Why Emerging Payment Technologies Strike Fear into the Heart of Your Subway


NFC? EMV? Contactless? A combination? It's an exciting time for the payments sector which boasts a tremendous number of emerging disruptive technologies. When we say payments we tend to think of retail transactions, whether online, via mobile or in-store. From a public transit perspective, these relatively straightforward transactions seem pretty simple, and the benefit of exploring more innovative platforms which are more efficient for customers is obvious. But the fast-paced evolution of payments technology is in fact a bit of a worry for public transport operators.

The rail sector moves slowly. Tenders may stay open for months, new technologies takes years to implement and once they're in, they're there to stay (at least for another 10 to 20 years). This is measured, incremental approach is not quite in-keeping with the fast-paced enterprise sector where a product can become redundant mere months after being launched. But public transport conducts hundreds of thousands (and in some case millions) of payment transactions every day. I'm talking, of course, of transport ticketing.

So how can public transport operators and cities marry their conservative transport ticketing schemes with increasingly sophisticated payments technologies that consumers are adapting to? The obvious proven technology to date has been the Smart Card, enabling passengers to ‘pre-bank' an amount of money for the transit operator and then spend it in increments. However an astonishingly small proportion of PTOs world-wide have implemented these platforms. Not because they don't see the value, or because they don't want them, but because in rail everything simply takes so darn long. 

An important element to consider for railways is the concept of asset management. The implementation of a Smart Card system (or any new payments technology) requires closing of stations across an entire city, a tremendous investment, equipping vehicles, possible reputation-damaging teething-issues and the knowledge that if it doesn't quite work you're probably stuck with it until you can get some more funding to try something new. It's a huge commitment for railways bringing problems which don't necessarily exist for private retailers.

While I don't have the answers, a couple of interesting documents below might help:

1. A presentation from Transport for London exploring their priorities for a new ticketing system (TfL, for what it's worth, are one of the operators furthest forward in marrying new payment technologies with fare collection)

2. A paper from payments specialists Consult Hyperion explaining the potential for EMV to improve ticketing for urban transit

I'd love insight from our readers into how urban rail can best integrate new payments platforms with their fare collection needs in a way which is sustainable, customer-friendly and able to integrate seamlessly with existing operations. Please feel free to leave your comments below.

We'll be exploring the future of payments and how it impacts the rail market at this year's Rail Revenue Congress in Amsterdam. TfL will be there, and so will Consult Hyperion. We'd love to have you join us as well!

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