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Transport: The driving force behind contactless payments in the UK

It has been well documented that the transport industry has been the driving force behind contactless cards in the UK, with Transport for London being instrumental in both their adoption and acceptance on its tube and bus networks. However, as just one system in one city, it isn’t the only way that the transport industry has influenced consumer behaviour in the UK when it comes to payments.

London Underground

Whenever anyone speaks about how transport has helped the payments industry, there is only one place to start. Transport for London has become the poster child of contactless, having actively promoted use of the technology across their network for many years – from Oyster cards to contactless payment cards and, more recently, Apple Pay. TfL has sought to educate its customers on the benefits of using contactless payment methods over others and why wouldn’t they?! Every time a card is tapped at the turnstiles it reduces queueing times for customers, enabling more travellers through the gates. Whilst traditional paper travel cards are still available, there is a longer delay at the turnstile when using them, so it makes sense to push contactless on customers.

When Apple Pay was launched across the network there were a number of initiatives put in place to encourage travellers to use it on the tube, such as MasterCard’s ‘Fare Free Monday’ scheme, which offered free travel across the TfL network for their cardholders using Apple Pay. However, the process of opening the app and paying with it at the turnstile has been criticised by many as cumbersome as it takes more time than tapping a contactless card at the turnstile. This perceived inconvenience, and a number of additional annoyances, has led to a lot of unhappy customers. Despite this, the publicity surrounding the acceptance of the payment method on the London Underground will still have done the job of encouraging Apple users that have access to it to at least try it out, regardless of its reviews.

Bus networks

The TfL bus network has also been instrumental in the adoption of contactless payments, having gone completely cashless in July 2014. Whilst not completely cashless, other bus networks across the nation seem to have followed suit - with at least one closed-loop prepaid smartcard system in place (similar to the Oyster card) that enables customers to travel across its transport network in many UK cities. For example, in Nottingham, there are a number of systems in place – one for each transport company, as well as a new overarching smartcard that enables travel on every network. To encourage the use of their prepaid contactless smartcard systems, many bus companies across the country have also made it a policy not to give change for cash transactions on their networks - and let’s face it, if your journey is going to cost more because you don’t have the correct change on you, why use cash?

Whilst bus travel seems mostly to be limited to the prepaid closed-loop card systems at the moment, earlier this year the UK transportation industry announced plans to enable contactless payment card travel on every bus in the UK by 2022. The aim is to give a consistent experience for all travellers in the country. I have no doubt that this move will further ingrain the technology into society and consumer consciousness reaching beyond transport.

Taxi companies

Whilst TfL and bus networks across the country have been instrumental in the initial uptake and use of contactless technology, I would argue that taxi services are at the forefront of payment innovation, driving the adoption of the newer payment channels further. Traditionally cash only networks, taxi companies across the country are not only introducing card and contactless payments, but services such as Uber are doing away with the traditional ‘payment’ altogether.

The payment process for the taxi journey is invisible to both the driver and customer, making the cashless transaction one of the most frictionless payments all round and in my opinion, achieving the holy grail of consumer payment experiences.

There are always going to be some consumers that would prefer to pay for travel with cash; however the promotion of different electronic payment methods by transport companies, coupled with the sheer volume of customers that use them to pay for these services, demonstrates how important the transportation industry has been in driving payments in the UK, and I look forward to see how others will continue to try and streamline payments in the future. 

Comments: (7)

Melvin Haskins
Melvin Haskins - Haston International Limited - 18 August, 2016, 07:28Be the first to give this comment the thumbs up 0 likes

My son is on a Government apprentice scheme and is low paid. He needs to travel into central London for two days per month as part of his training. The fares are reimbursable, but only with a receipt for purchase. At £12 return the sums are significant to him. He cannot get a receipt with his Oyster card, so has to purchase tickets. No receipt, no reimbursement.

Kirsty Berry
Kirsty Berry - Compass Plus - Nottingham 18 August, 2016, 09:241 like 1 like

Hi Melvin, you are actually able to view and print receipts for both Oyster and contactless payment cards on the TfL website, so in this scenario there would be no need for Myson to purchase paper tickets (which would also probably be more expensive than using either an Oyster or conatctless payment card)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 18 August, 2016, 19:04Be the first to give this comment the thumbs up 0 likes

"Apple Pay. However, the process of opening the app..." Maybe it's different on TfL but, in general, Apple Pay comes on automatically, which is one of its strong differentiators compared to other mobile payments, as I'd highlighted in Apple Puts Banks Squarely At The Center Of Mobile Payments.

A Finextra member
A Finextra member 19 August, 2016, 11:01Be the first to give this comment the thumbs up 0 likes

You are right, Ketharaman. In general, Apple Pay works well with TfL (except dead battery scenarios). There are many things which can be improved with contactless-based transit ticketing, especially as far as UX is concerned - at MultiPass, we are going to demonstrate some of the new features during our forthcoming pilot with several bus operators in the UK.

Matt Scott
Matt Scott - RenovITe Technologies Inc - London 19 August, 2016, 11:18Be the first to give this comment the thumbs up 0 likes

Clearly the opportunity here is for TFL to have a series of USB Battery Packs for sale in Vending machines by the Exit Gates.

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 19 August, 2016, 12:08Be the first to give this comment the thumbs up 0 likes

Yo @AlexanderPeschkoff: Long time, good to see you again! I thought Apple Pay had totally licked mobile payments UX. Your comments are making me curiouser and curiouser about MultiPass!

@MattScott: "Don't leave home without powerbank." AmEx may not like USB Battery Pack usurping its credit card but, even without Apple Pay - I'm an Android fan - that's the reality in today's smartphone-dependent world. 

A Finextra member
A Finextra member 19 August, 2016, 12:14Be the first to give this comment the thumbs up 0 likes

@KS: I am planning to get back "on the radar" at Finextra - it's a good community here. As for MultiPass - in a month, I will be able to tell you more (if you don't read about it in the press first :)