Do transit smartcards drive tourists to taxis?

Fri, 2014-06-13 06:00 -- Doug Cooley

In hundreds of cities around the world, transit riders use smartcards to pay the fare to ride buses and trains.  In London they have the Oyster card. In Hong Kong it’s the Octopus card. Seattle has its Orca card. And the list -- not all of them use sea creature names -- goes on.

The advantages of these “contactless” cards are clear. Riders can board faster not having to swipe or insert cards into a reader, which in turn helps keep buses and trains running on time. Transit operators also gain other operating efficiencies.

But the problem is that visitors to cities with localized transport smartcards are often confused about how to use or obtain them. As SCC Global Partner MasterCard points out, the cards produce three unfortunate consequences.

  • Travelers visiting a city avoid public transportation services and rely on taxis. And more taxi rides lead to more traffic congestion and pollution.
  • Visitors who use taxis and shun public transit also don’t explore a city as much. They don’t make those extra stops to eat and shop locally. City businesses suffer.
  • For visitors who do opt to buy local smartcards,  the city incurs the costs of issuing the card, explaining how it works, replacing it if it gets lost, and so on.

MasterCard contends the remedy rests in the acceptance of global, general purpose payment cards on transit systems -- cards like MasterCard, American Express and Visa. That would assure travelers they can pay fares on a city’s transport system with the payment card already in their wallet or purse.

“Contactless payment technology allows such cards to be used at speed for low-value payments, and recent work in London and elsewhere has resulted in the creation of a set of transaction rules specifically for public transport operators that allow for distance-based pricing,” writes Will Judge with MasterCard’s Transit Centre of Excellence.

London has indeed already enabled the use of general purpose payment cards for its buses. The city’s transit operator is also looking to enable commuters to pay for bus and train fares using NFC-enabled smartphones.