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The global payments landscape is radically and swiftly changing. Advancements in technology and mobile communications are simplifying payments to a tap of a bankcard or smart device at the cashier. The customer payment experience is now quicker and easier, and creates opportunities for new engagement models with consumers. As adoption of new banking and mobile technology grows at the consumer level, more and more businesses in every sector are beginning to see the benefits of opening their payments channels.
Retail, FMCG and fast food businesses that have naturally low value, high-volume payments have been amongst the quickest to roll out these new systems. However, these speed and cost efficiencies could have the biggest positive impact in the one sector where payments systems have historically been a disproportionate drain on resources and a source of frustration for customers – passenger transport.
Historically, transport authorities have not been early adopters of new technology and have tended to be slow to evolve their systems. However, in recent years, forward-thinking transport authorities and operators from Salt Lake City to London have piloted and launched new transit payment and ticketing systems that allow passengers to use contactless credit or debit cards, student cards or other ID cards, or even their mobile phone to pay for their journeys.
These new automated fare collection (AFC) solutions are commonly called “open-loop” or account-based systems. They can provide a greater degree of flexibility than previous transit “closed-loop” or cash based payments and ticketing schemes.
This paper examines the benefits of introducing open payments systems for passengers and operators. It also reviews some of the challenges and provides examples of where various schemes are already working well around the world.