The emergence and growth of contactless payment options has had a significant impact on consumers’ lives, delivering greater speed and convenience in low-value transactions.
One of the areas where the effects of this technology have been most pronounced is travel, particularly in mass transit systems. Across the London transport network, for example, some two million journeys are made using contactless every day.
All the signs point towards this payment technology continuing to grow and having a bigger impact on how people make journeys over the years to come.
‘Transforming the mass transit experience’
Transport for London (TfL) first made contactless payment available on the UK capital’s buses in December 2012 and expanded the capability to cover Tube and rail services in September 2014.
Figures released in July 2017 showed that the city’s transport network has now seen more than one billion pay-as-you-go journeys completed with contactless payment. This technology is now used for 40 percent of all pay-as-you-go trips, up from around 25 percent a year ago.
Shashi Verma, chief technology officer at TfL, said the availability of contactless has “completely transformed” the way people pay to travel in London.
But it’s not just in the UK that this payment option is having a significant impact on mass transit networks, with Visa recently announcing a global program to drive “seamless, friction-free” travel with contactless payments.
The Visa Global Transit Solutions initiative has been designed to boost speed and convenience for travellers worldwide by accelerating the use of debit, credit and pre-paid accounts at fare gates and bus readers. It has various components, including a consulting service that will support contactless payment implementations with guidance and hands-on assistance.
Visa has also created a back-office framework to manage contactless transactions, regardless of the relevant transit operator’s size or fare structure.
Michael Lemberger, head of products at Visa in Europe, said: “Visa played an important role in partnering with TfL. We are applying the expertize which has led to more than one billion Visa contactless journeys on TfL to help mass transit operators around the world move away from cash and tickets to contactless payments on buses and trains.”
Part of an increasingly diverse payments ecosystem
It’s clear that contactless payment technology has already had a marked impact on how people use mass transit systems, and it looks set to become even more influential in the years to come.
This is indicative of a payments ecosystem defined not by any particular transaction method or channel growing at the expense of another, but by expanding diversity, flexibility and choice for consumers.
Tap-and-go convenience may be reducing the need for cash in mass transit networks, but we have also seen that physical currency still has a vital role to play in payments and the financial system as a whole.
The 2017 World Payments Report from Capgemini and BNP Paribas concluded that cash “continues to be in the mainstream”, particularly for low-value purchases. Cash transactions also remain highly important for independent retailers with relatively small but loyal customer bases.
As the payments sector moves into 2018 – a year that could be defined by regulatory change and ongoing financial services industry transformation – we can expect diversity and choice to remain prominent themes.
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