This document discusses potential benefits and business models for banks partnering with transit operators to implement cashless transit ticketing systems using smart cards. Key benefits include reduced costs for transit operators through lower capital expenditures and cash handling, potential new revenue streams for banks from card transactions outside of transit, and increased convenience, speed and security for consumers. Two business models are described: banks providing smart cards and lifecycle management or implementing full end-to-end automated fare collection solutions integrated with smart card technology. Challenges around existing proprietary systems, device quality, and stakeholder mindsets are also noted.

1. Axis bank - Integrated Transport
Services- Cashless
Transactions/Smart Card

2. Why banks are relevant to transit ticketing?
 Substantial financial benefits to transit operators vis-à-vis existing Mode
 Reduced CAPEX (Potential savings of ~ INR 50-100 Cr)
 Potential Revenue Generation through card transactions outside transit network
 Limited Operational overhead as FI offers Card distribution, operations and customer services
 Reduced Cash management - Promotion of electronic cash
 Creation of products based on consumer behaviour which leads to wider utility of card (doubling up as
Prepaid/CC/Debit card) promotes wider acceptance among travellers
 Allows multiple card products in market proven for secured EMV based transactions
 Enables inter-operability across transit operators and achieving the vision of Common Mobility Card
 Promote loyalty program with other service providers

3. 3
Benefits to stakeholders
Transit operators
Speed, Spend, Cost & Insight
 Faster than cash
 Shorter queues
 Increased spend
 Improved customer satisfaction
 Customer loyalty
 Reduced cash handling
 Customer intelligence
 New revenue generating
opportunities
Financial Institutions
Revenue, Differentiation & Loyalty
 Replace cash
 Increased spend
 Customer retention and acquisition
 Customer intelligence
 Savings on offline transactions
CONSUMERS
Speed, Convenience & Security
 Speed
 Convenience
 Security (card will stay with card holder)

4. Business models in transit
• Existing models
– Banks offset the cost of smart cards only
– No involvement in processing transit transactions
– Non sustainable business model
• New possible business model
– Model 1: Bank integrating with existing AFC solutions
• Banks provide smart cards and perform life cycle management of
smart cards
• Banks do marketing and distribution of smart cards
– Model 2: Banks implementing end to end AFC solution
• Banks implement AFC ticketing solution integrated with smart card
solutions
• Cloud based AFC hosting for multiple operators (buses, metros,
BRTS, taxis, parking, etc) to join the same program thereby
reducing overall ecosystem costs

5. Challenges to create cashless
ecosystem
• Non availability of a sustainable business model
• Proprietary & non electronic payments
supporting AFC solutions (esp. buses)
• Quality of handheld devices in the existing bus
ecosystem
• Closed ecosystems by metro AFC providers
• Mindset and complex environment with multiple
stakeholders

6. Axis Bank – Seeing strong tailwinds of growth post
BMTC
Wave 2
Overall contactless
Strategy
Wave 1
Bengaluru Contactless
Other
functions
Retail
Transit &
Toll
Payment Wallet
BMTC Offerings
Loyalty,
Ticketing, Access
Control -
Contactless
Smart City
Applications
NPCI BMTC Smart
Bengaluru
The BMTC contactless strategy can offer the following
in phased priorities:
• Phase A: Transit and toll payment using NPCI wallet
• Phase B: Transit, Toll and Retail for all payment
schemes
• Phase C: Smart city applications like retail, transit,
toll, enforcements, utility bill payments, access
controls – All using the same contactless card
6

7. Contactless Use Cases – Through NFC enabled mobile phone/card
7
Transactions
Contactless
Payments &
Loyalty
Transactions
Access control
Service
Discovery
Receive info,
coupon or
ticket from
poster
Transactions
Public
transport
ticketing
Transactions
Micro
payments
Connectivity
Exchange
information
and much
more…

8. Consumer segments view the product differently
Will use everywhere applicable
Working
Women
Will use only for transit
Cash only, No Card usage
Regular usage of Both Cards
Infrequent Debit
usage
Youth
Debit + Infrequent
Credit usage
Frequent Debit usage
• Don’t carry a card in the wallet, but have a debit
card at home
• Use online channels for recharge
• Most payments in cash
• See the card as a Status Symbol
• Carry cash in wallet for daily payments
• Like Reward accumulation
• Spend for small payments, big ticket payments
done by the spouse
• Transact through a Credit/Debit card – Mostly Debit
• Likened it to a Debit card
• Highly calculative
• Skeptical of using the card outside transit unless it is
used in avenues where existing cards are not used
Working Men
I can load my pocket money in this card and
use– don’t have to ask parents for debt
card every-time
• Can this be available in my existing card, I
don’t want to add another card in my wallet
• If it can be used in places where debit card
is not used like for very small payments,
then will be useful
Others
I will use it if I have reward points in the card