Contactless digital payment solutions are revolutionizing travel. Transit leaders are seeking new ways to provide travelers with a better, more efficient experience, and cities are striving to become more accessible and transform urban mobility. So, what’s happening behind the scenes to make this transformation possible?
Global Adoption of Digital Payment Solutions
Digital payment platforms are growing fast. According to Market Data Forecast’s recent report, the global contactless payment market is expected to grow at a compound annual growth rate (CAGR) of 21.5% from 2024 to 2029 and be worth USD 144.1 billion by 2029. This trend is particularly relevant to the transit sector.
What Are Contactless Payments?
Contactless payments, also known as ‘tap-and-go,’ are transactions that replace traditional payment systems. Initially popular in industries like healthcare, retail, hospitality, and telecommunications, they are now making significant inroads in transit.
Contactless cards enable fast, easy, and secure payments through contactless chip technology. Instead of purchasing a ticket from a machine or using a closed-loop travel card, travelers can simply use their credit/debit card, smartphone, or e-wallet to pay for rides. This eliminates common frustrations such as queuing for tickets, running out of credit, having limited transport options, and missing out on better-value fares. Travel becomes fast, simple, and frictionless.
Introducing Open-Loop Systems
Open-loop technology enables mass transit payments using international EMV® standards. It is universal: any passenger with a bank-issued contactless EMV® credit/debit card or smart device can pay for their travel wherever open-loop payment systems are implemented. The payment card or mobile device acts as a ticket, and prepaid EMV® cards are also available.
With open-loop technologies, no tickets or sales equipment are required. Riders simply tap their cards or associated mobile devices at the terminal and go. Open-loop systems provide a secure, scalable, convenient, and cost-effective way for passengers to pay for travel and for operators to accept payments.
Closed-Loop Systems
Unlike universally accessible open-loop systems, closed-loop systems are limited to specific transit operators due to their specific standards and technology. Travelers can only use their transportation cards to pay for their commute, and any additional credit cannot be used for other purchases. If the card is lost or stolen, the money stored on it is not recoverable.
Traditional closed-loop models generate revenue through physical tickets, sales terminals, staff, validation equipment, and inspection processes. Examples include the Oyster Card in London, the OV-chipkaart in the Netherlands, and the Clipper card in San Francisco.
The Passenger Perspective
Visa’s third edition of the Future of Urban Mobility Survey revealed that 51% of public transit riders use four or more payment methods a month for their trips. While 94% of passengers expect public transit to offer contactless payment moving forward, 65% would use contactless payment methods for their commute.
The top benefits of contactless payments include convenience, enhanced security features, time saved due to faster transactions, less worry about carrying enough cash, and reduced contact with surfaces and other people. Additional benefits include targeted discounts, promotions, and loyalty programs that are automatically applied to relevant journeys.
Win-Win for All
Contactless payment solutions in transit benefit not only passengers but also transit operators and cities.
Transit Operators:
- No need to issue, stock, or replace cards.
- Simplified fare collection.
- Reduced management costs.
- Automatic application of best-fare ticketing options.
- Enhanced passenger data collection and reporting capabilities.
Passengers & City Councils:
- Cities become more accessible with multiple payment options.
- Reduced use of paper, cash, and coins supports sustainability.
- Shorter waiting lines.
- Targeted discounts, promotions, and loyalty programs.
A Closer Look at Open-Loop Payments
There are three main transaction models for open-loop systems:
- The Pre-Purchase Model: The payment is made before the journey, similar to standard retail models.
- The Known Fare Model: Like a single-ride ticket, the transaction value is determined when the passenger taps their credit/debit card or mobile device, with real-time payment authorization.
- The Accumulated Model: The transaction is processed when the passenger completes their entire journey, allowing transit operators to offer flexible fares based on the actual journey taken.
Choosing the Right Transit Payment Solution
When selecting a transit payment provider, ensure they offer:
- Flexibility: Modular solutions for seamless integration and future-proofing.
- Technological Capabilities: Cutting-edge innovation and thought leadership.
- All-in-One Solutions: Look for one comprehensive solution that covers all your needs.
- Compliance: Transit payments require the whole infrastructure, from front-end devices to back-end systems, to be compliant with the banking industry’s security standards. When implementing an open-loop payment system, selecting the correct payment partner is crucial.
- Payments Experience: Knowledge of open-loop technologies and industry expertise will bring extra value to your business.
- Customer Service: 24/7 value-added support, advice, and service.
Simplify Your Transit Payments With Shift4
At Shift4, we enable transit leaders to effortlessly implement contactless payment solutions. Our customized approach ensures seamless integration with existing systems, significantly enhancing the customer experience. Our end-to-end solution meets the diverse needs of transit leaders, cities, and passengers, making public transport more accessible and efficient.
Why Choose Shift4?
Shift4’s contactless transit payments system offers numerous advantages, including:
- Multiple certified devices.
- Transit scheme certified: Visa Mass Transit and Mastercard Pay As You Go.
- Calculation engine with business rules for transit fares.
- Dedicated dashboard for transit functionality.
- Full integration with remote transit management & ticketing platforms.
- Open-loop, closed-loop, and tap payment capabilities.
- No third parties.
- Complete focus on your business needs.
Fertagus trusted Shift4 to implement their contactless transit payments project. “The team’s dedicated commitment and strong capabilities ensured that this project became a reality!” – Clara Esquivel, Member of the Board, Fertagus
Exciting changes are coming to enhance your transit experience! Now, you can conveniently pay using contactless methods. Connect with our transit payments experts for personalized guidance today!