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The Transit Wave of the Future – 6 Reasons to Go Contactless

Mar 27, 2018
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A common sign seen near bus stops at transit agencies that only accept cash

As I watched the 2018 Winter Olympics, I could not help but see several Visa commercials showing how fast an athlete could pay for a purchase with a contactless credit card. And it raised the question: how prepared are we for a cashless society?

While the use of contactless bank cards and mobile payments (smart devices with mobile wallets such as Apple Pay or Android Pay) are slow to gain widespread acceptance in the United States, these payment methods are commonly used in Europe, Australia, and Canada and are starting to make their way into mass public transit.  The U.S. has only recently moved from magnetic stripe cards to having chips on cards, and because of this slow transition, are behind on adoption of contactless credit cards and the infrastructure to support contactless payments. 

So how prepared are you to take this next step for fare collection?  Here are six reasons why you should consider the move to contactless payments for public transit.

1. Make Small Purchases Quickly

The use of contactless payments is perfect for public transit as it is designed for making small purchases quickly. Credit card issuers have set limits on what can be charged when making contactless payments, typically less than $20, making them a perfect option for bus or train fares and completely changing the way riders purchase fares and travel.

2. Avoid Unnecessary Boarding Delays

How often has a rider boarded a bus only to discover that their fare card does not have a big enough balance for the fare? Then they need to scramble to find the needed cash causing unnecessary delays in boarding.  Use of contactless payments would eliminate the need to buy tickets or reload of fare cards in advance of travel. 

3. Give Passengers a Fast and Convenient Way to Pay

Just like other technologies that have gained widespread acceptance in recent years, it is only a matter of time before “tap and go” or “wave and pay” payment technology becomes the norm in our busy lifestyles.  Transit riders are looking for speed and convenience. Only needing to carry one item (smartphone or contactless card) to handle all purchases including use of the transit system, means less waiting, fewer delays, and hopefully an easier trip for them.

Companies like Visa see the potential and are pushing for the adoption of contactless cards in the transit industry. Traditionally, transit systems have been closed loop but a move to contactless payments opens the door for financial institutions to use their networks (the same ones merchants use) and provides them with a new untapped market. Visa feels so strongly that they’re an ideal fit for public transit that they have created Visa Global Transit Solutions which is geared to help transit agencies add contactless payments as an option for fare collection.

4. Remove Inefficient Fare Collection Processes

The most significant advantage is that contactless transactions significantly decrease or remove inefficient processes that currently exist in a fare collection system. You’d no longer need to produce, maintain, and deploy current fare media which would lead to operational improvements.

5. Decrease Cost of Fare Collection 

As more contactless payments are accepted, there is less cash in the system for agency personnel to deal with on a daily basis. Reducing these processes will lead to significant cost reductions. A recent study reported by Visa indicates that it costs transit agencies 14.5 cents for every dollar bill collected compared to just 4.2 cents for a contactless transaction, leading to significant savings throughout the year.

6. Improve Ridership Data

Another advantage is the ridership data that contactless transactions would provide. According to a 2011 US Census Bureau study, commuters spend over 95 minutes each day using public transportation systems. Using contactless transactions would provide a wealth of data on when and where customers are traveling and help agencies, as well as merchants, determine better ways to serve them. Agencies could tailor fare structures to offer more flexible fare options and fare capping features for their regular commuters. And merchants could use the data to offer goods and services to make the commute more enjoyable. 

Final Note

If you haven’t started to prepare a strategy for accepting contactless bank cards and mobile payments, the time to create a plan on how to transition from your current fare collection methods to contactless transactions is now. Employing contactless transactions is the next migration step in fare collection and transit agencies around the world have already begun making the move. It is only a matter of time before U.S. riders will look for faster ways to purchase fares and simplify their commute.

How ready are you to ride the cashless wave?

I’ll be speaking at APTA’s 2018 Fare Collection/Revenue Management conference on April 9, 2018. Learn more about the new technologies that are changing fare collection, from contactless payments to be in-be out technology. Then, make sure to join my colleague Paul Comfort at the roundtable on disruptive technology! 

Mark Poole has over 30 years of experience implementing vehicle and mobile computing solutions. Poole recently joined Trapeze Group as the Industry Solutions Manager for Automatic Fare Collection (AFC) to help customers evolve their systems to the latest faring technologies.
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