Contactless payments keep cities in touch with future mobility demands

In order for inner-city travel to be a painless procedure, Mobility as a Service (MaaS) providers must work with public transit operators to adopt new payment solutions. By Freddie Holmes

Companies known for providing credit and debit cards may not be the most obvious stakeholders in the future of mobility, but the rollout of new mobility services could see the physical ticket resigned to the history books. In its place will be the digital wallet, which many commuters already use through contactless card and smartphone payments.

Today, the process of travelling across a city can be draining. Cycling through various screens for a printed ticket at an automated kiosk takes time, requires excess infrastructure and makes the convenience of private vehicle ownership ever more attractive. Queuing up at the ticket office is not much better, and adds staffing costs to the equation. In order to remove single-occupancy cars from the city centre, public transit must be fast, reliable and seamless. This is where contactless payment systems can make a real difference.

“Why should engaging with a city be any different to buying a cup of coffee or a cinema ticket?” asked Matt Blanks, Transportation Lead at Mastercard. Blanks has previously been involved with Oyster card projects in London, as well as the 2012 Olympics. He leads a team that has worked with various transport operators around the world, such as Singapore’s Land Transport Authority (LTA) and Transport for New South Wales in Australia.

People don’t want to think about how they pay for their transport, and many cities add unnatural pain points to a public transit system

Contactless payment technology has been a breath of fresh air for many travellers. In the UK, 50% of all public transit transactions in London are now contactless. It may seem a simple tweak, but it has allowed for a raft of other improvements downstream. “The city has been able to close its ticket offices, remove cash from buses, and reutilise those resources to run the night tube,” explained Blanks. “A big challenge for cities is handling an increase in demand for transport, but with no increase in budget. We look at more efficient ways to leverage global products to handle that.”

Payment in the future of transportation

Based on 2018 data from the United Nations, 55% of the world’s population lives in urban areas. By 2050, that figure is expected to hit 68%. Much of this urbanisation will be localised within Asia; Tokyo is currently the world’s largest city with 37 million inhabitants, and New Delhi is expected to overtake the Japanese capital by 2028.

Around 43 megacities—those with more than ten million inhabitants—are also expected to form around the world by 2030. While issues such as housing, energy, employment and other basic services will take precedence, mobility is also a key indicator of economic and social prosperity. In order for residents to utilise public transportation or other mobility offerings, those services must be affordable, accessible and simple to use.

“With the pressure this massive urbanisation places on cities, we have seen various consumer challenges and friction points,” said Blanks. “We have learned from the retail sector how consumer interactions can be simplified, and saw transit as a significant way to help make cities more efficient and open for residents and visitors joining them.”

Why should engaging with a city be any different to buying a cup of coffee or a cinema ticket?

Today, many travellers no longer need to queue up for a physical ticket, and instead can use a contactless card in their wallet or smartphone options such as Apple Pay, Google Pay or Samsung Pay. “You can use those directly on transit; it is about breaking down barriers to interacting with a city and making it quick and easy to travel,” explained Blanks. “It sounds cliché, but transportation is the lifeblood of a city. If people cannot use the Jubilee line on the London Underground, the Canary Wharf business district struggles to function.”

The new normal

Semiconductor manufacturer Infineon estimates that by 2020, more than 60% of all payment transactions will utilise contactless technologies such as Near Field Communication (NFC). Many trains, metros and city buses all utilise contactless payments today. The same technology can be used to unlock shared pedal-assist bicycles and e-scooters, too. It has also found various uses within automotive; a handful of electric vehicle charging providers allow for contactless payments, and DS Automobiles even offers a car key that links to your bank account.

But with the wider concept of ‘future mobility’ in mind, the greatest gains should be seen within public transit. “Planning a journey is very simple, but payments across multiple journeys can still be quite complex,” said Blanks. “That is what needs to be simplified. Otherwise, we will not reduce this reliance on cars, and cities will choke with congestion.”

This is why companies like Mastercard and Visa are working with authorities to implement new solutions that make the most of a city’s existing infrastructure, and handle the growing number of travellers on its network of trains, buses and other mobility services. As Olabisi Boyle, Vice President of Internet of Things at Visa, noted in the Automotive World special report, The path to integrated mobility: “Waiting line moments need to decline in order for smart mobility to progress.”

“We understand the pain points of cities and transport operators, where there are inefficiencies, how people move around, and how we can help them manage that demand,” added Blanks.

Chicago

Mastercard in particular is focussing on two key issues: making it easier to use a transportation system, and managing overall demand for travel. “The biggest pain point is how you gain access to a train and how you buy that ticket. The second is that cities need to change how they interact with citizens in order to change the way they behave.”

A big challenge for cities is handling an increase in demand for transport, but with no increase in budget

The company has been working with Chicago to this end since 2017. City planners have been investigating how payments can be made faster and easier, but also how people can be encouraged to travel off-peak. “Chicago really struggled with how it moved people around the city, so we partnered with the mayor’s office and a few other key partners to incentivise and nudge customers travelling on the Chicago Transit Authority (CTA),” said Blanks.

It is not just commuting that causes congestion, but also regular events taking place within the city, such as baseball games. With mid-week games starting shortly after work, many fans end up travelling in the same direction as those heading home. To soothe congestion, incentives were offered for those willing to delay their trip, or even travel earlier. Anything from discounts to free drinks have been offered as an incentive to spread out that demand, making things easier for everyone involved.

“It is about simplifying the interaction, and then managing that demand through a range of partners and technology providers to make it less congested,” explained Blanks. “People don’t want to think about how they pay for their transport, and many cities add unnatural pain points to a public transit system. We can save them money and time, and make it easier for people to travel around.”

Bogota

Similar initiatives have taken place elsewhere, such as Sydney, London and Bogota. According to traffic analysis from INRIX, the Colombian capital was the third most congested city in 2018. Local authorities have been pressing to revamp the efficiency of its bus network, which avoids much of this traffic via the TransMilenio bus rapid transit system.

It sounds cliché, but transportation is the lifeblood of a city. If I cannot use the Jubilee line on the London Underground, the Canary Wharf business district struggles to function

Access is granted through the prepaid Tullave card—‘your key’ in Spanish—with riders able to simply tap a contactless terminal mounted in buses without breaking stride. However, long queues remain a serious problem, as funds need to be reloaded onto the card at kiosks. Third party top-up stations had been trialled in shops, but the scheme proved largely unsuccessful due to inconvenient locations.

In 2015, Mastercard launched a new debit card, via its Maestro brand, in combination with domestic bank Bancolombia. This allowed travellers to make contactless payments directly from their own bank account, without having to queue and top up their Tullave card. Payments could be ‘post-paid’, with a day’s worth of travel settled in one go. “You tap in and out as you go through the day,” explained Blanks. “At the end of the day, that transaction is cleared so there is one charge on your account.”

A cashless society

In future, the idea is that urbanites will be able to ride-hail to the train station, take the train and then hop on an e-scooter for the last mile to work. That will only be an attractive proposition if payment is painless. But is it a realistic ambition? “We have technologies available now that can do all of that,” said Banks. “It is just about where the ecosystem goes, and how you put all those players together.”

As he points out, such a scenario would require a mix of private and public players all working together. “Our technology can easily take one payment from you as a consumer and pass it on to those three separate companies—it’s more about how those players and the city decide to work together,” he continued. “We can support all of those things, it just depends on how the game plays out with all of these different MaaS providers.”

If you look at the way the industry is going with MaaS, it is about connecting all of these players together with one account

Looking ahead, cities may eventually navigate toward an entirely cashless transportation system, with physical printed tickets shunned in favour of digital wallets. “Never say never,” said Blanks. “If you look at the way the industry is going with MaaS, it is about connecting all of these players together with one account. That account naturally comes through a digital device; whether you pre-fund your journeys or you post-pay them, you have one credential that gives you access to everything.”

The smartphone in particular will be a “portal into the city”, suggested Blanks. That is not to say other methods will not remain available, but it will be challenging to use a variety of mobility services seamlessly with physical tickets and a number of different technologies. “It needs to be one simple technology that can be used around the world,” he concluded. “For cities to survive, they have to make it quick, easy and simple to use public transit.”

This article appeared in the Q3 2019 issue of M:bility | Magazine. Follow this link to download the full issue.

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