Benefits of contactless payments in public transport - Visa
DURBAN - A 2018 study conducted by Statistics SA, via a General Household Survey, reveals that South Africans undertake a whopping 72 million trips every month using public transport.
With a public transport spend that consumes anywhere between 1 percent and 10 percent of total income, South African households are being forced to carry around wads of cash to pay for their daily commute.
Alternatives to cash payments for transportation are being sought around the globe. From 31 May 2019, many New York City subways and buses will let riders tap a contactless bank card or their mobile wallet at some turnstiles to pay fares. This advancement has got experts excited about how the new fare system could be the ‘tipping point’ in the move away from cash once and for all.
Visa, commissioned a global study to better understand the challenges faced by commuters. The study, entitled "The Future of Transportation: Mobility in the Age of the Megacity" comprised 19 000 consumers living in either of the two biggest cities in 19 countries, including respondents from Cape Town and Johannesburg.
The results of the survey indicate that complexity in payment is often a point of frustration among commuters. The study also found that 50 percent of people open to new innovations would be more likely to use public transport if they had access to a consolidated app that allows them to plan and pay for journeys across a mix of public transport.
The research revealed that long queues are the most common frustration when it comes to paying for public transport (cited by 52 percent of respondents). 47 percent said that the need for different tickets for different modes of travel is an issue while 44 percent said that not knowing how much to pay is a problem, and 41 percent cited services being cash-only.
Herman Donner, PhD and Postdoctoral Researcher from Stanford University and co-author of the report said, "When looking across the technology landscape, there already exist many products that could easily address people’s daily frustrations with travel. A major challenge therefore lies in first identifying relevant technologies that provide suitable products for the market".
"Solutions such as contactless transit that make payments easier could be critical to increasing usage and commuter satisfaction in the future," said Daneel Jordaan, Visa’s Head of Consumer Products for Sub-Saharan Africa.
Despite unsubstantiated claims to the contrary, contactless payments are secure and continue to maintain one of the lowest fraud rates of any type of payment.
SABRIC (The South African Banking Risk Information Centre) Chief Executive, Kalyani Pillay, allays any fears that bank clients may have about contactless bank cards or “tap & go” as they have become known.
Pillay said, "Contactless payment cards are as secure as traditional cards, and SABRIC has not received any reported crime incidents where “tap and go” cards have been exploited".
"Visa contactless cards are built on secure EMV® Chip technology, which has proven effective at reducing counterfeit fraud. In countries where contactless payments are used widely, fraud at the point of sale has remained at historic lows. In fact, the global contactless fraud rate declined 33 percent between 2017 and 2018," explained Jordaan.
Contactless technology are relatively new in South Africa. The convenience lies in the fact that these cards can merely be tapped on a near-field communication (NFC) Point of Sale (POS) device to make certain payments, which is quick and easy for the card holder.
Visa’s transportation study revealed several frustrations experienced by commuters.Consequently, the ability to plan and pay for trips in a consolidated manner that is applicable to all modes of transport, is likely to increase and streamline mass-transit usage.
Contactless payment, based on NFC, offers the benefit of speed, taking almost half the time compared to traditional card payments or cash. In the South African context, where such a large portion of our workforce is reliant on public transport, this equates to an enormous potential for shortened commuting times.
Describing Visa’s approach to their product development, Jordaan said, "The most important question that we need to ask as we develop new solutions is how inclusive the solutions we develop are and whether they are solving the challenges of South Africa’s underserved communities".
When designing the commerce ecosystem for the next generation of transportation, the features and functionality need be simple and intuitive to entice the elderly and new entrants into digital commerce, while still retaining the features that appeal to the digital native.
BUSINESS REPORT ONLINE