Singapore’s Land Transport Authority to Accept Visa Cards for Fares in June

NFC TIMES Exclusive Insight – Singapore’s Land Transport Authority announced today it will begin accepting Visa-branded contactless cards to pay fares on trains and buses starting June 6, only two months after it launched its “SimplyGo” open-loop fare collection service with only Mastercard-branded cards.

Since then, the authority has seen an average of 120,000 daily trips with the Mastercard cards or card credentials on NFC phones, which the authority said represents a “steady uptake in usage.” But it still accounts for less than 2% of the nearly 8 million daily trips riders take on buses, metro and light rail on the island state. 

The move to accept cards on the Visa network, which has a larger share of the credit card market in Singapore than Mastercard, should significantly increase usage of bank cards for transit payments. Visa’s country manager for Singapore said contactless penetration for Visa cards for retail payments is more than 80%. 

Mastercard no doubt paid a hefty promotional fee to LTA for the exclusivity period during the first two months of the commercial open-loop service and for much of the two-year trial leading up to that commercial launch. That launch occurred April 4. 

LTA was the first major transit authority in Asia to commercially launch open-loop payments  outside of China. The authority built an account-based ticketing system, which is used for both its open-loop and closed-loop payments services. 

Riders can continue to use the closed-loop, stored-value ez-link and NETS FlashPay cards, but they can receive the same fares by tapping with  contactless credit, debit and prepaid bank cards or card credentials on NFC devices for use with Apple Pay, Google Pay and Samsung Pay. 

With the stored-value cards, customers will have to top them up, although that will become easier toward the end of the year when ez-link users will be able to set up SimplyGo accounts.

The account-based ticketing system will enable open-loop card users to  sign up for SimplyGo accounts to view their ride history and fares payments, either via PC or smartphone app. 

Some credit and debit contactless cards in Singapore also carry a separate ez-link or NETS application. In order to use the open-loop application when they tap these cards instead of the fare being deducted from the e-purses, customers will need to switch the cards to bank card mode. They can do this on ticketing machines in metro and light-rail stations. 

Following London
As NFC Times reported in March, Singapore and other transit agencies hope to match the success of open-loop fare collection as experienced by Transport for London, which launched open loop in late 2012 on buses and in 2014 on the London Underground. Now contactless credit and debit cards and card credentials on NFC phones make up more than half of all pay-as-you-go transactions on the Underground. 

Other cities, including Chicago, Sydney, Vancouver, Milan, among others, have launched acceptance of open-loop contactless payments. That list will soon include New York and Boston in the U.S., as well. But transit authorities and operators in most Asian cities have been slower to move forward on open-loop payments. 

Yet, several Asian cities have been moving forward on accepting open-loop payments. Besides Singapore and Kaohsiung, in Taiwan, other Asian cities planning to accept open loop, include Bangkok, Kuala Lumpur and Mumbai. 

This is in addition to more than a dozen cities in China that take open-loop payments from contactless bank cards and NFC devices and also from apps supporting QR codes on smartphones. The fares are funded by bank cards branded by China UnionPay, as NFC Times reported. The cities include many of China’s largest, such as Shanghai, Beijing, Guangzhou and Shenzhen.

Some Open-Loop Drawbacks
The inability of riders to view the fares they will be charged upon exiting the subway gate or bus as they can with closed-loop stored value cards has been a drawback for open-loop payments services. Sometimes it can take several days for the actual fare to show up on card transaction records online. 

Transactions from Mastercard-branded cards are aggregated for up to five days before processing, said LTA. Visa cards are aggregated daily, but settlement takes at least three days, according to LTA. 

The fact that LTA says it will provide smartphone notifications to customers of their fares after the ride is completed will help. 

Industry veteran Silvester Prakasam, a fare systems expert with MSI Global, a consulting company owned by LTA, and who worked on the SimplyGo said that, in addition, users don’t have to reload credit and debit cards accepted for fare payments, as they do with stored-value cards. But Prakasam, speaking at a conference last year, said there are some other disadvantages to open-loop payments of transit fares besides not being able to view exact fares on transit terminals. 

Certification of contactless readers in the terminals to support EMV is expensive, he said. In addition to lower-level certification vendors must get for each reader, every contactless application, such as Mastercard Contactless and Visa payWave, has its own application certification requirements. There are seven such contactless “kernels.” And acquirers must be certified, as well, for the end-to-end transaction system for collecting fares with bank cards. 

Prakasam, who was instrumental in building the LTA’s first contactless fare collection system, which launched in 2002, also noted that third party application providers can’t write to the chips in banking cards or NFC phones. And when customers’ cards are blacklisted on subway or bus terminals, they can’t be removed from the list immediately after their cards are cleared.

Moreover, open-loop cards and especially NFC smartphones have slower communication speeds and longer read ranges than closed-loop transit cards, said Prakasam, speaking last June at the Transport Payments conference organized by the Asia Pacific Smart Card Association. He noted that speeds for some iPhones supporting Apple Pay were as much as 1 second during tests, and the Samsung Gear S3 Frontier smartwatch came in at 900 milliseconds. That compared with closed-loop cards at 400 milliseconds and EMV bank cards sometimes topping 500 milliseconds. 

On the other hand, the iPhone 7 and iPhone 6 Plus had the highest range of communication between the phone and reader, at nearly 12 centimeters during tests. The Samsung Gear S3 had the shortest range, at just over 4 cm. A short range could lead to customers having to retap their devices to get them to couple with the reader. 

The longer transaction times and need to retap devices could result in slower throughput and longer lines for customers at turnstiles, Prakasam said. And users might require more assistance from agents, he added. 

© NFC Times and Forthwrite Media. NFC Times content is for individual use and cannot be copied or distributed without the express permission of the publisher.

HEADLINE NEWS

Lax Security Blamed for Hack of 7-Eleven’s Mobile Payments Service in Japan

NFC TIMES Exclusive Insight – Japan’s popular 7-Eleven convenience store chain reported Thursday a major hack of its QR code-based mobile-payments app, but the breach appears to be due to poorly designed security protections in the app. 

In-Depth: More Nordic Banks Support Payments on Passive Wearables with Provisioning after Sale

NFC TIMES Exclusive Insight – Two more large Nordic banks, Nordea and Swedbank, have launched contactless payments on analog watches, using technology from Swedish provisioning company Fidesmo that enables consumers to buy the watches and provision them with tokenized Mastercard-branded cards after the sale by tapping the watches on Android NFC phones.

Insight: Apple Pay’s Expansion to 13 New European Countries Won’t Add Much Transaction Volume but Follows Familiar Strategy

NFC TIMES Exclusive Insight – Apple’s expansion this week into 13 new European countries may not look so good on paper, but it follows a divide-and-conquer strategy that Apple has used effectively before.

Visa Deepens Push into Tokenization with Planned Acquisition of Rambus Payments and Ticketing Unit

NFC TIMES Exclusive Insight – Visa plans to buy the payments and ticketing unit of U.S.-based chip company Rambus for $75 million, as the payments network seeks to expand tokenization beyond Visa cards, including to bank accounts used for real-time payments, as well as to transactions processed by domestic networks.

With Contactless Payments Ready to Take Off in U.S., Payments Trade Group Concerned ‘Fragmented POS Experience’ Could Hinder Growth

NFC TIMES Exclusive Insight – While contactless payments in the U.S. is “expected to accelerate in the near future,” merchants and issuers must improve the “POS experience” for consumers, the U.S. Payments Forum, a payments industry trade group, said today.

Melbourne Transit Agency Touts Successful Launch of Closed-Loop Payments with Google Pay; Plans to Add Support with Apple Pay

Jun 17 2019

NFC TIMES Exclusive Insight – Following a successful launch of its closed-loop Mifare-based transit payments service, myki, with Google Pay, Melbourne, Australia, transit authority Public Transport Victoria has allocated AU$1 million to expand the service onto other smartphone platforms, including iOS and the iPhone, an agency spokeswoman confirmed to NFC Times.

Analysis: BBVA’s ‘Global Payment Platform' Unlikely to Make Much Impact

NFC TIMES Exclusive Insight – The recent announcement by large Spain-based banking group BBVA of plans to enable more banks across its footprint in Latin America to roll out the NFC-enabled BBVA Wallet as part of their banking apps could run into problems, given trends for low take-up of bank-issued NFC wallets. 

In North America, Many Cities Not Ready for Open-Loop Payments

May 31 2019

NFC TIMES Exclusive Insight – While open-loop transit payments services, such as one being launched this week by New York’s Metropolitan Transportation Authority, get most of the attention, most public transit agencies and operators do not plan to accept credit and debit cards directly for payment of fares anytime soon.

Visa and Chase Seize on Launch of New York City Transit Payments Service to Try to Build ‘Momentum’ for Contactless

NFC TIMES Exclusive Insight – Unlike in most developed countries in Europe and Asia, in the U.S., only a small percentage of the population regularly uses mass transit. But New York City is an exception, with more than 4 billion transit trips per year in the metropolitan area–seven times greater than in the next largest U.S. city in terms of transit use, Chicago.

As Their Resistance Crumbles, Australia’s Big Four Banks have Found that Opposing Apple Pay Too Costly, Despite Tech Giant’s Fees

NFC TIMES Exclusive Insight – Another one of Australia’s big four banks, National Australia Bank, has given in to pressure from customers and has agreed to support Apple Pay.

In-Depth: Ticketmaster Embraces Digital Ticketing to Cut Fraud and Improve Communication with Ticket Purchasers and Fans

NFC TIMES Exclusive Insight – U.S.-based sports and entertainment ticketing vendor Ticketmaster sees its new digital-ticketing technology–supporting bar codes and NFC–as a way to reduce fraud and stay in touch with both ticket purchasers and event attendees.

Japanese Payments Players Expand Support for QR Code-Based Payments

May 20 2019

NFC TIMES Exclusive Insight – Japan’s mobile payments market is expanding, but the talk is not about NFC payments services, such as Apple Pay, Google Pay or the pioneering FeliCa wallet services originally pushed by NTT DoCoMo and rail operator JR East.