Enabling seamless access to urban public transport systems around the world

Today over 50% of the global population lives in cities. It’s expected to increase to 70% over the next 20 odd years. In the face of growing population and legacy infrastructure, public transportation is one of the key challenges faced by cities. It is a critical issue that cities aspiring to be smart have to address. It is related to economic growth, competitiveness, sustainability and ensuring better lives for citizens.

As a global payments platform, Mastercard is closely collaborating with governments around the world to support them in their endeavor to create more efficient urban transportation. OpenGov spoke to Carlos Menendez, President, Enterprise Partnerships at Mastercard to learn more about these partnerships and the resulting benefits.

Quick return on investment through operational efficiencies

Around the world, there is a desire to make investments in various projects to make cities smarter. But many governments face a shortage of capital.

Mr. Menendez said, “Over and over the projects that we have seen approved are the ones that get a faster return.” Because election cycles play a role in investment decisions.

Transit is one such area. Working with cities like London, Mastercard estimated that anywhere from 12 to 14% of revenue is spent on collecting fares in a city. By shifting to an open loop system, enabled by a globally interoperable technology like that of Mastercard, the cities can save significant amounts of money.

For example, London saved around 100 million Pounds annually by moving from proprietary technology like Oyster to an open loop contactless system, which accounts for nearly 50% of all pay as you go ridership in London today.

London was already using a cashless system. For more than a decade, Transport for London (TfL) has used Oyster, a pre-loaded contactless smartcard, as its ticketless payment system for fares on bus, Tube, tram, DLR, London Overground, TfL Rail, Emirates Air Line and most National Rail services in London. Doing so has eliminated the need to use cash to pay for fares, helping to reduce long queues during peak travel times.

But Oyster has significant operating costs. Volumes of new Oyster card issuance in excess of 500,000 cards per month resulted in a hefty bill for purchasing, preparing and distributing new cards. There were substantial costs as well to maintain top-up network, collect cash from stations and commission for third parties to top up Oyster cards. Moreover, the requirements for the Oyster system were finalised before the Internet went mainstream. Hence, it did not have a straightforward way for customers to manage products stored on Oyster cards online which had to be retrofitted into the system.

In response to these issues, TfL launched the Future Ticketing Programme in 2014, enabled by Mastercard’s contactless payment technology. Commuters could use a contactless-enabled Mastercard® or Maestro® card, or a NFC-enabled smart phone. In just over a year, the cost of collecting fares dropped from about 14 percent of revenues to just below 9 percent.

It also brought another benefit. For the nearly 20 million international individuals1 who visit London each year, as well as residents who infrequently use the transit system, the Oyster card system could be problematic.

“Tourists who are figuring out the system are slowing down the system. They don’t know where to buy a ticket, they don’t know where to stand, where to go. The ease of going through the system with their existing card from their home country leads to better journeys for tourists and also improves the flow for the city itself, to the benefit of the locals,” Mr. Menendez explained. 

At the moment, Mastercard is working with over 100 cities around the world on similar transit payment systems, including the Land Transport Authority in Singapore.

Data insights for better journeys and enhanced sustainability

After the data on the journeys starts getting digitised, Mastercard has worked with cities like London and Chicago to improve the journey itself. Anonymised payment data can be captured real-time. It can help city transport authorities to optimise public transport planning and advise commuters on most efficient routes at a particular time.  

In a recent trial in Chicago individuals signed up to receive texts when crowding is to be expected on a particular line due to sporting events, and almost 20% of the people shifted to alternate routes.

Mr. Menendez said, “So, you find that citizens themselves are responsive and they appreciate the fact that they can get a better and easier journey by getting better information. The whole digitisation of the data underneath from using cards and phones facilitates that.”

Mastercard is also working with Transport for New South Wales to understand the real-time flow of individuals through the transit system as they go shopping, to restaurants or for enjoying nightlife. (Mastercard and Transport for NSW introduced contactless ticketing payment to Sydney Ferries wherein, commuters can use their Mastercard contactless card or mobile wallets that have enabled Mastercard cards to tap on.)

Harnessing data analytics and technology to help urban planners would reduce emissions also, resulting in better air quality and associated health benefits.

Urban transportation is one of the key contributors to CO2 emissions globally. Mastercard entered into a partnership with the C40 Cities Climate Leadership Group (C40) in 20156 to connect Chinese and global megacities in a ‘Mobility Management’ network.

The C40 Mobility Management network spearheads the sharing and activation of best practices to better integrate and optimise the various modes of public transport. It supports city efforts to reduce Greenhouse Gas emissions by improving integration across transit modes, making public transit more attractive and easier to use, as well as reducing and re-distributing travel demand.

Financial inclusion

Working with cities on transport systems ties into Mastercard’s financial inclusion commitment to reach 500 million people previously excluded from financial services and the formal economy by 2020.

It’s important that the smart city is for the benefit of many, and not just a few. It's important to ensure that the people who would benefit the most from time and money savings don’t get locked out. 

“If you are working a day job or a week job, you will be getting paid in that fashion. You don’t have the benefit of buying a monthly pass or a weekly pass. You literally have to wait in line each time for your one-time journey,” Mr. Menendez elaborated.

Mastercard works together with the government and banks to get prepaid cards and debit cards into these individuals’ hands.

For instance, Bogota in Colombia has a bus rapid transit system. There Mastercard worked with the government and a bank to provide contactless debit cards to the people. There are over 2 million people using that particular system in Bogota.

In Vietnam, Mastercard is working with a mobile operator to give customers prepaid cards. Multiple functionalities were built into the card. It can be used for topping up airtime, paying bills, paying for transport.

Mr. Menendez said, “We recognise that cities are different and that they need unique solutions.”

But at the end of the day, they share many of the objectives. Creating a more efficient transport system, saving costs, improving air quality, enabling seamless journeys for residents as well as tourists, and ultimately about moving towards a healthier, better and safer life for citizens.

And this is where having technology that is scalable to thousands of locations around the world can provide a leg up. 

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