Credit Card Processing

Visa and the Contactless Transit Payments Market

by

March 26, 2018

When it comes to public transportation and commuting, passengers are looking for one thing above all else — speed. As city populations grow, public transit is coming under pressure to move as many people through the system as quickly as possible.

That’s why Visa’s new entry into the contactless transit payments marketplace is so exciting.

We’ve all seen the queues at turnstiles and ticket windows. Systems like Oyster on the London Underground, Suica in Japan, and Calypso in Europe have revolutionized how people get around. These contactless micro payment cards simply debit a small amount from the card balance when the cardholder take a public transit journey.

This combination of convenience and efficiency has helped both passengers and transit operators accept contactless payments as one of the easiest ways to travel. On some public transport networks, they account for more than 40% of all journeys.


Visa Global Transit Solutions

But, the way city transport organizations and consumers want to use and pay for transit is changing. Some operators want to move away from dedicated smart travel cards towards mobile wallets and general purpose credit and debit cards. It’s this shift that Visa is taking advantage of, through creating a new business unit called “Visa Global Transit Solutions.” While the team is based in London, the solutions are expected to be offered worldwide.

The aim of this new area is to help public transit organizations develop and utilize payment systems that can easily accept contactless payments from any type of compatible contactless device, debit, or credit card. This is what they say on their website:

“People around the world spend up to $800 billion annually on public transport fares, a very large proportion of which is paid in cash or cash-equivalent technology like smartcards. Contactless technology can help reduce the need for traditional tickets or travel smartcards and therefore reduce the operating costs for cash acceptance, making it faster and easier for consumers to ride on mass transit while making it less expensive for operators to run their network.”

Why Visa’s Public Transport Initiative Matters

Visa is one of the most dominant forces in the payments marketplace. They have the largest distribution of cards and biggest payment acceptance network in the world. They are starting to take microtransactions very seriously. This new, public transit-focused business unit shows that the company looks to dominate even more areas of payments.

Visa already works with over 100 transit authorities and operators, and this initiative will significantly build on that success. They will achieve this in several ways:

  • Work with transit agencies regardless of their size, operations, or way they charge passengers.
  • Integrate with contactless credit cards, debit cards, digital wallets, and smartphones.
  • Provide access to the “Visa Ready” program that certifies them as meeting security standards for contactless payments.
  • Reduce costs for collecting fares, from an average of 14.5 cents in the dollar for paper tickets compared to 4.2 cents in the dollar for digital smart tickets and contactless microtransactions.
  • Innovate for collecting fares in a contactless, public transit, microtransaction system.

Visa Global Transit Solutions Impact on Passengers, Operators, and Fare Payment Networks

The big question is, what will the effect of these changes be for transit agencies, customers, and other networks? While it’s too early to say, we can probably expect more integration with contactless / NFC credit and debit cards and smart phones could reduce the use of dedicated transit smart cards. Instead, passengers can just carry one device or card for everything. This also helps achieve greater throughput of customers due to more people using contactless payments. That equals less waiting and time spent commuting. There will be no need to pre-load smart cards, meaning easier travel through the transit system and fewer delays for individual passengers.

Additionally, there may be significantly reduced operational fare collection costs for operators, which may in turn release funds for capital improvements, repairs, and maintenance of the transport networks.

As public transit becomes more popular, it’s vital to make the system as easy and fast to use as possible. If Visa can deliver an improved customer experience, reduce the costs for transit operators, and help everyone adopt a more efficient way to travel, there are exciting times ahead.

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Paul Maplesden

BY Paul Maplesden

Paul Maplesden is a freelance writer specializing in business, finance, and technology. He brings shrewd research skills to CardFellow, resulting in detailed, actionable information for business owners.Paul finds writing about money deeply interesting, and much of his work for CardFellow focuses on the intersection of payments and technology. Whether he's writing about the latest payment app or detailing the differences in popular ecommerce platforms, Paul's work helps businesses understand the myriad products and services available in the processing industry.Aside from writing, he loves Earl Grey tea, pivot tables, hats, and other fine geekery.

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