Author(s): Raghu Gopal
Last week, Visa announced the launch of its Visa Global Transit Solutions unit, a business group that will assist municipal transit systems in implementing contactless ticketing solutions. The division will offer guidance, frameworks and standards for transport operators around the world, and will supply technical experts to aid adoption of corporate transaction services such as fixed and distance-based fares, multimodal travel, capping, concessions and delay compensation.
For Visa, the programme means shifting more transactions from cash to electronic payments. It aims to enable mass transit operators and technology providers of any size to provide contactless payments as a fare option at the gate.
Some cities are already well ahead in this game. Major metro areas including Hong Kong, London, Sydney and Tokyo have been deploying advanced contactless systems for years, covering all modes of public transportation. The systems deliver several benefits for commuters and transit operators, such as faster payments, dynamic fare models and transaction cost savings.
Visa had worked with Transport for London in the past and sees this as a good model to emulate. Since its launch in 2012, more than 1 billion journeys on London's tubes, trains and buses have been made using contactless payment. About 2 million trips are now made each day using this alternative payment option.
Visa claims a switch to contactless transactions could offer major advantages to transport operators. Its recent Cashless Cities report found that transit agencies spend an average of 14.5 cents of every physical dollar collected in marketing costs, whereas only 4.2 cents is spent for every digital dollar. The study estimates that relying more on electronic payments such as cards and mobile payments, could yield a net benefit of up to $470 billion per year in the 100 cities studied — roughly equivalent to 3 percent of the average gross domestic product for each of those cities.
There's a clear transformation happening in many cities, as digital technologies make their way through public services, though the change happens at a different pace. The increasing use of advanced forms of payment will generate a positive impact that could extend beyond simple financial gains. Although the digital shift might be uncomfortable for some, it could accelerate digital behaviour and boost the reputation of a city. Visa is looking at the complete end-to-end consumer experience, using its Innovation Center in London to build the future of payment options for automobiles, air travel and mass transit.