Is London’s transport system finally ready for contactless payments?

TfL undergroundBy Eve Pearce, Contributor

London is a traveler’s city, a place where everyone is constantly on the go. Tourism is on the rise and people are eagerly looking for better, more convenient ways to spend their holiday cash. During the first six months of 2014, vacation visits in the United Kingdom were up 12% from last year. Economists project 2014 will show a 7% increase in tourism spending and a new record of £1.97 billion was set in the month of June alone.

Business visits are also slowly rising, with just a modest 5% increase in the last year. Whether visiting on holiday or business, travelers want access to expedient payment systems that are easy to use and easy to understand. However, they don’t want to suffer from anxiety, worrying that their funds are lost in some digital dead-zone. The greatest fear about contactless payment is just that: the lack of contact. Yet with all that visitor cash floating around, what is the city of London doing to keep bank accounts safe and retail transactions secure? The London transportation system is a good place to start, with over 1.26 billion passenger journeys a year. Confidex, a contactless service provider has already had a successful outing in Glasgow, so now it’s time for London to have its time in the NFC limelight.

NFC and London Transportation

Contactless payment will finally make a large scale debut in the London transit network on September 16th, 2014. Credit cards from all the major UK financial institutions will allow users to pay for fares much in the same way they’ve been doing for years with their Oyster cards. The Oyster will still be accepted but travelers can now use chip-enhanced cards from VISA, MasterCard, and most British banks. Although the system that is currently in place is quite convenient by global standards, travelers will no longer have to keep topping up their travel cards at designated kiosks. Now, they can have their balance deducted directly from a bank account or credit card. One of the greatest benefits of the contactless payment programs is the daily and weekly cap-off for travel rates. People riding the tubes more frequently have been assured that their charges won’t exceed the rate of a standard day travel or weekly travel pass.

A pilot version of this program has already been in effect since 2013 with about 3,000 users testing out the system. In December of 2012, the system was launched for travelers on the overground bus network. Yet, most Londoners are still lagging behind the trend, largely unaware of exactly how the system will work. Caroline Pidgeon of the Liberal Democrat London Assembly Group recently spoke about the NFC transition, saying “Most importantly we need an absolute assurance that anyone without access to a bank account and who is unable to use contactless payment is not then excluded from the cheapest fare packages.” That is one significant drawback to the contactless readers. Non-UK cards will certainly have trouble using the NFC system. Cardholders from foreign countries will be forced to top up an Oyster card instead of benefiting from the convenience of contactless payment. With all the tourists and travelers in London, this issue will certainly slow down travel time as foreign passengers try over and over again to use their foreign methods of payment. Will Londoners exercise greater patience or will the kettle boil over?

MNO’s do not want to be left out on this new new NFC trend

Mobile app designers and cell phone carriers refuse to be left out of this NFC trend hitting London’s transportation sector. They are the leaders in this technology after all. Yet, are the smart chip cards becoming more popular than NFC mobile apps? Mobile network provider, EE, certainly doesn’t want consumers to think so. EE recently launched a mobile app called “Cash on Tap” which is compatible with the London transportation network. It allows users to pay their fares by waving their smart phone near the payment reader, much in the same way an Oyster card or chip-enhanced bank card would be used. Vodafone and O2 are close behind with their own NFC mobile apps that will rival contactless cards. Yet still, some retailers balk when a customer isn’t required to enter a PIN number or opts to settle a transaction with a mobile phone or tablet instead. Cyber crime is a major issue in the UK that affects both retailers and customers alike. In March of 2014, representatives from 45 different countries met in London for an E-Crime Congress to discuss ways to protect digital devices from security breaches. Service providers and retailers have all but guaranteed the safety of NFC transactions, but travelers should still take measures to insure their devices from being damaged, lost or stolen.

In the end, time will tell just how prepared London is for a contactless society. Contactless payment is certainly not new to the UK. In May of 2014, there were 19.7 million transactions. As early as 2012, mobile apps like MyCheck were helping customers eat and run in London. Now, UK banks are scrambling to meet the demand for smart chip cards, issuing 37.8 million cards in 2014 alone. NFC mobile apps are becoming more popular with independent companies like Starbucks and Orderella developing their own user interfaces. Also, mobile network providers are testing new NFC technologies in select markets around the country. The verdict is still out on London’s surge in NFC and contactless payment. Yet, economists and developers certainly agree that opportunities for the technology exist and consumers are eager to enhance their consumer experience with Near Field Communication.

Reference Links:

Cellular News: Contactless Payments Surge
Engadget: London’s Tube to Accept Contactless Payments
BBC News: Contactless Payments due for Tube Network
Transportation for London Annual Report

26.09.2014 UPDATE: Since the September 16th launch there have been no reported problems concerning the new technology. “As such, this may be considered one of the most successful contactless ticketing/payment launches ever!” (Editor)

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Categories: Near Field Communications, Transportation

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One Comment on “Is London’s transport system finally ready for contactless payments?”

  1. September 16, 2014 at 9:57 am #

    Reblogged this on Connected Places UK and commented:
    Consumer and commuter education on the topic of contactless payment being secure is still clearly needed.
    But will the banks, card issuers/acquirers and MNOs play nice together? Or are we getting set for more of “Wallet Wars”? Some progress towards the uniformity of user mobile experience, please!

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