Abstract
The top 20 global transit markets account for $37 billion in annual revenues.
As mass transit systems continue to grow, that volume does as well. Long a
cash-oriented process, global transit authorities are typically choosing
contactless, closed loop payment systems to speed riders through their
turnstiles and revenues into transit authority coffers. The challenge for
card networks and issuers is how to participate in that transaction processing
flow.
International Transit Payments: Find the Contactless Breakout Strategy
examines the market size of the global transit industry, it identifies four
transit payment models and identifies the model best positioned to meet the
needs of the card networks, issuers, transit authorities, merchants and
consumers. This latest Mercator Advisory Group report reviews the
perspectives and drivers of card networks and their issuing customers, transit
authorities and merchants as they each try to optimize costs and revenue.
"Issuers and transit authorities view transit payments through very different
lenses. Issuers want to accelerate the use of contactless transit payments,
so we expect to see broader use of an issuer-based hybrid card model," stated
Melanie Broad, a member of Mercator Advisory Group' s Emerging Technologies
Service and principal analyst on this report. "Everyone has an interest in
moving from cash to cards, even the consumer. The trick is finding a payment
method that satisfies all members of the transit payment process. This new
hybrid card model will do that."
The report reviews current deployments of open loop and hybrid transit
solutions in Asia, the UK, and the US. The impediments to broad usage of open
loop contactless cards in what is a predominantly closed loop industry are
examined. Finally, consideration is given to new capabilities and obstacles
to broader transit payments including the roll-out of NFC-based handsets and
the increasing use of multi-application smart cards.
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