Over the last decade, India’s financial regulator has taken a series of measures to modernize the country’s payments infrastructure to drive a connected digital payments economy and promote economic and social inclusion.
One such recent initiative is the cashless fare system powered by National Common Mobility Card (NCMC) or ‘One Nation One Card’
, which will work across all public transit systems and day-to-day retail payments systems in the country.
Transit forms approximate 10 percent and 15 percent of household monthly expenditure. Considering the recurring nature of transit transactions and multimodal transportation , modernising transit payments presents an opportunity to deepen adoption of digital payments.
Currently, most transit operators deploy payment systems that are closed-loop in nature and lack of interoperability in ticketing systems impedes broad acceptance by consumers. Market needs an EMV-based open loop contactless payments system, National Common Mobility Cards (NCMCs) which will provide increased mobility and a seamless travel experience to customers.
The stored value on this wallet allows passengers to initiate tap and pay contactless fare payments on all bus, metro and rail services across the country using their debit prepaid or credit card or a single transit smartcard. Transit-specific purses such as monthly passes, season tickets can be activated on the card’s service feature area.
The total addressable opportunity is significant. Currently, 62 state road transport undertaking units (SRTU), which have more than 1.6 million buses, transport an approximately 70 million people daily. The suburban railways of Mumbai, Kolkata and Chennai contribute to more than 50 percent of all railway passengers with a daily ridership of 13.5 million. Ten live metro services report a daily ridership of 4.6 million. Another 14 metro services are present at various stages of implementation.
From an issuer’s perspective, NCMC
enables issuers to move into new markets and customer segments example blue-collar workers who use public transit and are heavily reliant on cash. It optimises operating costs through cost savings on managing multiple card programs. It also creates the potential to earn fee revenue on non-transit usage and locks-in cardholders by supporting a range of payments, especially prepaid cardholder segments and infrequent users of public transit.
Beyond the benefits of offering a pervasive payment option, to capitalise on the revenue potential and differentiate offerings, financial institutions would need to rapidly layer on additional, innovative use cases early-on that create cardholder stickiness. Added value capabilities include:
• Establish Last Mile Connectivity –
Drive the usage of smart cards by introducing complementary ride-share and micro-mobility services. As an example, enable taxi service payments for last mile travel using the same card app
• Support New Form Factors – Satisfy customer demand for instant digital issuance and embedded payments on any device. For instance, Singapore has enabled NFC fitness trackers with transit cards to pay for public transport
• Incentivise Usage – Exploit customer transactional insights to offer geolocation and time-bound offers and incentivize cardholders to use the card for all payments, including transit and retail
• Build Open Services Ecosystem & Tap into New Payment Flows – An approximate 60 per cent of India’s population is expected to live in smart cities. Issuers, in an attempt to improve customer engagement levels, can position NCMC as a smart city card and partner with third party service providers to build services ecosystem by offering services such as travel insurance, hotel bookings for inter-city travel, taxes, use cards within gated urban communities, receive real-time information on parking spaces.
At the backend, issuers need to have the right partner and a robust, efficient technology backbone to manage and issue physical and virtual transit cards. The selection criterion needs to be aligned to the future roadmap of the issuer and would span multiple dimensions including:
• Unified platform for launching any card variant, open-loop prepaid + transit, open-loop debit-transit, credit + transit -- reducing overall cost of ownership
• Flexible API-driven architecture to launch new card programs, integrate with bank internal systems as well as third party applications
• Support for added value capabilities including spend alerts, spend controls, expense management, loyalty applications
• Domain experience in implementing new capabilities whilst ensuring minimum modification in the existing card management system of the bank
• Holistic services approach in helping financial institutions build an open issuance platform, backed by technology solutions such as Big Data, cloud technology, and the Internet of Things for shaping sustainable and interconnected, networked societies of the future
NCMC will have a transformative impact on payments and presents a significant growth to all transit ecosystem constituents -- FinTech players, financial institutions, transport operators and the government. As a global payments technology provider, FSS can provide a complete NCMC compliant solution spanning card issuance, transaction acquiring and automated fare collection management to help financial institutions capitalise on this opportunity.
The author, N Satish, is Deputy Chief Product Officer at FSS. The views expressed are personal.