Interviews

Wave and pay

Later this year, London will lead the world in contactless payment when it goes live with ‘wave-and-pay’ technology across the Tube, DLR and Overground. RTM spoke to Shashi Verma, TfL’s director of customer experience, who heads the contactless project.

Since December, passengers on London’s buses have been able to pay using contactless bank cards, in the same way they might use an Oyster card. Around 10,000 passengers a day are paying this way already, up from 3,000 on the launch day.

But rolling this technology out to the Tube, DLR and Overground is much more complex, as the fares system is much more intricate than the simple flat payment for bus trips. After some well-publicised delays to the launch, Shashi Verma, TfL’s director of customer experience, told RTM that the go-live date will be before the end of 2013.

He said: “The bus launch was really a stepping stone towards what’s going to happen on rail. We’re expecting to launch on rail by the end of the year.

“Every bus now has a new reader, and the same thing is happening on the Tube network. That’s happening practically every night, right now: installation engineers are going out to stations to replace the readers. That part of the upgrade is quite well-advanced. They’re exactly the same as the bus readers, so we’ve got 9,000 in the field already.

“The second part is a remote software update, once the hardware has been upgraded, to allow these readers to accept contactless transactions.”

‘No-one wants to buy a ticket to travel’

We asked Verma to explain the longer-term vision for contactless payment in the ticketing mix, and how he expects it to sit alongside Oyster.

He said: “Before looking forwards, the first thing to do is look backwards. The whole reason for introducing Oyster, which has been an enormous success, was to allow people to move through the gates faster, which truly has made a big impact. With the kind of traffic we’re carrying now, many of our stations would be inoperable had we not had Oyster.

“It was also to shut down some of the deficiencies with the magnetic stripe system, which allowed people to get away with paying a low fare: you could call it fraud, or the inadequacy of the system, but the fact was it was collecting less money than it should have.

“No-one really wants to buy a ticket in order to travel. For those people with season tickets, the magnetic strip system was ok, but if you didn’t have a season ticket, you ended up buying a ticket every single time you travelled. So, the introduction of pay-as-you-go has made a big difference to that. People now top-up once for multiple journeys, and the number of ticketing transactions has dropped by two-thirds as a result.

“But, despite that huge success, which is very visible across the network, the reality today is still that even though you do not need to buy a ticket every time you travel, you still need to top up your Oyster card from time to time. Visiting a ticket machine or office is still par for the course, and occasionally you do run out of money on your Oyster card unexpectedly.”

Taking off over time

Verma continued: “We’re trying to align the world of transport payments with the world of payments generally. You don’t do anything special when you walk into Sainsbury’s or Marks & Spencer; why should the transport industry make you do something special before you travel?

“It was after that very simple realisation that the world of contactless payments has come around: we looked quite extensively at what might replace Oyster in the future, back in 2006, and found that the additional step of buying a ticket is not productive either for us or for our customers. That’s why we’re doing contactless payments. It’s going to be something that will take off over time: nothing of this kind succeeds over night. But once we put it out there, it will succeed. We’re seeing that on buses right now.”

Verma said there are more than 1,000 new users of the system daily on the buses so far. He said: “This is actually getting to the market that’s the hardest for us to get to: the infrequent user, who has decided it’s not worth their while investing in the Oyster card system. It gives people from the rest of the UK and the rest of the world the ability to pay on our transport system without having to engage in a lot of kerfuffle. That’s a good thing.”

Tap in, tap out

Anyone used to the Oyster card system will know what to do with contactless payments – tap in, tap out, and you’re charged what you owe depending on the fare zones you’ve crossed. It will cost the same as an equivalent Oyster journey – so cheaper than paying by cash – and should ultimately include the other benefits like daily/weekly capping of payments at travelcard rates.

Users can register with TfL, giving them more visibility of the fares they’ve paid and extra customer services, but this is not necessary to travel.

No need to worry

Some people will no doubt have concerns about the technology, however, especially around being charged incorrectly.

Verma said: “With the bus system, with 10,000 journeys a day, we’re getting about one complaint a day. Obviously any instance of double-charging is bad – though we haven’t yet had a case of an Oyster card and a bank card being charged at the same time.”

If multiple contactless cards are accidently presented, such as a bank card and Oyster card, the reader rejects them all. But someone who just waves their wallet at a reader assuming it will pick up their Oyster card loaded with a travelcard, for example, may find it picks up their contactless bank card instead and charges them the pay-as-you-go rate.

Verma said: “That’s why our advice to customers has always been very clear: you should only present the card that you intend to pay with. But we’re very careful about this, and any instance of incorrect charging will be refunded. It’s not an epidemic by any means.”

Global pioneer

Other cities are watching London carefully. “We’re undoubtedly in the lead on this one,” Verma said. “There are many cities we’re in touch with – almost every major city in the world – who are trying to emulate what we’re trying to do. But the launch on the bus network in London is the fi rst big launch anywhere in the world. There have been small-scale pilots here and there, but there’s never been a commercial launch.”

Contactless cards are getting more common, with RBS/Natwest being the latest to announce all their debit cards will be contactless, from April. The payments industry, especially Visa and Mastercard, who have been working closely with TfL since 2006, are thrilled that a technology they’ve been trying to push for retail (with only mediocre results so far) will be introduced to so many more people through London’s transport system. Verma said: “Once we launch on the rail system in London we would expect to be carrying more [contactless] transactions than all other merchants combined.”

The data goldmine

Some doubt the longer-term potential of contactless bank cards on the rail network, and think more effort should be made with mobile phone payments. Michael Leach, when he was chief executive of ITSO, had a different criticism, telling us then: “I don’t ever see contactless bank cards being suitable for longdistance rail journeys, or season tickets, or being desirable for a number of the operating companies. They want to own the relationship with the customer. Allowing HSBC or Barclays to do that takes away that ability…ITSO will not dominate the market; but neither will contactless bank cards.”

Clearly ITSO has an interest in supporting smartcard technology over contactless, but does Leach have a point about the relationship with the customer and the use of that data? We asked Verma whether TfL is afraid of losing the goldmine of data it gets from passengers via Oyster, if more of them choose to take up contactless instead.

He said: “The same goldmine exists for contactless as well. Keep in mind that every transaction has to flow through our system.

“We will maintain a record of every single transaction.

“There’s no difference to Oyster in that regard.”

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