Four years ago Consult Hyperion completed a transit project which changed not only the way people paid for their travel, but cemented contactless in the vocabulary of the masses. We were focussed on getting contactless bank cards to work for pay-as-you-go (PAYG) transit payments. This was a significant undertaking since it had not been done before and the customer proposition included a fair-price promise. This fair-price promise required the contactless bank card solution to mimic the existing Oyster “capping” which allows customers to travel without knowing the tariffs, trusting that they will only be charged the best price they could have got had they bothered to research it all beforehand. It required adding contactless payment card acceptance to all TfL readers and the building of a bespoke back office to support this new Account-Based Ticketing (ABT) where no travel information is stored on the card.
Convenience is king in mass transit. And our task was to meet the demands of one of the world’s busiest transit environments but make it cheaper to operate. The long-term vision was that by 2018, Oyster cards would be migrated to use the ABT back office and the legacy Oyster system would be turned off. The Oyster brand would remain alongside bank cards for those not using bank cards, but the technology powering this, would be changed to be ABT.
TfL and Consult Hyperion worked closely with the payment schemes to define the process of card acceptance and with the UK Card Association to establish a harmonized set of rules to balance risk between TfL and the card issuers.
The system launched on buses in 2012 and on the rest of the TfL Oyster network in 2014. Later in 2016 the privately-run river buses were added.
Fare collection costs were reduced from 14% to less than 9% of fare revenue. In 2016, 34% of TfL PAYG journeys were made using contactless bank cards (56% were Oyster and 10% were paper tickets). Is this good, bad or indifferent? Well, this figure needs to be understood in context:
- Contactless bank cards were still rolling out. In 2015, less than half of UK bank cards were contactless.
- Not everyone has a bank account. In 2015, about 5% of UK adults were unbanked and half of these did not want a bank account.
- Loss of government subsidy and a mayor-imposed TfL fare freeze meant that the vision of turning the legacy Oyster system off had to be reconsidered. Existing Oyster users have no incentive to switch over to using their bank cards.
- Not all foreigners arriving in London are keen to use their bank cards since they may be subject to bank charges back home, making Oyster the better choice for them.
Despite these barriers to the uptake of contactless bank cards, by April 2016, 9% of all UK contactless transactions took place on TfL services. By 2018 (year 4 of acceptance of bank cards on the full Oyster network), the percentage of PAYG journeys made using bank cards (or their emulations on phones or wearables) has risen from 34% to approximately 50%.
Consult Hyperion were uniquely qualified to help TfL deliver their ambition. Bringing in-depth knowledge and a heritage of working with the major payment networks and their detailed specifications for three decades, a solid understanding of proprietary transit technologies and practical experience of delivering innovative payment methods, outside of the retail community.
The team at Consult Hyperion is now involved across the globe working with transit agencies looking to emulate the success of London in their own cities. As well as Transport for the North in the UK, these projects have included working in countries where contactless success has outpaced the UK, such as Australia to territories where contactless payments are still emerging, like India and Colombia. Our US team has been working for a number of agencies who, today are developing systems capable of accepting contactless payment cards, even though issuance is less than 0.01%, in the hope that transit will drive banks to start issuing cards. There are early signs of success.
It is clear, that the success of TfL’s Future Ticketing Project has helped drive a sea-change in the payments and transportation industries that can save money in one industry and drive transaction volumes up in another. With our help, we are confident this success will continue.
 UK Cards Association Summary Statistics
 Financial Inclusion Commission 2015 Report
 UK Cards Association Contactless Transit Project Briefing – May 2016