Top 10 reasons why your city needs contactless payments

How automated fare collection can revolutionize your agency

Contactless payments around the world have skyrocketed as people look for touch free payment experiences amid the coronavirus pandemic. The crisis has boosted the positive perception of contactless payments because it is viewed as a cleaner way to pay and it can be 5-10 times faster than other in-person payment methods. It has reinforced use in markets where adoption is more mature and simulated use in newer markets. We believe this trend is here to stay.

But we already knew that the world was going contactless, right? The majority of countries are on the path to digital payments. This is due to increasing focus on the economic, social and sustainable development of major urban areas – smart cities – as well as advancements in technology such as the Internet of Things and enhanced connectivity.

The concept of contactless transit has been around for more than a decade in the form of smartcards. Technology has advanced with pay-as-you-go and tap-and-ride using bank cards or mobile phones, with countries like the United Kingdom, Singapore, Russia and Brazil leading the way. The reality is that the contactless transit movement was very much in play before the crisis, but we will now see greater momentum and faster adoption.


Source: Visa Cashless Cities Report


Where is your city on this journey? Check out the Visa Cashless Cities Report. It is a fascinating read, offering in depth analysis of the costs, benefits, impact and strategies of going cashless.


Source: Visa Cashless Cities Report


In this blog, we explore the top 10 reasons why the leading transit agencies around the world are making the move to contactless payments with rapid adoption that is exceeding expectations.



The top benefits of contactless transit

Contactless transit embraces the technology that passengers already have in their hands and reduces the use of bespoke hardware and tickets. It is the most convenient, cost effective and sustainable way to go cashless! There is no doubt that cashless payments result in significant gains for the city, operators, passengers and wider community.

Transport for London says that removing cash fares speeds up boarding times and leads to faster journeys saying:

“Customers will not only benefit from a quicker, cheaper and more convenient method of paying their bus fare; it will also enable us to save millions of pounds each year – which will be reinvested in further improvements to the capital’s transport network.”

Following the rollout of the Contactless Transit Framework in the UK, contactless pay-as-you-go journeys reached 54 percent in London, with mobile-wallet based payments representing 16 percent. Contactless payments continue to see significant and consistent growth in London, as other methods steadily decline.


Transport for London (TfL) Contactless Journey Trends


So let us get on with our top 10!

1. Speed up boarding and reduce dwell times

The driver efficiencies and operational gains are significant. Cashless systems move passengers more quickly through the transit system, with reports that contactless payment can reduce boarding times by half compared to putting the exact change into a farebox. This has a tremendous impact on passenger throughput, dwell times, run times and route cycles. It also improves on-time performance and schedule adherence – the number one factor behind passenger satisfaction.

2. Reduce cost of cash handling

Research has found that transit authorities spend 3.5 times more on physical collection of fares versus digital fares (14.5 cents a physical dollar versus 4.2 cents a digital dollar). This is mainly due to labor cost savings as cashless transactions are processed automatically, such as reducing travel to collect and deposit cash, shorter reconciliation times and lower risks of cash related crime.

3. Reduce cost of ticket management and infrastructure

Cities are required to be smarter in their deployment of resources and contactless transit helps by removing some of the cost of managing ticketing infrastructure. This could include a reduction in ticket counters which cuts down on staffing costs and operating ticket vending machines or running other processes required to issue customers with a travel token, such as paper-based tickets or smartcards.

4. Create a compelling passenger experience

Fast and easy contactless payments eliminates the need to queue – to purchase tickets, top-up smart cards and to board services – leading to a much better travel experience. In fact, 84 percent of customers cite ‘speed’ and 79 percent cite ‘ease’ as reasons for using contactless payments. Interestingly, according to research, passengers are willing to sacrifice knowing the exact cost of their travel for the convenience of not having to pre-purchase tickets. Customers are also more confident in using public transport when they do not have to worry about having the exact cash for a fare, particularly on non-regular routes. In fact, 45 percent of passengers would feel more positively towards public transport operators if contactless was introduced.

5. Best fares and incentivizing travel behavior

Contactless payments enable ‘best fare’ offers with fares aggregated and capped on a daily or weekly basis. TfL directly attributes this to an increase in ridership. Since it launched its Hopper fare in 2016 – £1.50 for unlimited journeys within one hour of touching in – the first successful year of 80,000 ‘Hops’ per day is now at 450,000 each day. Cashless systems also offer the potential to offer discounts or incentives to riders to avoid peak hours.

6. Tap into new markets and attract new riders

A recent report by Transport Focus on bus travel for young people found that ‘the overriding view was that contactless is the way forward and should be offered via card or phone’. It also found that young people are more likely to use public transport if they don’t have to worry about having the exact change. Contactless payments also enable international tourists to use public transport without having to understand proprietary ticketing systems.

7. Improve driver safety

The strongest advocate for contactless has been the driver community, which appreciates the quicker boarding times and reduction in cash handling. This was particularly the case with the coronavirus pandemic, which has led the need to remove cash handling and minimize any personal contact to reduce the risk of spreading the disease. It is likely that these concerns will remain for the foreseeable future and possibly even forever.

 8. Increase revenue and profitability

Increased journey volumes, increase customer throughput, increase customer satisfaction all lead to increased revenue. When you bring the operational cost savings into the mix, the business case is solid! Across the 100 cities studied by Visa, businesses that started accepting digital payments saw revenues increase 17 percent, on average. It is also worth noting that when people were asked what they thought about contactless public transport proposition, 61 percent were very interested or interested.

9. Data driven service planning

Digital fare collection has empowered transit agencies with analytics that just are not available in the cash world. By collecting more data, access to metrics and insights can be used to assist transit service planning. With a better understanding of passenger flows and behavior, agencies can improve fare modeling, route loading and capacity planning.

10. Seamless use across different operators

As contactless cards operate on open global standards, they offer the ability to travel between different operators using the same device. This is very compelling for customers because a common customer experience reduces confusion and increases both trust and adoption. It is also compelling for cities with a multi-mode multi-operator model end game in mind.


Contactless payment solutions from LIT Transit

We hope this has helped you to understand how moving to a cashless payment system speeds up boarding and enhances the overall rider experience while improving your bottom line. We are in touch with many transit agencies who are currently rethinking their ticketing systems due to the COVID-19 outbreak. Drop us a line for free consultation.

Our comprehensive LIT Ticket offers a complete and powerful platform that puts you in control of ticketing, fare collection and revenue management for different modes of transport such as bus, rail, ferry and tram.

Find out how we can help your transit agency reap these rewards and join the contactless ticketing revolution, please contact us.

Posted 20th May 2020 By