Contactless in London
UK transport officials confirm that London’s transport network has seen more than one billion pay-as-you-go journeys made by contactless payment cards, with the new payment option “substantially changing” the way customers pay for their travel around the city.
“The landmark figures show that, on average, two million journeys are now made using contactless every day,” the government-based Transport for London (TfL) stated in a recent press release.
“In total, 40% of all pay-as-you-go journeys are now made using contactless. This is up from 25% in early 2016. Of these, almost one in 10 contactless transactions are now made using mobile devices, with more than 31 million journeys made specifically using mobile phones in London in the last 12 months.”
According to Transport for London, TfL’s contactless payment system was first launched on London’s buses in December 2012 and expanded to cover Tube and rail services in London in September 2014. The system automatically calculates the best-value fare based on the customer’s specific journey history and then charges them at the end of the day – ensuring they always pay the lowest fare in the easiest and most convenient way. This means that passengers can save money compared to buying a Travelcard, helping them to travel around London more affordably.
Mobile wallet travel apps gain traction
Commenting on the above, BusinessInsider’s Ayoub Aouad notes that the uptick of contactless payments on London’s transport system points to an increasing interest in embracing alternative payment methods.
“Consumers want a fast and convenient way to pay for their trips. Roughly 400 million, or 40%, of pay-as-you-go trips — which enable travelers to pay for their trips while they travel — were purchased using a contactless payment; this is up from 25% a year ago,” he explained. “The convenience of skipping the line and not having to enter in payment information to buy tickets has become exponentially more attractive to consumers.”
In addition, says Aouad, while contactless cards are currently the most used contactless payment method for travelers, mobile wallets are starting to gain some serious traction.
“More than 31 million journeys were made using mobile phones, representing nearly one in 10 contactless transactions,” he continued. “And this points to a larger trend of contactless habits having an impact on mobile wallet usage — Barclaycard saw a 90% increase in payment volume via its Android app through 2017, according to Finextra.”
Moreover, says Aouad, mobile wallet providers could further leverage the habitual consumer spending that’s present in the public transit industry.
“Americans took 10.6 billion trips on public transportation in 2015, according to the American Public. If mobile wallets encouraged frictionless travel by incorporating easy ways to not only pay for public transit across the globe, but also to store digital tickets, adoption of their products could skyrocket — about 80% of US transit riders would be willing to pay more per ride for a completely paperless trip, according to the Federal Reserve Bank of Boston,” he concluded.
Generating new revenue streams with mobile devices
Analysts predict 2.87 billion smartphone users by 2020 (worldwide), with 46.4 million smartphone owners expected in the UK by 2018. As the Smartcard Alliance points out, mobile devices offer functionality that bolsters the ability of transport operators to derive value from both current and new customers, all while providing convenience and value-added services to enhance the travel experience.
“For example, integrated mobile applications that combine fare payment with trip planning and service status information allow for a more personal interaction with the transit agency,” the Smartcard Alliance stated in a recent white paper. “Similarly, NFC technology not only provides an attractive mechanism for contactless transit fare payments at the point of entry, it can also provide for an interactive consumer experience with retailers that allows for customized loyalty programs, facilitating a transit agency’s opportunity to offer customers new marketing and incentive programs.”
More specifically, says the Smartcard Alliance, a white-label product issued by a transit agency could provide fresh revenue opportunities by creating cross-marketing and co-branded arrangements with other city services, major city events and attractions, as well as local retailers. For example, a transit operator could offer bundled pricing for sporting events that would encourage customers to take public transit to a public event. Similarly, partnerships with local retailers could enable loyalty benefits (such as a free cup of coffee at a local coffee shop) to be offered to transit agency customers, thereby encouraging increased ridership. In short, transit operators can clearly benefit from increased ridership revenue and direct or indirect revenues from cross marketing or co-branded partnerships.
Smart ticketing: The future is HCE
As ridership significantly expands in major cities, transaction speed and customer satisfaction have become increasingly important for transport operators. Consequently, multiple transport systems are steadily replacing paper tickets and tokens with smart cards and contactless payment cards, as well as mobile apps that allow passengers to use their smartphones to conveniently board buses, trains and ferries.
For transport operators seeking to modernize their fare systems, HCE mobile ticketing solutions, which are compatible with existing ITSO-based infrastructure, offer the same ‘shopper-friendly’ convenience consumers have come to expect from their smartphones in a transport environment, as it effectively replaces yet another plastic smart card with a secure digital travel wallet. With an HCE smart ticketing solution, passengers are freed from queuing for tickets, looking after and managing physical cards or concerning themselves with having the correct change to travel. HCE also allows passengers to top-up value, purchase and load tickets and view the contents of their HCE wallet, which can be accessed even if a smartphone is offline.
