Contactless payment: path to a better HK public transit future

June 10, 2020 09:23

Hong Kong is well positioned to introduce contactless payment into the city’s public transportation system, said Gavin Ho, Head of Merchant Sales & Acquiring, Visa Hong Kong and Macau.

Open-loop contactless payment technology will strengthen the foundation of Hong Kong public transportation – providing commuters with more and better choices

Infrastructure is fundamental when it comes to public transportation, but not many people realize the importance of a payment system in promoting greater urban mobility.

In recent years, many advanced cities worldwide have become aware that the introduction of an open-loop payment system into public transit can not only facilitate a globally connected environment, but also increase the efficiency of public transit, delivering the most of seamless travel experience. Hong Kong Economic Journal has talked to Gavin Ho, Head of Merchant Sales & Acquiring, Visa Hong Kong & Macau, to find out more about how contactless payment technology can improve transit experience.

For years, the Hong Kong public transportation system has been implementing a closed-loop payment system, accepting only local payment means such as stored value card. But as one of the most densely populated world-class cities and a popular travel destination, Hong Kong should accelerate to boost the efficiency and efficacy of its transportation infrastructure.

“In Hong Kong, nearly seven out of ten face-to-face Visa transactions are contactless. Hong Kong ranks fifth in Asia in terms of the penetration rate of contactless payment. Given such level of acceptance in payment technology, it should not be difficult to introduce an open-loop system into the city’s public transit,” said Mr. Ho.

Last year, a Visa study surveyed 1,000 respondents in Hong Kong and found that almost 90% of them indicate that they would ‘probably’ or ‘definitely’ try innovation in transit. About 60% would try contactless payments by credit or debit cards at fare gates, showing the majority of Hong Kong commuters are open to new technology that can improve their transport experiences.

Long Win Bus has recently announced that it will accept EMV® contactless payments. Mr. Ho believes that this is a good step to opening up public transit system in the payment space. Though limited to a few lines for now, Hong Kong is catching up with other global cities around the world.

Numerous countries adopt open-loop payments in their transportation systems

Since 2017, Visa launched Visa Global Transit Solutions designed to accelerate the use of contactless payments by debit, credit and pre-paid accounts at the fare gate, speeding up and creating a more convenient travel experience for mass transit commuters worldwide. Globally Visa is engaged in more than 180 transit projects, among which the development in Asia is especially rapid.

In Taiwan, passengers can now tap to pay with Visa contactless when travelling on Taoyuan MRT (including Airport line) and Kaohsiung Metro stations. Since last year, Sydney began to accept Visa contactless in phases at its Light Rail and train network. One of the world’s largest transit projects to date is Singapore with Visa contactless acceptance went live in June last year, covering both metro and bus network, serving 6 million local passengers and over 18 million visitors already.

Commuters can now pay with Visa mobile contactless or contactless cards on Taoyuan MRT (including Airport line) and Kaohsiung Metro in Taiwan.

There are three key considerations when countries around the world choose to adopt open-loop payment systems, Ho said.

Total carbon emission from transport is projected to double from current level by 2050, most of which is from private vehicle, according to the United Nations. This is why improving efficiency of the public transportation system can encourage more rides and less reliance on private cars that help a city to reduce carbon footprint for a more sustainable development.

From customers’ perspective, contactless payment brings greater convenience in daily life. Although the pandemic has limited cross-border travel for now, but avid travelers like many Hong Kong people should have experienced the hassle of getting foreign currency change or looking around for ticketing machine on arrival at a foreign city. Pay with mobile contactless or contactless card can save these steps to enable a trouble-free journey.

For transport operators, an open-loop payment system can save ticketing manpower and public resources. For example, Visa’s Ready for Transit program provides access to over 100 partners that supply innovative solutions, promoting contactless payment development in public transit systems, and contributing to lower costs for transit operators.

Creating a simple and effortless experience

Apple and Octopus have just announced the addition of Octopus account to Apple Wallet. Commuters can now top up their digital Octopus accounts with credit cards already tied to their Apple Pay. Though Mr. Ho could not comment on the partnership with both parties, he believes that this is a small but significant step to drive urban mobility. Consumers nowadays desire fast, secure and hassle-free experiences with most tasks managed through their mobile devices. Transportation is no exception. Leveraging technology to improve daily journey can better meet riders’ needs and moves people around the city at a more efficient rate.

According to a McKinsey & Co. study on urban mobility, one of the key trends in urban mobility is the departure from unconnected, suboptimal transportation system to on-demand, connected system that uses data to unlock more efficiencies.

“Ultimately, the experience should be as straightforward and simple as possible. For Visa, that would be enabling commuters to pay with their contactless account during transit, without the need to top-up every time the account runs low."

“There is also the opportunity to create better rider experiences and rewards system through the ethical and secure use of data,” Mr. Ho added.

From technology or business point of view, contactless payment is undoubtedly one of the best solutions for future transportation development, Ho said. “Though QR code technology is mature, and has been widely used in the retail sector, scanning QR code can be impeded with insufficient lighting. Contactless payment also has an advantage in terms of speed taking into account the steps leading to QR code generation before paying."

As a world leader in digital payment, Visa processes 65,000 transactions each second, while provides secure and reliable payment around the world. We are confident to optimize the transport payment experience for millions of Hong Kong passengers, and support local public transit operators to lift their efficiency and cost effectiveness.

Open-loop payment is just the start, “Mobility as a Service (MaaS) is our long term vision - integrating different modes of transportation into a unified solution accessible on-demand. For example, offering more attractive monthly scheme, or increasing payment flexibility, will encourage more people to use public transport."


(Information is supplied by Visa)


Hong Kong Economic Journal