Nigel Hyslop, president and managing director UK at Global Payments, discusses the relentless rollout of contactless ticketing across the rail network, and the new IT, payment choices and mobile apps that are powering its progress

Two years ago we wrote here about how contactless payments were just starting to gain traction on the transport network, with time-pressed travellers beginning to turn to contactless for convenience and speed. Fast forward to 2016, and what’s changed?

The latest Card Expenditure Statistics* from the UK Card Association show that total UK card spending amounted to £51.9 billion in March 2016, up from £46.4 billion in the same month two years ago – a 12 per cent rise. This growth can be largely attributed to the ongoing migration of payments from cash to cards, boosted by the increased use and acceptance of contactless cards, not least at ticket offices on the rail network.

Indeed, according to the UK Card Association, in March this year contactless payments accounted for 15 per cent of total purchases, which is an increase from 6 per cent just 12 months ago. Alongside this, there has been a consistent decline in average transaction values (ATV) since 2011, mainly driven by the continuous migration of low value cash payments to cards.

What does this mean for rail companies?
There are two parallel contactless payment stories at play on UK’s rail network and it is important to differentiate between the two when looking at trends: retail payments – the payments customers make when they purchase tickets from a ticket office or machine; and transit payments – the payments made when customers use their contactless card as a ticket by pressing it to the barrier to get to the platform.

Looking firstly at retail payments, the rollout of contactless payment systems for retail purchases of tickets – at a ticket office – has accelerated in the last two years and its rollout across the network is well underway.

Just two years ago, Merseyrail, the busiest transport system outside of London, which carries more than 100,000 passengers on a typical working day, was the first UK rail company to introduce retail contactless payments across its network**. Currently, quite a few of the nation’s ticket offices offer contactless payments, however it’s expected that by 2018 all stations to offer contactless payments for purchases up to £30 in their ticket office and self-service machines.

The technology is in place, and customers are ready for it – with those who were once reticent to use their cards for contactless payments, either because of security fears or lack of confidence, now doing so without even thinking. So, on the retail side, there is a focus on rolling out contactless technology across the network to reduce queuing times and provide a quicker customer experience. This will include Apple Pay and Android Pay.

The transit model, on the other hand, is still in development and is currently only being offered by Transport for London where customers can touch in and out of stations using their contactless card in the same way as a pay-as-you-go Oyster card. In this regard, London continues to run at its own pace, with tap-in-tap-out payments at turnstiles now being the norm rather than the exception.

There are two main reasons that London has been able to offer this so much earlier than other parts of the network: firstly, it is a self-contained transport area, which makes it relatively simple for TfL to roll out contactless across its own ticket barriers; secondly, same-day journeys within London almost always cost less than £30, which is the upper limit for contactless payments.

But this is about to change. A pilot contactless scheme is currently underway on Chiltern Railways and more are expected to follow in quick pursuit, with much of the industry predicting that paper tickets will no longer exist by 2020 – an assertion backed by the transport secretary, Patrick McLoughlin, last year.

The Association of Train Operating Companies (ATOC) is heavily committed to making this happen and is playing a pivotal role in moving contactless forward across the networks. The UK Card Association, supported by ATOC has been running monthly workshops with rail and bus companies and the cards industry for over a year now, enabling them to discuss how the TfL style system would work across the rest of the network.

So what’s next?
In order to roll out contactless for transit payments across the full network of train operating companies (TOCs), there needs to be a system to collect all the journey taps that a customer makes on any given day. This is to enable train companies to automatically work out the best fare for the customer so that no one is disadvantaged by tapping in and out. This requires a back office to collect all the taps – like the one TfL currently uses – which is currently in discussion with ATOC.

Revenue protection is also key when customers travel across various parts of the rail network on one journey. Controls need to be in place to ensure that customers can’t exploit the system. For example, so that a customer can’t get away with tapping in at London Kings Cross, tell the ticket inspector that they are alighting at Stevenage, but then stay on the train until Edinburgh.

One innovation that solves this is a mobile ticket app, which is currently in use by many TOCs. Customers download the app to their phone, purchase the ticket using their stored card details and then the ticket details are download to their phone in order to travel. It’s hoped that apps can be developed to the extent that the phone will be used as a virtual ticket using contactless technology at the ticket barriers.

Another method that is being developed is Card As Authority to Travel. This will enable customers to visit the rail website, which will ask them to nominate which card they would like to give Authority to Travel. When they touch that card to the barrier it will open because the card has been pre-authorised.

Some transport networks have been at the cutting edge of new payment technologies for over a decade, with TfL introducing the Oyster card as early as 2003 – long before contactless payment was even available for retail payments at ticket offices. But customer expectations are constantly rising and TOCs are going to great lengths to introduce new contactless updates to the rest of the network. It’s going to be an exciting few years to come.

*UK Card Association: Card Expenditure Statistics March 2016
**BBC News: Contactless payments introduced on Merseyrail –

Nigel HyslopNigel Hyslop is president and managing director UK at Global Payments