Mass Transit systems in India: Biggest Payments opportunity

Payments in the context of transit applications is one of the greatest opportunities for Fintech innovators and more importantly for implementers. Within no time you will see the Oyster card in UK and the Clipper in California getting replaced by mobile using NFC or some other enabling technology. In India we have this huge opportunity to directly jump over to the future of transit payments. Some implementers need to see that and some innovators need to sell that vision. In the area of telecom, India was far behind in the wireline telephony sector while the world was making advancements. India jumped directly to wireless, quickly moved to 2.5G, 3G and beyond and rest is history. Can we do that in payments in general and transit applications in particular?

We are still at a very nascent stage in terms of the mass rapid transit systems in India. Most of the large cities are now building their own Metro systems. Delhi (and National Capital Region) is probably the only one fully built out. Others are barely scratching the surface. Without getting into the plans and delays etc. the point I am trying to make here is about Payments vision that we need to have. Instead of going from Tokens to Contactless plastic cards to Mobile payments for ticket payments, we should directly jump to Mobile payments. Everyone has a mobile in India, or at least all the metro commuters surely do. We are not like the large U.S. cities where riders are accustomed to fare payment using contactless cards, which they are now transitioning to fare payment using a mobile device.

The amount of time mPayments can save commuters and the ease of use, make it a worthy candidate in the bigger scheme of things in the Metro plans of the cities. Forget the large developed nations, even countries like Croatia have done it. Croatian carrier Vipnet has added NFC to its mPrijevoz service, allowing commuters in the city of Osijek to store their monthly Butra transport pass on their smartphone and validate it using contactless readers installed on buses and trams.

Current Scenario:

Public transport infrastructure remains under developed in India, capable of serving only <35% population in urban cities as opposed to an ideal 65% - 70%

- India is currently witnessing a spurt in projects related to mass transit systems across the country through development of metro rails, Bus Rapid Transit Systems(BRTS) & Mono rails

- India currently has functional Metro railways in Delhi & Kolkata with MRTS Systems proposed for various other cities across the country

- MRTS projects at Mumbai, Bengaluru, Hyderabad, Chennai, Jaipur, and Kochi are at various stages of development while proposals are being made for MRTS systems at Pune, Chandigarh, Ahmedabad, Kanpur, Ludhiana, Bhopal, Indore and Faridabad

- BRTS is also in trial stages in India with projects rolled-out in cities such as Ahmedabad, Indore, Pune & Delhi with limited success

Use of technology for ticketing in MRTS:

Various technology alternatives such as NFC, RFID & smartcards are being considered for ticketing purposes in mass transit systems across the country:

- Delhi Metro, which serves about 1.5M commuters/day currently uses RFID tokens and smartcards for ticketing purposes but has started pilot projects for using NFC technology

- Use of NFC-based automated fare collection system is finding traction in India with Bengaluru's metro rail system expected to adopt NXP Semiconductor‟s contactless card system

- Nokia India (along with some payment companies) is also in talks with various metro rail projects across the country to introduce NFC based payments system

Upcoming Retail Chain at Metro stations and payments opportunity:

Development of MRTS provides an opportunity for growth of retail chains & outlets for providing quick and convenient service to commuters. Since the commuters are always pressed on time, what if the same mobile payments that worked for ticketing, worked for purchases at these retail outlets? It will save time and ease of use for consumers. It will also get more footfalls for these merchants.

- ATMs, book stores & fast food chains have mushroomed at Delhi metro with global establishments like InterGlobe retail ,McDonalds, Bharti Airtel & Vodafone openings shops

- Chennai Metro Rail Limited(CMRL) has also invited applications from consulting firms for consulting on use of commercial space around metro stations for retail purposes

The Namma Metro, Stolen tokens and eBay story:

There are several other issues that can be solved using modern payment systems. E.g., recently there was a news about Bangalore Metro tokens, that are issued for boarding and using Metro services, being stolen. And they were sold on eBay. TOI reported:

Number of tokens lost: 2,500

Price of each token: Rs 10-15

Fine if caught trying to smuggle tokens out: Rs 200

Price of a token on offer eBay: $ 4.99 to $9.99

This is a classic example of why we should move to mobile payments.

LTP view: Growing population, limited existing infrastructure for public transport are key drivers for MRTS adoption in India - and providing opportunity for use of newer technologies for ticketing & transit retail purchases should be paramount for the planners