why it's time for mass transit operators to embrace contactless and mobile ticketing

As pandemic-related restrictions start to lift in many parts of the world, mass transit operators are keen to attract riders back to buses, trains, trams and metros. Many operators are looking to stem the revenue losses they've experienced over the past year or more as people worked from home and leisure travel dwindled. At the same time, they're keen to achieve longer-term efficiencies, by making their operations more cost effective.

During the pandemic, many of us have happily adopted new ways of paying for things, such as contactless EMV? cards, digital wallets, and smart devices and wearables. In fact, these contactless and mobile payment methods have quickly become mainstream.

So there's an opportunity for transit operators to boost ridership by offering contactless and mobile ticketing options that make it simple for people to tap to ride.

Giving riders more choice

Of course, operators will want to retain all their current payment and ticketing options alongside any new alternatives they propose. After all, it's about giving riders more choice, not less.

Many operators have already deployed closed-loop card systems, which offer some unique functionality compared with other payment methods. For example, you can co-badge them so that cardholders can use their cards to make purchases from other retailers.

And there will always be some people who want or need to pay for their tickets in cash — because, for example, they prefer the anonymity cash offers, or they don't have a credit card or smart device.

But adding contactless (open-loop) tap-to-ride solutions alongside cash-based ticketing and closed-loop cards can help to break down more barriers to using public transport. Riders can simply hop on and off the bus, train, tram or metro without needing to find a ticket machine, obtain a closed-loop card, or understand the fare structure. In particular, it's a great way to attract occasional riders and city visitors, who might be so daunted by all these complexities that they find some other way to travel.

Operators with open-loop systems can additionally integrate prepaid EMV? cards that can be a way to introduce under- and unbanked people to the concept of payment cards. As well as helping to drive more inclusivity in mass transit, these cards can also spark those individuals' participation in the wider financial system.

Reducing operational costs

The other good news about contactless and mobile payment methods is that they can enable operational cost savings. We all know that handling cash comes with high costs, and that cash in the field is actually a liability until it's banked. And closed-loop systems, with their specific standards and proprietary technology, usually cost more to operate than open-loop solutions, which rely instead on international EMV? standards and universal technology.

According to Transport for London (TfL), as much as 14 pence in every pound collected is spent on operating the Oyster system. In comparison, open loop can be operated for as little as 10 pence. Given revenues of over ￡3 billion, this amounts to savings of over ￡100 million.[1]

One very interesting thing we're seeing here at Cybersource is that our mass transit contactless transaction volumes are already higher than they were pre-pandemic, even though ridership isn't yet anywhere close to pre-pandemic levels. So where tap to ride is available, it seems to be a popular option with riders.

Future-proof solutions

There's a great deal of technology available to mass transit operators who want to provide riders with a broader choice of payment options. Beyond contactless EMV cards, some operators and their solution providers are exploring other innovative ways to pay, like QR codes and smart ticketing apps.

We're also seeing opportunities for operators to build on what they already have, such as upgrading validators originally installed as part of a closed-loop system to make them work with contactless open-loop EMV? cards.

As a global payment platform, Cybersource provides an agnostic foundation for acquirers and solution providers in the mass transit payment and ticketing space — and in the wider urban mobility landscape. Our objective is to give transit operators (working with their solution providers) a stable, future-proof platform on which they can build solutions that help control their operating costs, mitigate their exposure, and allow them to provide a range of convenient, compelling and frictionless payment and ticketing experiences for riders.

Bringing the experience to life

We’re helping transport operators worldwide support a simpler, safer urban mobility experience. Most recently in Portugual, we worked with partners to introduce the first contactless payments for public transport in Porto. Whilst in the US, we worked with regional operators in Santa Barbara to roll out tap to ride on a selection of bus routes.

To find out more about these implementations and more please feel free to contact me

[1] Source: https://www.intelligenttransport.com/transport-articles/78096/open-loop-payments-united-states/