City Transit Pressing On Full Speed Ahead With Contactless Payments

17 Sep, 2020 . 4 minutes



As the international economy is picking up the pace with digitization, transit operators are now looking to contactless technology as a new way to redefine public transportation.

The IRS-backed nonprofit foundation The Eno Center for Transportation saw a transitional demand for customer health and safety owing to the high risk of Covid-19 in public transportation. In an early March survey, 48% of Americans said public transportation posed a high Covid-19 risk – encouraging operators to invest in contactless payments services.

Metro, the U.S.’s third-largest transit service, responded by launching a virtual fare via both Apple Pay and its new Metro app in Apple’s App Store with an Android version on the way. With the contactless feature commuters could tap and go by holding their phones to a payment unit. Metro spent $20 million to develop the mobile app and fare collection systems with auto-reload features, power and guaranteed security. The spending is considered by experts to have good prospects. Visa noted a steep rebound in its contactless transactions for transit fares in May and June – accumulating an increase of 187% from January. Visa now has uplifted more than 500 tap-to-pay projects worldwide with more on the way. Apple said other transit systems in the U.K.’s London, China, Hong Kong and Japan were implementing similar contactless fares with Apple Wallet. Social distancing has influenced a different customer-payment behavior. Mastercard Inc. polling showed a 46% worldwide growth of contactless payments in the first quarter. This outlook is likely to inspire long-term use – 74% of consumers will continue using contactless payments after the pandemic. Of 17,000 consumers in 19 countries, 82% of Mastercard’s survey respondents in April considered contactless payments as “the cleaner way to pay.”

From digital wallets, virtual check-ins, account-based systems to near field communications, the payment industry offers extensive options to remove as much friction as possible during transactions. This transition has prompted travel and transport industries to look at how they deal with shifting customer behavior. Thus, extending the partnership with large players in the smart payments sector like Visa and Apple Pay is a new reality. Fernando Souza, vice president of Visa’s Inc.’s CyberSource, saw a rising number of \contactless projects for transit systems around the world. “They are calling on us to do preparations faster than ever before,” he said to PYMNTS.com.

U.S.-based Cubic, for instance, joined forces with Visa to launch a smart travel option with an integrated network on an international scale. The project will allow commuters in cities with high mobility like London, New York and Sydney to get around easier with contactless payment on rail and bus. Contactless is already around in London. The efficiency rate of Transport for London’s transit system in handling around 30 million daily journeys was higher after partnering with Mastercard to opt-in contactless payments. Half of all tube and rail journeys have been applying contactless – cutting fare collection cost from 14% to 9% in 2019. In March, Transport for London’s passenger numbers fell 86% compared with the same period last year. But that has started to pick up since Transport for London geared up its contactless movement in the same month by signing a £2 million (around $2.5 million) sponsorship deal with Google.

Embracing contactless, however, will not be enough. Cubic suggested the implementation sooner or later must be integrated with smart edge technologies and expanded into a scalable transport network hub to meet evolving market demand. ResearchAndMarkets reported in March international contactless payments are at approximately $10.3 billion this year and expected to see an 11.7% compound annual growth rate to $18 billion in the next five years. The forecasted growth is not the only indicator of rising popularity in touchless payment. Online news portal NFCW noticed that, as a result of rising contactless transaction activity, 48 countries must add up the limit with the average cap increase at 131%.

Mobility-as-a-service platform Moovit took the call by getting public transportation council NEORide and leading fare payment platform Masabi on board. Replacing the need for direct contact payment with advanced online fares and QR code scans, the multifunctional app will enable commuters to plan, pay and navigate more easily. Moovit aims to generate seamless integration of mobile ticketing and contactless options for public transit users in the Midwestern U.S. Yovav Meydad, Moovit’s chief growth and marketing officer, said it won’t stop adapting to changing habits. “We hope to help transit agencies move toward digitization. Especially in the face of the coronavirus, contactless payments are an important technology to help restore rider confidence and increase ridership,” Yovav told Global Fleet, a fleet-management and news platform.

In the wake of the economic downturn, contactless payments are projected by experts to grow for much longer and help usher transit into an exciting future.




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