Open loop transit cards are expected to post high growth in emerging markets

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Mass transit authorities across the globe are steadily moving from paper based cash tickets to contactless eTicketing system. There has been growing penetration of open loop contactless payment cards in transportation segment as well across many markets. Reduction in labor costs, revenue losses and fraud risk is driving the adoption rate of open loop transit cards among operators. One of the most common payment instruments accepted in this segment is EMV. Australia, Canada, Brazil, majority European countries and Asia have embraced EMV contactless payment system with United States joining the list last year. About 45% global payment cards use EMV standards and 76% terminals are EMV enabled. According to PayNXT360, open loop prepaid cards are expected to post a CAGR of 25% over the next five years in transaction value terms. Transit segment is expected to be a key growth driver for open loop prepaid cards. Especially, in growth markets, large consumer base is expected to contribute to high volume growth.

Emerging markets have been centre of attraction for open loop transit cards in recent times.

• Global digital security firm Gema?lto has partnered with Bank of the Philippines Islands (BPI) to provide EMV prepaid banking and transport cards that support contactless ticketing system beep of Manila Metro. With this BPI became the first bank to cater to EMV and transport payment. The dual functionality card is powered with Optelio technology that facilitates secure and convenient transactions.
• Metropolitan Manila is one of the most densely populated areas of Philippines with 12 million residents and 2 million commute daily by trains. Moreover, only 31% of adult population is banked. This opens up a huge scope for BPI to reach out to unbanked population for increasing customer base and diversify its service line. Gemalto on the other hand has successfully delivered 1 billion EMV payment cards worldwide and this initiative is anticipated to increase its foothold in the emerging market.
• India’s third largest private sector bank, Axis Bank has announced the plan to launch prepaid transit card in association with Bengaluru Metropolitan Transport Corporation (BMTC) and National Payments Corporation of India (NPCI) in Bengaluru. First of its kind Axis Bank BMTC Smart card doubles up as a EMV wallet that will allow cashless payments on bus travel and 1.2 million merchant locations across India. Initially the card will be available at BMTC issuance counters and Traffic and Transit Management Centres (TTMC) and customers will be required to submit KYC documentation for the card issuance.
• MasterCard had entered into partnership with Singapore based Land Transport Authority (LTA) to facilitate contactless payments via debit and credit cards by end of 2016. Initially the service will be available to around 1 million customers on pilot basis. Customers will be able to track journeys and fare history through a mobile app. Further developments include NFC based mobile payments in rail and bus travels.

To know more and gain deeper understanding of global open loop prepaid card industry, click here