Contactless payments in public transport are here to stay, but is the industry ready?
Contactless transit payments quick fire Q&A with Nilaya Varma of Primus Partners India
Did you join our recent webinar GO CONTACTLESS: Keep your drivers and passengers safe? Not to worry if you missed it, you can watch it on-demand or catch the quick fire Q&A interviews with our panelists in a snappy 10 minute read.
Thanks for joining us Nilaya, can you please introduce yourself?
I am a co-founder of Primus Partners in India – we work with both public and private sector organizations involved in nation building. Personally, I have worked with consulting firms PwC, Accenture and KPMG in the past on digital government transformation and public policy consulting. I have led more than 20 key assignments across digital strategy, mobility, infrastructure, healthcare and smart cities in more than 30 countries.
Can you please walk us through the world of public mobility in India right now?
One thing we need to recognize is that anything that is multiplied by 1.3bn people is always going to be large. That is true for everything in India. We have a large transportation and bus service of 1.3m buses from 62 bus transit operators with 25bn plus people ridership. Only 10% of the buses are run by the public sector (150k buses).
The reality is that due to the socio-economic circumstances in India, the demand for public transport is going to continue. Social distancing for most Indians does not exist because of the density of the cities and the way that we travel, which is important in the context of public transport in India.
Tell us more about your contactless payment environment?
In India, everything co-exists at the same time, for example in one region across multiple operators we have farebox collection in place as we are moving to open loop systems:
Level 0 – Fare Box Collection
Level 1 – Pre-printed Ticket
Level 2 – Electronic Ticketing
Level 3 – Smart Card Ticketing (Closed Loop)
Level 4 – Smart Card Ticketing (Semi Closed Loop)
Level 5 – Smart Cart Ticketing (Open Loop)
In the last few years though we have seen a significant push towards level 5 to get to open loop systems. There is clear progression across the country to contactless mobility.
How do you think things will progress in light of COVID-19?
A year ago, the National Common Mobility Card was introduced in an attempt to create a single interoperable platform that would help create e-ticketing and payment system. In light of COVID-19 this initiative will get a push – people are saying they want to avoid contact and are buying passes instead of tickets.
There are start-ups in India with innovative solutions involving live bus tracking, passenger mapping, contactless payment cards and fleet management to help authorities monitor and track passengers after lockdown. This includes leveraging NFC based smart cards and simple QR codes for payments.
Central government already announced that passengers traveling on metro trains will see contactless ticketing replace tokens once restrictions on public transport are lifted.
Overall, the direction was already there, and COVID-19 will push things forward very quickly. Funnily enough, most people would know that Indian’s love their cash and I have never seen them avoiding cash until now. I think that is going to continue.
How has public transit ticketing changed? Do you think the future is contactless?
Public transport ticketing may seem like a trivial issue, but it is more important than most of us realize. While the service itself looks mostly the same, ticketing has evolved throughout history to match the pace of our technological advancements. It has taken many forms: tokens, pieces of paper, magnetic strip cards, smart cards, until, finally, our tickets are becoming embedded in our credit cards and phones.
As far as the future of ticketing goes, I am pretty sure we will converge to a point where a substantial portion of transactions will go contactless however it is also true that in most geographies you will find alternative fare medias also operational.
Where should an agency start when it comes to contactless transit?
By understanding the entire ecosystem with regards to the end consumers, the infrastructure and the service providers. They are critical in adopting the right technology. Some of the key aspects that should be kept in mind are:
Details of the demography of people using public transport services.
Penetration of mobile phones and smartphone usage.
How many of the unbanked population uses public transport.
Classification of income group of people using public transport.
The existing IT infrastructure.
All the above factors will decide the right fare media to adopt or to invest. It is quite important to understand that multiple fare media will be available for people to use. With a large population with bank access and mobile penetration, coupled with a younger population, the adoption of contactless solutions will be much faster.
As operators focus in doing what they do best such as enhancing the efficiency and reliability of services, non-core functions like collections will move to technology providers of account-based ticketing or open loop systems.
It can take time for passengers to adopt new technology, how can this be accelerated?
As James Clear tells us in his New York Times bestseller Atomic Habits, the best way to break a bad habit is to make following it impossible. And the best way of adopting a new habit is to make it automatic, sometimes supported by technology that makes whatever it is easier to do, frictionless and sure to deliver returns.
One thing is clear: the pandemic and lockdown have broken our payment habits, thanks to the need to eliminate cash for hygiene reasons and the availability of contactless technology. Paying with a tap of a card, a mobile wallet or a fitbit smartwatch has become the new norm. Contactless payment is here, and every day new people are being taught how to use this new service. Surely, they will never again pay for goods the way they used to.
So, you think contactless is here to stay?
Shifting to contactless payment was a direct response to the World Health Organization’s (WHO) guidance and payment networks globally have responded. As a result, even cash-heavy countries have seen contactless payments grow. For instance, Germany has seen contactless payments go from 35% to 50% of card transactions since it raised the cap from EUR 25 to EUR 50.
If we look at the science behind habits, contactless payment should be here to stay. One thing is certain: the ecosystem needs to be ready to accelerate their digital payment agenda. The post-COVID-19 period will be critical from loyalty, customer acquisition and competitive standpoints.
A huge thank you to Nilaya for giving us a view into his world and for his valuable insight. Hear the full discussion, now available to watch here.