Our transport providers are really taking a kicking in the last few weeks. First they dropped their Real Time Bus App, and replaced it with something people don’t seem to like, and now they're in the news for not providing contactless payments on buses.
Phone-in talk shows are all very good for getting the view of the man-in-the-street (“Every Taxi in Dublin has to have one, so what can’t the buses?” goes the cry), but soundbites rarely try to dig into the why. Nothing like an article in the journal to turn the masses into payments experts now, is there.
Why do I get to have an opinion? Well, we produced one of those now defunct real-time bus apps, and have worked with Fintech partners for many years. I also commute every day on Dublin Bus. I think this qualifies me.
Let’s start with the basics.
Have you ever got on the 27 on Eden Quay around 6pm? It pulls in to 40 or 50 people waiting. There’s only one gig here - get passengers off and on as quickly as possible. Even with high-speed internet connections, a credit card transaction has to make a call right back to the card issuer to see if they can take funds. That card issuer may be in Ireland, but they can just as well be anywhere, as once we accept cards, we’re pretty much accepting cards from anywhere in the world. Yeah, the internet happens at light speed, but not all country’s payment infrastructure is that quick. In high-end supermarkets, a contactless payment happens in about 4 to 5 seconds; In theory on a 5G network, you should get good speeds, so imagine we could get this. Now imagine 40 people taking 4 seconds each. Over two minutes, before you take into account the declines, and dealing with people trying a second card. And this is at each stop. Compare that with how long it takes you to pay by credit card when exiting a taxi. They are very different use cases.
But wait - don’t some contactless transactions not call home, and just get accepted ? Yes. They do. But they rely on a random capability; This randomness makes it risky for a fraudster to use the card; they don’t know if a transaction will work, or will get declined. This would be a problem for a fraudster.
How come Leap is quicker? Leap works on the concept that there is stored value on the card, stored securely using cryptography. The interaction to deduct money happens between the reader and the card - No need to call home, no need to check with anyone else. The deduction occurs if there’s balance on the cards; It is literally tap and go.
Surely, the technology has been around for a while - right? (Every taxi!). Well, you don’t put a sum-up into a bus; Here’s some reasons why; It’s portable, so will be lost, stolen, dropped, etc. It has no communications; it requires being used in conjunction with a smartphone, which provides its internet connectivity. A bus needs a tough, high-end piece of equipment. It needs to be rugged, can handle volume, and manage its own connectivity. So, there’s a selection process needed, and a large cost associated with that.
Then there’s communications. It would appear that most of our rolling stock (Buses, Luas, Rail) provide real time information, so presumably they have internet connectivity; but frankly when this fails, it’s far less catastrophic than having to allow passengers on for free. The real-time infrastructure even takes into account that buses can temporarily disappear and reappear, and make inferences from this. Payments doesn't have this luxury; So your reader better have high-quality comms, and likely failover to a second network if one fails. (Who remembers those Friday evenings when one of our cellular networks went down) - Now imagine the cost of this was everyone in Dublin travelling free. Who’d foot that bill?
Does anyone remember when Eircom introduced pay phones that could accept cards? Fun fact - they became a great way for someone with a stolen credit card to find out if it had been flagged yet. So, maybe fraudsters would have a new way. Yeah, it’s in person, but a busy bus driver with 40 passengers to board won’t mind them trying a (known, working) card.
Your bank card as your identity
Some other services offer your bank card as your identity, and never deduct from it. People who frequent certain gyms would be familiar with this, as would users of pay-as-you-go car sharing services. These work differently: You have an account with them, and they are (typically, but not always) pre-paid. You use an app to instruct the system that the card you are about to present has to be associated with your account. The system just uses that card like an id card - granting you access; the actual deduction comes from the account you hold with them (which may for example, use a different card on file).
Could this work ? In theory yes - but it would have other issues: It would still need a call home, but this time to Transport Infrastructure, not card issuers. In theory this can be streamlined and made fast. It is a difficult thing to explain to the public “we’re using your card, but not for payment - register your actual payment card here”. No amount of switching from one card to another will make funds appear; if your transport account is empty, it doesn’t matter which card you use to identify yourself to it.
So it's never coming?
Oh, it's coming. It's just coming slower than you want. Because its harder than you think, costs more than you expect, and could provide a worse service than you want. Contactless payments are here to stay. We definitely need to move to it for transport. But it’s never as easy as people think.