Contact-free public transport (Part 2)

photo of a bus

This is the second of three blogs about technologies to support contact-free use of public transport.

Public transport operators have been making great efforts to make public transport safe during the pandemic. TfL recently launched a new app that makes it easier for passengers to plan their travel and avoid routes where they might come close to large numbers of people. There are claims that the rate of uptake of contactless by passengers has increased significantly since the pandemic and the demand for contact-free transactions on public transport. Visa recently offered a graph relating to global public transport contactless transactions. However, it is not clear what the actual contactless usage is since they are hidden behind month-on-month percentage increases which look enormous when the previous months had fallen off the proverbial cliff.

King Harald Bluetooth to the rescue?

For an ultimately contact-free experience, Be-In Be-Out (BIBO), where the passenger presence on a mode of transport is detected without their having to tap in and out, seems highly desirable. Until, that is, you start to look for technologies that can deliver it. We have conducted surveys of BIBO in the past for clients and there was a trial on buses when we were working at Transport for the North. Yet still in 2020 BIBO is not a success story outside of the lab.

Various technologies have been trialled for delivering BIBO, some with beacons mounted at strategic points on buses and trains as well as at stops and stations. The passengers must carry some kind of transponder that can be detected by the beacons as they pass through the transport network. The latest hope for BIBO is Bluetooth Low Energy (BLE) named by Ericsson after a Danish king with a dead ‘blue’ tooth. BLE is inside every modern smartphone and can be left activated without significant battery drain.

However, BLE has been around 2011/12 in smart phones and still no BIBO success. There are all sorts of known issues with implementing BIBO. Say, on a bus:

  • How does the driver know you are using BIBO? So, you end up having to activate an app and show the driver that you are using it. By which time, it would have been faster to pay by more conventional means such as tapping a contactless bank card.
  • The beacons are not particularly accurate in range and struggle to differentiate between a passenger on the bus and one standing near the bus.

This same technology was proposed for COVID-19 ‘track and trace’ apps. For similar reasons to BIBO lack of success, it seemed obvious that they would not be able to operate accurately enough to be useful. Furthermore, if launched, they would potentially cause more trouble than they are worth by triggering false alarms and telling innocents to go into periods of self-isolation for fear of transmitting a virus they don’t have to others. Although, companies are still working on it and some claim to have a solution by combining BLE with inaudible ultra-high frequency sounds and others are trialling the use of GPS for tracking.

This is the second of three blogs about technologies to support contact-free use of public transport. There are many technological options and even more considerations, but we thrive on the challenge of finding smart, innovative solutions to clients’ requirements. If you would like to discuss what this means for you, give us a call.

Contact-free public transport (Part 1)

buildings city clock downtown

This is the first of three blogs about technologies to support contact-free use of public transport.

I heard on the radio that, despite ministers encouraging people in England back to work in their offices, most are staying at home. Commuter trains are about one-third full and buses are about 40% full. During the COVID-19 pandemic, demand for public transport fell off a cliff as governments told their people to stay at home.  A major part of encouraging travellers to use public transport is the provision of systems that allow social distancing of passengers from staff, ideally eliminating the need to exchange physical tickets, cash and paper receipts.

The use-case I am interested in is one that allows passengers to travel without paying upfront and be charged afterward based on the journey that they took. Somehow, which journeys the passenger has taken need to be tracked in order that either they can be allowed to travel because they have already paid, or more likely these days with the demise of season tickets, and assuming carnets do not suddenly take off (which seems to be the case), charged after the travel in a modern Pay As You Go (PAYG) manner. What technologies are going to help?

Contactless bank cards

Our work with Transport for London on the use of contactless bank cards for convenient public transport payments is well known. Even before the pandemic, the contactless uptake facts and figures published by TfL in January 2020 at Transport Ticketing Global were better than anyone expected when we started the work back in 2008:

  • Customers surveyed:
    • 44% had used contactless payments for public transport.
    • 28% were using contactless payments for all or most of their public transport payments.
    • 2/3 of customers convert to contactless payments after first use. It is clearly popular and this could mean that the pandemic accelerates the shift to contactless.
  • TfL journey payments market overall:
    • 2/3 of journeys are PAYG:
      • 57% of PAYG is contactless payments and rising. Launch was 2014, and by 2015 20% of PAYG was contactless payments. The contactless proportion of PAYG continues to rise.
      • 21% of the PAYG contactless payments is mobile payments.
    • 50% fewer season tickets are sold since the acceptance of contactless payments (NB this was before COVID-19 pandemic resulted in more people working from home).

TfL recently released graphs of their actual PAYG journeys using Oyster and contactless bank cards across the recent months (see below). The apparent period of zero bus journeys was when TfL temporarily stopped taking payments so that the journeys were not recorded. The split between Oyster and contactless bank cards is not available. In the future, it will be interesting to see whether the pandemic speeds up the switch to PAYG and also whether Oyster users migrate to bank cards.

This is the first of three blogs about technologies to support contact-free use of public transport. There are many technological options and even more considerations, but we thrive on the challenge of finding smart, innovative solutions to clients’ requirements. If you would like to discuss what this means for you, give us a call.

NHS test and trace text messaging scams target vulnerable people

person using smartphone

Here at Consult Hyperion we tend to go on about the lack of a joined up thinking around government policy on digital identity and source authentication but mostly it doesn’t really affect us personally. I mean, we get this stuff, we can spot a scam a mile off. But sometimes it does get a bit close to home…

I discovered today that my frail but still mentally competent parents have been quarantining for the past week, and a bit, because they received an NHS Test and Trace text warning that they’d been in the proximity to someone diagnosed with COVID-19. As they’re in the very high risk category, you can imagine how worried they were. But here’s the thing – they never give their mobile number to anyone and they wouldn’t know how to download an app even if I spent a year explaining it to them. It was a scam – in fact the text deleted itself, but almost certainly it will have contained “more information” link, which would have downloaded malware onto their phone.

Payment card issuance errors leave you vulnerable to fraud

Major payment cards

As Consult Hyperion, and as many other analysts, predicted, Covid-19 has driven the adoption and use of contact-free technology at the point of service. A recent survey funded by the National Retail Foundation, found that no-touch payments have increased for 69 percent of US retailers surveyed, since January 2020. In May, Mastercard reported that 78% of all their transactions across Europe were contactless.

Fraudsters are always looking for ways to take advantage of potential weaknesses or even inexperience in new payment devices. A recent news story promoted a man in the middle attack in which two phones are used to transfer and manipulate the transaction message between a stolen contactless card and the point of sale terminal.

Contact-free and App Clips in Apple’s iOS 14

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The Use of Contact-free is Accelerating

At Consult Hyperion, we have already seen the pandemic accelerate the adoption of contact-free payments in the face to face environment as customers have become wary of catching COVID by touching shared devices, such as self-service terminals and PIN pads.  The use of personal devices for payments is hardly new but the attraction of an in-app/in-store version of mobile payments, whereby the consumer uses an app on their own device to interact with the retailer or service provider and pay for services, has just increased dramatically. Solutions for parking (RingGo) and for restaurants (like the Wahaca app, powered by Judopay) were already demonstrating the benefits of such an approach for customers and businesses before COVID struck.

4+4 | Strategic thinking for post-pandemic payments

mountains nature arrow guide

Early on in the pandemic my colleagues at Consult Hyperion and I did a lot of research to explore how it might impact our customers and our customers’ customers, just as I am sure every other organisation in the payments sector did. We looked at a lot of speculative forecasts, we looked at research and analysis from quite a wide range of organisations in the financial sector and beyond, we spoke to a number of people in the industry and we took part in a fair few discussions and debates on the topic. As a result of this, we identified a number of strategic areas where stakeholders in the payment space should be developing or at least preparing their strategies and where they should be planning for some changes to take them through and beyond the COVID-19 crisis.

Travel Broke and Broken

The ongoing COVID-19 crisis has been ruthlessly exposing fragile business models and weak balance sheets across a whole range of industries but perhaps never more so than in the travel business. In fairness, no one could have anticipated a global, government dictated total shutdown and no business models could ever be flexible enough to support such an improbable scenario. Still, it’s become clear that many travel industry companies are effectively broke and that the payments model they rely on is broken. Going forward we need a better and more sustainable approach to payments in the industry.

Most travel industry payments rely on payments cards so it’s worth starting by recapping on how most card payment models work. When a cardholder makes a payment to a merchant – either in store or, increasingly, on-line, this is routed to the merchant’s card acquirer. The acquirer has a direct relationship with the merchant in the same way that a card issuer has a direct relationship with cardholders and the acquirer will route the payment request to the relevant issuer – usually by sending the request to a payment scheme who uses the card number to identify the correct issuer. If the issuer approves the transaction then the response is routed back through the same path and the purchase completed. This is no different from any other card payment, although there are hidden complexities where the merchant is an online travel agent sourcing flights, hotels, etc from multiple underlying vendors. However, that’s a detail.

Back to the future – QR codes are coming

QR codes are coming

Who’d have thought that the humble barcode – reimagined in 3D – would have posed a genuine threat to the global behemoths that are the international card payments schemes?  And, of all the times, why now? Well, as always, there’s no single answer. We’re seeing multiple trends coalescing to drive uptake of QR code initiated payments, but the announcement by PayPal that they’re rolling their solution out to all CVS stores is perhaps a critical moment:

PayPal and InComm on Thursday (July 30) unveiled a QR code payment system that will enable touchless checkouts by PayPal and Venmo users with their mobile phones at brick-and-mortar stores.

Paypal teams up with CVS to offer touch-free payments

It’s not so much that it makes QR codes mainstream, it’s more that it validates the point that they’re a perfectly viable way of making in-store payments, and then tying it to a e-comm type payment method: now that’s replicable. Four things are coming together to drive the adoption of QR codes:

  1. Smartphones: The widespread availability of smartphones makes them a perfect solution for retail payments. If everyone has one then creating a pervasive alternative to card payments is possible.
  2. Connectivity: In fact it’s not absolutely necessary to always have mobile data connectivity to allow QR code based payments, but I helps managing the risk. And even where mobile data isn’t available a lot of mainstream retail chains are providing in store WiFi or Bluetooth capability.
  3. COVID-19: Suddenly contact-free payments are the way to go – and QR Code initiated payments are a guaranteed way of ensuring that payments can be made without touching merchant equipment.
  4. Integrated retail experiences – “omnichannel”: Merchants with a good omnichannel experience are having a better crisis because the ability to order and pay on one channel and fulfil on another is critical. Increasingly merchant POS estates have API based access to backend systems which can be used to access QR code authorisation or approval channels.

The pay-by-app model, we’ve been touting for years is actually, finally, coming to fruition. Lots of individual merchants – and probably every major supermarket chain in the world – has its own app that allows QR code based payments. Those apps allow a range of other functions to be integrated, including scanning, checkout, automated loyalty redemption and real-time customer data analytics.  The ability to make the customer relationship sticky is attractive and with the average supermarket basket value increasing as customers shop bigger and less often ensuring that you’re the retail destination of choice is critical.

Behind this, however, is another change – and one that the PayPal deal with CVS lays bare. There is nothing that forces one of these QR code initiated payment apps to use payment cards as the means of transaction. Sure, they’ll be there as a backup but any API-based payment solution – and there are hundreds, if not thousands – can be integrated. As direct to account payment APIs, such as the PSD2 payment initiation API that’s mandated in Europe, become more widespread, it will be possible to go direct to the payment account in order to authorise payments.

This trend has other, major implications for other aspects of payments such as settlement and refunds but, as we can see from our own clients, a lot of thought and effort is going into resolving those issues. For retailers who can see lower cost of payments, reduced fraud, significant reductions in the cost of handling chargebacks and faster settlement this is a win-win-win-win situation.

As you might surmise, here at Consult Hyperion, we are heavily involved in all aspects of this change. From helping to develop and secure the apps, to advising on the business and governance models, through to designing and developing the solutions, and providing regulatory advice. We’re leaders in the field. If you’re interested come back to the future with us, QR codes are coming…

Leveraging the payment networks for immunity passports

COVID-19

As if lockdown were not bad enough, many of us are now faced with spending the next year with children unable to spend their Gap Year travelling the more exotic parts of the world. The traditional jobs within the entertainment and leisure sectors that could keep them busy, and paid for their travel, are no longer available. The opportunity to spend time with elderly relatives depends on the results of their last COVID-19 test.

I recognize that we are a lucky family to have such ‘problems’. However, they are representative of the issues we all face as we work hard to bring our families, companies and organizations out of lockdown. When can we open up our facilities to our employees, customers and visitors? What protection should we offer those employees that must or choose to work away from home? What is the impact of the CEO travelling abroad to meet new employees or customers, sign that large deal or deliver the keynote at that trade fair in Las Vegas?


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