EDITORIAL: Contactless ticketing for public transport is moving on in 2016

bus_ticketsThis editorial was first released on Monday 18th January. Contactless Intelligence Weekly News Review Editorial – Week 03, 2016:

Last week, contactless was all about travel. Be it buses or trains, 2016 sets out to be the year that paper-based systems evolve into contactless card and mobile tickets. Or even, as some would have us believe, into digital currency.

First up came the news that the Oyster zone in London was being extended to Gatwick airport. The airport’s station has been added to Transport for London’s newly expanded rail network map for the first time, meaning barriers will now accept pay-as-you-go Oyster and contactless cards. It puts paid to a long-term gripe of passengers, who were previously required to buy a separate ticket from East Croydon if travelling from another station in London to Gatwick.

According to Gatwick Airport’s Chief Commercial Officer, Guy Stephenson, Gatwick’s passengers will welcome the introduction of Oyster and contactless payments because it is the most convenient way to pay for onward rail travel to London. It means a single ticketless system will link Gatwick with the whole of Greater London so passengers can benefit from seamless connections to and throughout the capital.

The way people took to Twitter to express their joy was truly confusing for the the rest of us, but as long as they were happy.

Last week, Visa reported that cardholders made more than a million contactless journeys on London’s transport network on a single day in the lead up to Christmas. “In December alone, Visa Europe saw an 166% annual increase in the total number of journeys by people who used their Visa card to pay as they travelled, and a total spend for the year of £339m,” says Kevin Jenkins, regional managing director for the UK and Ireland at Visa Europe. “That’s 7x growth in total spend on the year.” Visa say they expects to see usage grow, particularly with the growing popularity of wearables like bPay and the Apple Watch, as well as the uptake of mobile NFC payment services.

Transport for London are also very pleased with themselves. Shashi Verma, director, customer experience, TfL, said, “Contactless payments on TfL services has been a huge success. A quarter of our pay as you go customers use contactless payment already because it is so quick and easy and there have been more than 250 million journeys made using cards from over 80 countries.”

In the coming years, public transport users in other parts of the UK will be able to pay for journeys via contactless. Earlier last week, the UK Cards Association set out a framework to enable transport operators across the country to implement contactless payments on local pay-as-you-go journeys, including single trips, such as a bus journey, or combined travel on more than one type of transport.

Melanie Johnson, Chair of The UK Cards Association, said, “Payment cards play a key role in our lives and we believe this work contributes to making public transport more convenient for millions of passengers. Our collaborative project with the transport industry aims to transform the way customers pay for their travel and supports the Government’s objectives. This framework sets out how contactless payments can be used to support any journey, whether a single bus ride or a cross-country trip”.

Contactless travel could also be put in place on every bus in Britain by 2022 under a multi-million-pound plan unveiled earlier this week, developed by five major bus operators in the UK. Stagecoach, First Bus, Go-Ahead, Arriva and National Express are working together to produce a business case which is expected to be completed by late spring 2016. The scheme, funded predominantly by the private sector, could see new EMV contactless technology installed on every one of the UK’s 32,000-plus buses outside London. It would offer cashless travel for those who want it and capped pay-as-you-go-fares in all urban areas.

This new project would complement the framework, covering more than 1,200 bus operators in England, Scotland and Wales, and making contactless travel available for 5.2 billion bus passenger journeys a year across Britain. Associated government legislation would be needed to ensure contactless ticketing was offered by all individual bus operators. The development of the bus contactless plan comes just weeks after the major operators completed the introduction of smart multi-operator bus ticketing in all nine of England’s smart city regions with support from local transport authorities. It is making public transport more accessible in regions which account for around 15 million people – over a quarter of England’s population. A similar project is now underway in Scotland to deliver the same benefits to Glasgow, Edinburgh, Dundee and Aberdeen.

Robert Montgomery, Stagecoach UK Bus Managing Director and chair of the major operators’ steering group on smart ticketing, said, “This contactless initiative would be the biggest smart ticketing project ever delivered in Britain and a major milestone in providing simpler travel for the millions of people who rely on buses. Smart bus ticketing is already widespread across the UK, with ourselves and Go-Ahead having over 1.5 million smart cards in circulation.”

Some industry experts looked to put these announcements into some perspective. “By adding Gatwick, TfL is balancing up the competition between Heathrow and Gatwick. However it has fueled customer frustration because only stations stops on the route and not other stations in between will benefit. This is upsetting people on the edge of London (e.g. Epsom) who will say ‘why not us too?’. The reality of the announcements is that on bus, most equipment will have to be updated again for smart. Bus operators who have ITSO capable equipment may now need to replace/upgrade to accept contactless payment cards. It is not yet clear how this will be funded and how long DfT will continue BSOG which gives operators a rebate on fuel duty, ” said Smartran’s Kevin Farquharson.

“For rail the timescales are more dependent on preparing a method of accessing and validating tickets in the cloud as the daily limit on contactless is £30 which is only good for suburban travel. The future can be expected to see a combination of ticket methods used to cover concessions, commuters, students, occasional travelers, off-peak travel, leisure travel and business trips with both single operators as well as multi-modal.”

However, the government was quick to pass praise on these initiatives and frameworks with Transport Minister Andrew Jones commenting, “The smart ticketing revolution is helping to build a modern, affordable transport network that provides better journeys for everyone. By working together, industry, city regions and government have been able to ensure more and more people can use smart ticketing to get around. We are determined to continue driving progress so passengers get the quick and simple journeys that they want and deserve.”

But why stop there? Across the pond, in New York,  contactless payments are a big part of the future of finance, according to the Metropolitan Transportation Agency in New York. If all goes to plan, both the subway and bus industry will be using contactless payments from 2018 onwards, thanks to a partnership between the MTA, MasterCard, and Citi. New York Governor Andrew Cuomo commented, “The MTA is absolutely vital to the daily functioning of New York City, but for too long it has failed to meet the region’s growing size and strength. This is about doing more than just repair and maintain – this is thinking bigger and better and building the 21st-century transit system New Yorkers deserve.”

Bitcoin enthusiasts in the US have been quick to jump on this train. They argue that contactless payment integration opens up a lot of opportunities for Bitcoin in the near future as well. In fact, companies such as Plutus have come up with a way to allow for Bitcoin transactions wherever NFC payments are accepted. This means Bitcoin users in New York should be able to use digital currency as a payment method for public transportation.

Even though New York doesn’t appear to be keen on Bitcoin by any means, these enthusiast like to think that the MTA will integrate digital currency payments in the future. When it comes to places with a lot of tourists every year, Bitcoin payments for public transportation make a lot of sense.

At least for them. Knowing the confusion created before the extension of the Oyster system to Gatwick – can you imagine having to explain a digital currency to tourists just wanting to get home!

Steve Atkins
Contactless Intelligence

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Categories: Bitcoin, Editorial, Ticketing, Transportation

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