India needs to figure out Travel/Transit cards

We tend to believe that India’s small-ticket digital payments revolution is all-pervasive and has completely annihilated the concept of cash and change. However, that is hardly the case. Even as many of us, including nearly all reading this post, pay for all our “chillar” transactions of Rs.23 or Rs.187 every where from tea stalls to supermarkets using UPI, there still exists a large space that are still stuck in the 1990s. The most significant among these is sadly, public transport. Yeah, dare to board a bus without “physical” change in your pocket!

The very thought of having to procure change itself is enough to put the average person off public transport. Who is going to hunt for change to just pay the bus? Let us not even think about the altercations with bus conductors who get fed up with everyone handing 100 Rupee notes to pay for Rs.15 tickets. The widespread adoption of UPI has made it even more difficult today to procure change.

It is a shame that transit has completely been left out of India’s digital payments revolution. It is ridiculous that we still need to procure handfuls of crumpled currency notes and pocketfuls of loose change to board a bus or in some cases, a train. Transit probably never sees a mention in the digital payments space because no one among the tech-savvy or policy makers or article-writers on the benefit of digital payments tend to take public transport.

Indians tend to think that retail was the first place where payment was digitised. However, it was transit that was the first place where fare payment shifted to electronic and digital methods in most parts of the world. In many western countries transit fare payment had moved to digital methods as far back as the 1970s. Paying for bus or train tickets using cash isn’t even a concept, forget an option, nearly everywhere in the developed world today, even in places that do not have a UPI-equivalent for digital payments. You will be laughed out of the bus if you try to pay using cash in most places in Europe. India lags by a big margin when it comes to digital transit payment and this needs to be fixed.

Well, we do have the solution to fix this, right? Yes, we do, but the optimum “digitized solution” to process transit payments might not be UPI. A better suited technology exists: they are called Travel cards or Transit cards.

Transit/Travel Cards for Buses

Transit cards or prepaid travel cards are the most common payment method on public transportation networks worldwide. Indians know them as the ubiquitous Metro cards. These credit card-sized, NFC-enabled devices are linked to unique virtual wallets that can be pre-loaded with cash. When the card is presented at a terminal (POS/ticketing machine/fixed gate) the ticket fare is electronically deducted (via NFC) from the card’s wallet. They are simple and easy to use, hardy and handy, transferable and hassle-free. Still, no major transit system outside the Metros use these cards on a mass basis.

There are some outlier travel cards being used for buses in India. For instance, one set of private buses in the Kottayam and Ernakulam districts in Kerala accept Chalo cards while another set of operators of the same region use the “Wheelz card” (which has been since discontinued). And the penetration levels of both are abysmal. I am not sure about other states though I’ve heard that certain routes in Mumbai use travel cards. Even KSRTC (Karnataka) that doyen and beacon of bus transport that jumps to adopt any new technology and trend with gusto has never forayed into using transit cards. Kerala KSRTC has issued a limited number of “KSRTC Travel Cards” for use in Trivandrum city circular services, but have withdrawn them since. The corporation has since introduced Chalo-based ticketing machines but they do not accept cards yet.

Of course, the first question that arises in this case is why not use UPI, the preferred method for small-ticket transactions for payment in buses as well? Well, as it turns out, UPI is not the best method for making payments on buses despite what most people want to believe.

Why Transit cards and not UPI?

At first glance, it would seem obvious that UPI, the pride and glory of India would be without question the most suited method to for bus ticket payments. However, anyone who regularly travels on buses or local trains would understand why it might not be the best solution as a transport fare collection system. This is of course not because the digital technology is not up to it, but because the entire “real world” process involved in making the payment still involves too much “human” and “environmental” conditions that are very different from the static environments surrounding retail payment. This can especially create bottlenecks when it gets crowded, as buses usually do.

How payment of a bus ticket through UPI would work:

1. Conductor informs passenger of fare
2. Passenger makes the payment on UPI app
   • Opens up the app on their smartphone
   • Finds and scans the QR code
   • Enters fare amount
   • Enters app PIN
   • Waits for response and authentication
   • Informs conductor of payment
3. Conductor verifies the transaction
4. Conductor prints out the ticket

There are a number of hold ups that are possible here:

• The conductor has to wait around for the transaction to be completed.
• Confusion will arise as of who made payments when many people (or a sound box) are trying to report their transactions (many of which might be the same amount) to the conductor at the same time.
• QR codes need to be pasted absolutely everywhere in the bus.
• It will be incredibly difficult for the average phone camera to get a focus lock on the QR code while the bus is in motion especially over bad roads and through traffic.
• Breaks in mobile data network as the bus passes through coverage black spots.
• Technical issues at the bank or provider side. What if the user has a Vodafone connection and SBI bank account?

As for prepaid transit cards:

1. Conductor punches up the fare
2. Passenger hands the conductor the card
3. Conductor places the card against the machine
4. Conductor hands the passenger the card and ticket.

What can be a three-second transaction with a transit card can easily go up to one minute with UPI. And on a crowded bus, every second counts. In addition, many passengers like students and the elderly might not carry the necessary smartphone with a bank-account linked UPI app and the associated knowledge to make UPI payments. Like I said before, large parts of not-so-tech-savvy India has yet to adopt UPI as it requires a very costly acquistion – a smartphone. Transit cards are the best way to bridge this gap as it is cost-effective.

The fact remains that UPI is not so all-pervasive as we think it is, large swaths of “Bharat” that shops in markets and travels in buses still live in the world of cash. It is just that “India” that is stuck in Bangalore’s traffic while trying to get to the latest happening Brew Pub does not want to know about this.

What we need is the simplest system. And here, NFC cards win. Transit cards have the potential to replicate the UPI revolution in India’s transit space, filling in the large gap that was left behind.

Using UPI to Recharge Travel/Transit Cards

This does not mean that UPI cannot have an application here. UPI can still be leveraged to solve the biggest bottleneck when it comes to travel cards: recharging them. Each card can be imprinted with a unique QR code encoded with the URI to trigger a UPI payment request on the wallet linked to the card when scanned. In other words, the user will be able to recharge/reload their card themselves by scanning its QR code using a UPI app like Google Pay. That alone will raise convenience and simplicity to a whole new level. Transit cards are mandated to be issued by banks through a payment network (usually RuPay), so this shouldn’t be a problem technically or administratively.

This will also help reduce overheads as the STU will not have to maintain a large network of agents for recharging the cards. Of course, the cards could be purchased/recharged through the conductor on the buses, online, through apps, at depots, merchant establishments around major bus stops, etc.

Advantages of Transit cards compared to UPI

Those who regularly use Metro travel cards will know how they make travel experience seamless, simple and smooth.

NFC transit cards are a thoroughly proven, rock-solid reliable technology that has been in use for decades. It is seamless, isolated, self-contained, and minimises the involvement of secondary or third-party systems or equipment. There are no “physical” problems of cash, change, network coverage, app crashes, or low battery. There is no learning curve. It might be old-fashioned, it is not glamorous since it does not involve hype, bluster, shiny devices and PR opportunities, but it still is the method that works the best. And the fastest. Those from London or New York will know how well the Oyster or MetroCards work.

A transit card in your pocket or wallet gives as much freedom as having to carry around only your mobile phone and no cash. Tickets are issued faster and easier. Just hand the conductor your card and you get your ticket in a few seconds. The convenience is not just for the passenger but for the crew as well. They do not have to lug around wads of notes and bundles of coins or fight with passengers for change. Overall, it gives peace of mind and makes travel frictionless, seamless and simpler. Transit cards should be made mandatory and promoted in a manner that they become the default method of fare payment on all buses of all STUs and private operators eventually replacing cash as the default method of payment.

Extra benefits of Transit cards

Manual ticketing, where conductors issue tickets to passengers in real-time is a financially very inefficient method. The bus has to end its service and reach the depot for the fare to be accounted for. With travel cards, the money will already be in the company account long before the passenger has even made the trip. In this way, the actual revenue balance will always be many times that of actual fare earnings.

With travel cards, the fare will always go directly into the account of the owner/company/corporation, lowering the chance of low level fare theft (high level is another thing) which many STUs struggle with.

Data gathered from the cards could be used to analyse passenger demand, volumes and rationanlise services to run more buses during high-demand times and on high-demand routes. They could also be used to inform passengers of new services on their preferred routes. The data analytics possibilities themselves are extremely wide-reaching and could alter the entire transit landscape.

Transit cards could bring with them a range of benefits for passengers. Such benefits could include discounts on ticket fare, offers while used at merchant establishments, or even a loyalty program linked to the card. An example of what could be a loyalty scheme for KSRTC (Kerala):

The biggest benefit of transit cards is that it will create a legion of loyal clientele who will think of using public transport given that its biggest turn-off (cash/change) is eliminated.

Interoperability and acceptability: Simply put, transit cards should be like prepaid or debit cards. Cards issued by different systems must mandatorily be accepted everywhere and interoperable with each other, at least in the same state. For instance, Kochi Metro’s Kochi 1 Axis bank card should be accepted on KSRTC buses and vice versa. Or even better, every state should have its own transit card accepted by all operators/providers, even private ones. The proposed National Common Mobility Card (NCMC) which is supposed to be a pan-India travel card has been in the pipeline for quite some time.

Remember how I mentioned that most countries switched to electronic payments many decades ago? They had identified payment being the biggest put-off for using transit. They also found that transit cards were the easiest and most frictionless method for payment, automatically making access and usage of public transport easier, simpler, seamless and hassle-free. This should be the ultimate aim of technology – to make things simpler. And if there is something that needs to be made easier and simpler to use, it is public transport. Transit/Travel cards are the best way to achieve that. Removing the scourge of loose change itself will go a long way to encourage people to take the bus.

It is 2024. We shouldn’t be hunting for change to pay for our rides.