Transport for London: The Evolution of Contactless Payments

August 17, 2016 | Sam Valdes

Contactless payments continue to become very prominent within our day-to-day lives. Since the introduction of contactless payment cards back in 2007 by Barclays, the move towards a cashless society has become ever greater. Britain in particular has been making large strides towards a cashless society, with 2015 seeing less than half of consumer’s payments consisting of cash. One big part of the cashless ecosystem has been contactless payments for transport.

London has been one of the biggest adopters of the contactless payments method for transport with a major drive in this area coming from the world class contactless system developed by Transport for London (TfL). For every 10 contactless transactions in the UK, one of these are made on the TfL’s network.  Since its launch in 2012 on London buses and on the Tube and rail services in 2014, more than 500 million journeys have been made by more than 12 million unique credit and debit cards from 90 different countries (TfL, 2016).

These stats were bolstered with the inclusion of mobile device ticketing technology with its presence in contactless payments increasing. Following the success of TfL with contactless and more latterly mobile, the GSMA decided to have a Q&A session with Shashi Verma, Chief Technology Officer and Director of Customer Experience at TfL.

How has the introduction of Contactless payments changed London?

Contactless payments cards have completely transformed the way people move around London. For decades, if you wanted to travel on a train, Tube or bus you had to either queue up to purchase a ticket every time you travelled, or outlay a significant up-front cost to buy a travelcard. While the success of Oyster helped reduce this by allowing people to load credit onto a card so they could pay as they go, contactless payments mean that the fare is taken directly from your bank account.  Since we introduced it widely across our buses, Tube, trams, DLR, London Overground, and most National Rail services in September 2014, more than 450 million journeys have already been made using this world-leading technology, accounting for around 30 per cent of all pay as you go journeys in London.

Wow! That’s a huge number of journeys. How difficult is it to ensure that they all get billed the correct way?

The beauty of the contactless payment system is that it’s entirely back-office based. This means that it removes the need for customers to top-up their card, as it’s linked directly to their bank account, and we automatically review the total daily fares before we bill the customer each night to ensure they get the best-value fare. Even more incredibly, the system is so advanced that these contactless cards have come from more than 80 different countries – all without the need for any registration or set-up.

Along with providing customers with the best-value fare on TfL services, and the vast majority of National Rail services, contactless payments provide ‘Monday to Sunday’ capping which automatically limits the cost of travel over this period to the price of a weekly travel card.

Where will contactless payments go next?

The use of contactless payments, especially on London’s public transport system, continues to grow. More than 25,000 new cards are used on the network every day, and we regularly talk to other transport authorities who are keen to learn from our experiences and expand the benefits that contactless payment could deliver to their transport systems. One area which I think we will see further development in the next 12 months is the use of contactless through other methods of payment, such as mobile device ticketing technology. In London, people can now use Apple Pay or Android Pay, as well as a number of other mobile payment options, to travel on our network. In the last 12 months, more than 3.2 million journeys were made using mobile devices. This is only going to increase further throughout 2016 as even more mobile devices with Near Field Communications (NFC) come onto the market.

If you had one piece of advice for anyone thinking about adopting contactless payments, what would it be?

You need to make sure that any proposition acts as the ‘heart’ between the customer and the provider. At TfL, we continue to ensure that customers get the simplest and cheapest experience while travelling on our network. With other transport authorities across the world now looking at this technology, this philosophy must be central to the proposition if it is to be accepted and as successful as we have seen in London.

Considering what has been said as well as the knowledge that TfL have signed a deal with Cubic Transportation Systems (CTS), enabling TfL’s contactless ticketing system to be used worldwide, the future growth for contactless payments looks strong. This growth can prove to be very encouraging for mobile device ticketing technology in the future.

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