Rewind to the start of 2020 and public transport was in an exciting phase. Ridership was healthy and the growth in contactless payments was driving the development of sustainable urban mobility. Four months later, the picture was very different. The coronavirus pandemic hit the industry hard and the future looked uncertain.
COVID-19 sprang from nowhere as an invisible enemy, with exponential growth of infection rates causing governments around the globe to act fast to enforce social distancing and restrictions on movement. With advice to avoid all but essential travel, 70-90 percent less people were using public transport and revenue was further drained by the cost of vehicle sanitization.
Now, eight months in, slowly passengers are returning and figures released by Visa show that transit ridership increased globally by 200 percent in the second quarter of 2020. Even still, it’s unlikely a bounce-back to pre-COVID levels will happen any time soon. In cities and commuter belt areas in particular, the way people use public transport has changed, possibly forever.
Spurred on by societal shifts, the public transport sector is redesigning its future, taking an honest look at the way people want to travel. It is appealing to technology suppliers, including ticketing and payment innovators, to help the industry create safe, relevant, value-added services.
One of the issues it’s tackling is that people have adapted their lifestyles and see no reason to back-pedal. In April, almost half (47 percent) of employed people in the UK did some work at home, the majority (86 percent) as a result of COVID-19. Many employers and employees found there were positives to this culture change. Now, big firms like Microsoft are developing hybrid workforce models, which balance the flexibility of home working with the sociability of office time.
The demise of the office-based nine-to-five means intercity trains are no longer bustling at dawn with commuters; and the five o’clock scramble across metro networks has abated. The cornerstones of transit ticketing, ‘peak’ and ‘non-peak’ travel and season tickets, have crumbled.
Although at first challenging to transit agencies that have structured fares around these pillars for decades, this development has been a catalyst for positive change. The unravelling of traditional transit ticketing has unleashed a powerful motivation to solve problems old and new.
The most pressing of these being how to take fares safely; how to create cost-effective ticketing for casual commuters and, the big one, how to turn a profit when social distancing means you can’t get close to full capacity. Bright minds have whirred into action to come up with ways to make transit work, from social distancing apps to AI-designed routes and schedules.
But perhaps the single most important piece of tech for public transport during this time is contactless EMV payments. As lockdowns descended, speculation was rife about the potential of cash and PIN-pads to transmit the virus. Contactless limits were raised in 29 countries and contactless card issuance, in the U.S. especially, went into overdrive. In the retail, hospitality and public transit sectors, the provision of tap to pay options became a vital part of COVIDsecurity.
Visa announced that since contactless limits were raised, it has processed more than half a billion additional touch-free payments, where previously consumers would have needed to use a PIN-pad. COVID-19 has transformed contactless payments from a nice-to-have to a must-have and consumer payment behavior has settled into a new groove.
Transit agencies that offer contactless EMV (cEMV) payments have a head start in the race to restore revenue and carve out their new role. The core passenger benefits of cEMV payments are convenience and speed. Riders can board vehicles quickly without queuing for tickets or smart card top-ups, tapping to pay with the bank card or smart phone they carry everywhere.
Another compelling advantage of cEMV, for both agencies and passengers at this time is simplicity. Passengers don’t need to analyze ticket prices to get a good deal. With dynamic ticketing models, many journeys can be combined into one best value fare.
Tap to pay solutions are highly configurable, so transit agencies can easily test fare products and price adjustment rules. By monitoring sales performance and tweaking the parameters if need be, they hit a sweet spot of passenger approval and, in time, increased ridership.
In the new era of ticketing and payments, season tickets will be usurped by cEMV fare capping. Transit agencies that have deployed a cEMV payment system can set up daily, weekly or rolling fare caps. When fares are capped at a certain limit, it means passengers can tap to pay for journeys several times within the capping period and only pay up to the fare cap amount. In some circumstances, this results in free journeys for the passenger. Fare caps can be a great way to add value for professionals who are travelling to work frequently, but not every day.
Transport for London (TfL) pioneered this type of cEMV fare capping across all its transport services, including buses, light rail and the tube. Until recently, it hasn’t been possible to offer multi-operator, multi-modal fare capping without building a similarly expensive bespoke system. Littlepay is leading the march on this, having developed a multi-operator capping feature within its modular cEMV payment gateway. This enables operators within a region to team-up, applying fare caps over their individual fare structures. Passengers can travel freely using any cooperating services, without having to pre-plan their routes to get the cheapest fare.
Innovation like this will help mass transit to bring back ridership to the maximum level that social distancing will allow. It’s also clear that a holistic approach to urban mobility is needed. With car journeys rising, and more people getting around cities on foot or by bike, there is a keen interest from transit authorities in combining services that enable users to plan, book and pay for multiple types of transport and mobility services, such as scooter and bike share and parking.
The movement towards this Mobility-as-a-Service approach gives rise to a need for collaborative ticketing and payments schemes. These will likely involve not just cEMV payments, but web and mobile too. Littlepay has been focused on developing omni-channel payment processing to facilitate this and unify the customer payment experience. Innovating now will be the key to unlocking growth for the transit and mobility sectors in the future.
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Amin Shayan was part of Littlepay’s founding team in 2016, becoming CEO in 2017, heading up offices in Melbourne and London. Previously, he worked in investment banking in New York and London.
