Transit fare payment witnessing changes-
Deployment of bank cards for transit ticketing is a recent phenomenon in Southeast Asia (SEA). It is currently limited to transit agencies in countries with well-developed public transport systems such as Malaysia, Singapore and Thailand that are increasingly focusing on improving passenger satisfaction by simplifying fare payment methods. Other cities in the region, however, are struggling with the penetration of bank cards. Overall, only around 32 per cent of the population in the SEA region has access to bank accounts, and hence, the use of bank cards (credit/debit) in public transit ticketing space is low, with less than 18 per cent of the total cities in the region currently using bank cards for fare collection.
Limited deployment of bank cards
Bank cards for fare collection have been deployed in nine cities in five countries. These are Jakarta, Palembang and Semarang in Indonesia, Kuala Lumpur in Malaysia, Caloocan, Manila and Quezon in the Philippines, Singapore, and Bangkok in Thailand. Deployment of bank cards is driven by the move towards account-based ticketing (ABT), which offers several advantages of improved passenger experience and reduced fare collection cost.
However, there is significant disparity amongst the cities in the usage and plans to deploy bank cards with some like Singapore, Bangkok and Palembang being actively involved in adopting bank cards and having announced plans to expand the use of bank cards, while others such as Hanoi and Ho Chi Minh City are still using paper tickets for fare payment on buses with no clear future plans to deploy bank cards on the upcoming metro rail network. The timeline for transition to bank cards in these cities cannot be determined as there are no firm plans for adopting advanced fare media.
Singapore: The first mover in Asia
Singapore is the first country in Asia to use bank cards for transit ticketing. The introduction of bank cards is part of the Smart Mobility pillar within the country’s Smart Nation vision. The new fare media taps on digital payments technology to provide passengers with a more convenient way for making fare payment.
Plans to launch ABT system in transit were announced in 2016. Subsequently, LTA and Mastercard launched the first open payment pilot project in March 2017.
Recently, in June 2018, the LTA announced plans to expand the ABT pilot by deploying Visa and Network for Electronic Transfers (NETS) cards. Additionally mobile ticketing options are being explored.The country aims to switch to fully cashless public transport system by 2020 under the Smart Nation Strategy.
Future plans
Transit authorities in six cities, namely, Phnom Penh in Cambodia, Palembang in Indonesia, Kuala Lumpur and Petaling Jaya in Malaysia, Singapore, and Bangkok in Thailand, have announced concrete plans to deploy bank cards on existing and upcoming systems. These cities account for 30 per cent of the 20 major cities analysed and less than 12 per cent of the total cities in SEA.
Challenges and prospects
In SEA, the major challenge in adopting bank cards for public transit ticketing is the limited financial inclusion of the population. Around 438 million people in the region do not have access to bank accounts and hence, cannot use bank cards for fare payments.
As a result, transit agencies interested in introducing and expanding the use of bank cards can only tap a small market comprising 32 per cent of the population (210.8 million people).
In more advanced countries like Singapore, there is growing emphasis on modern ticketing methods. ABT in general and bank cards in particular are gaining prominence. However, it is to be seen if banks and bank card issuers will be able to sustain and expand the usage of bank cards in the presence of competition from other upcoming fare media such as mobile ticketing and mobile wallets.
A final word
The use of bank cards for public transit ticketing in SEA is still in its development phase with five of the 10 countries currently deploying bank cards. Only one-third of the population has access to bank accounts, hence the penetration of bank cards in the ticketing space is limited. One of the key hurdles that most of the cities in the SEA region would face is the adoption of appropriate technology for the transition to advanced fare media amidst economic and financial backwardness. Over time, if the challenges are overcome, bank cards do have the potential to fully replace the use of travel cards, and in the longer run, can coexist with mobile ticketing.
