In March 2015, Transport for London (TfL) announced that 60 million contactless journeys were made on the UK transport network after the introduction of contactless payments in September 2014 – making it the fastest growing contactless Visa merchant in Europe and the fastest growing Mastercard and American Express vendor in the UK. On 13 March 2015, one million contactless taps were recorded on the network.
The quick adoption of contactless payments at large has generated remarkable statistics. In December 2014, the UK Cards Association reported that £380.8m was spent in the UK using a contactless bank card – a 330.8% increase over the previous year. Given their popularity, the UK Cards Association announced in February that the spending limit on contactless cards would rise to £30, starting September 2015.
The few issues so far associated with the scheme have been fairly minor.
The most notable of complaints was the “card clash” issue, where a few people have either been mistakenly charged twice for one product, or have experienced a “clash” between their contactless and Oyster cards while scanning in. But such reports have been few and far between and TfL has launched a poster campaign advising passengers how to use their cards separately.
Revelations of fraud also surfaced in November, after researchers identified a failure with Visa’s security system that allowed unlimited cash to be drained out of a contactless card account if the transaction was requested in a foreign currency. Visa did, however, insist that their security measures were sufficient to safeguard clients from this threat.
A different research team raised concerns over makeshift interception tools that could be used by scammers to harvest sensitive data from the cards from a distance.
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However, no real-life scenario emerged and statistics from the Financial Fraud Action UK showed that fraud on contactless was “negligible”, representing only 0.007% of contactless spending.
One step further: contactless goes mobile
Much work is being done to explore the seemingly endless possibilities of Near Field Communication (NFC) bridging our smartphones to our urban environment. NFC is not new – in fact, the still ubiquitous Oyster cards have used it for twelve years this June, amassing more than £100m in dormant, unused money on them in the meantime.
With many UK rail fares rising well beyond inflation, high costs risk damaging its value.
But it’s this same technology that is paving the way into the future by enabling us to drop the cards entirely and start using our smartphones to pay our way in.
In December 2014, the Department for Transport first announced the launch of Transport-Technology Research Innovations Grant (T-TRIG), offering £25,000 in funding towards “projects that use science, engineering and technology to help facilitate a more efficient transport system in the UK”.
On March 17, RSSB launched The Train Operator Competition 2015 as part of the FutureRailway programme. The competition will present £6m in investment to a handful of innovative proposals addressing the “key challenges faced by UK train operating companies”, with a clear focus on customer experience and connectivity. This comes one month after David Cameron’s announcement of a £50m government programme to roll out free Wi-Fi on UK trains by 2017.
Speaking at the launch of the competition, Transport Minister Claire Perry hinted at her hopes for increased connectivity: “Passengers want a seamless experience,” she said. “To find, buy, and get hold of their ticket at the best price, before proceeding with their journey. That should be the minimum requirement.”
“To really make things easy, maybe customers could have a permit to travel on their phone, with no gate-lines that slow them down – a really seamless experience from phone to train, “Perry suggested.
“There has never been a better time for the rail industry to innovate,” Perry said. “The railway is entering a new era of record investment. Of longer, more secure franchise periods, of digital communications technology that can revolutionise the passenger experience. There’s a real buzz about the industry.”
And research is certainly backing up Perry’s call for investment.
The Mobilized Travel Consumer report by travel company Expedia found that “consumers are not only turning to mobile devices more often, but they’re increasingly using these devices to consume travel content.” It’s not a big surprise that mobile devices were used most in transit. Similarly, technology research giant Gartner predicted the mobile payment market to be worth $721bn (£485bn), engaging 450 million users by 2017.
Understandably, the rail industry would be wise to join in on the movement, and cash in.
“The rail [industry] has to respond to the global market trends, but not for the sake of it, but in trying to solve a problem,” says David Clarke, RSSB Director of Enabling Innovation Team (EIT), also speaking at the Train Operator Competition.
Clarke admits that despite the widespread use and popularity of smartphones amongst passengers, bringing mobile into the rail industry has to follow a different logic: “The issue is,” Clarke says, “what it is going to do for business?”
“If the operator has a clear view as to how they want to improve customer service, then that might well be part of the solution. But I wouldn’t want to start from a solution, looking for challenges.”
Chris Fenton, Chief Executive at RSSB agrees: “Technology is only one part of the innovation and the key thing that we need is to talk about the challenges and then allow the industry to come up with demonstrative projects,” he says.
“There might well be mobile technologies which will come up as part of the solutions to address the customer experience, and being able to show how those could work is a key step.”
The race towards a cashless future in transport
For private companies looking to expand, urban transportation offers a goldmine of possibility.
Samsung’s push into the B2B market could be big news for rail operators looking for data-driven tech.
Such is the case for MasterCard. At the beginning of March, the company announced a new global partnership with Cubic Transportation Systems, a company providing travel software and applications worldwide. Targeted at daily commuters, the project will connect digital payment service MasterPass with Cubic’s NextWave ticketing and journey planning app, as a step closer to that “seamless experience” at a tap of a screen. The scheme is currently in progress in London and Chicago and aims to transfer the remaining “$200bn cash payments into digital payments”.
The race towards a cashless future in transport is tight. Apple‘s brand new Iphone6 features a NFC-based mobile wallet for digital payments – and as the world’s biggest smartphone producer and retailer, experts anticipate it will revolutionise the way we travel.
For Android enthusiasts, rival Samsung is again not far behind. Samsung Pay, its own digital payment service, was unveiled on 1 March alongside the Galaxy 6 devices. Its technology uses both NFC and LoopPay, a Magnetic Secure Transmission that allows more terminals to read and accept payment from the devices.
Digital Tourism recently reported that “mobile payments will be another major front in the ongoing war between these two consumer electronics giants.”
2015: “The year of wearables”
Even before the beginning of the year, 2015 was hailed as the “year of wearable technology”, with researchers, developers and experts alike recognising new potential beyond the world of health and fitness, its biggest market so far.
Indeed, the wearable technology market is forecast to expand to £5.33bn by 2018, according to research firm Marketsandmarkets.
In the UK, Barclaycard has made a name for itself in wearable technology by introducing bPay, a contactless wristband, as far back as June 2014 in response to the “card clash” problem. Although the full number of wristbands in use has not been disclosed by Barclaycard, the payment company said it can be used at 300,000 locations in the UK.
More significant is the launch of the eagerly awaited Apple Watch. The Apple Watch could sweep the mobile payment market, introducing wearables to the mainstream and potentially forcing the UK rail industry to face some new adaptation challenges.
“I think that the whole railway [industry] is moving from an analogue world, a mechanical engineering world, into the digital world,” says James Hardy, long-term strategy manager at FutureRailway.
“There is really big digital architecture to be done and that will release huge benefits in relation to how the system operates, so it’s the future.”
Modernising the system to suit consumer trends and bring passengers closer to that much debated “cashless future” is clearly a priority.
“I think the banking world is heading towards a cashless future and it is just a question for the railway to catch up and to standardize that approach. It’s coming our way sooner than they think.”