Contactless EMV Payments For Public Transit: An Overview

Contactless EMV Payments For Public Transit: An Overview

More that 51% of Americans are using some form of contactless payment cards. This type of payment has become such a natural part of our lives that some of us are often guilty of not bringing any cash whatsoever on them. And it’s no surprise – given the ease of use of contactless payments as well as the recent behavioral changes brought about by the pandemic. How can public transit tap into the potential of this technology and facilitate the lives of riders even further? The answer is contactless EMV, the technology that will change the way agencies operate, leaving cash in the past. But what is cEMV exactly?

In this article:

What is EMV? 

EMV stands for Europay, Mastercard, Visa – the three companies that created the standard, but it nowadays widely adopted by various payment providers. The technology was created to both facilitate and make payments more secure, as older types of technology had numerous security flaws. While EMV may be used with both chip-and-pin and chip-and-signature transactions, of specific interest to us (and the transit industry in general), are contactless EMV transactions. cEMV payments create an open-loop system as opposed to the traditional closed-loop systems of the past and are the much-needed step forward to create a seamless public transit experience.  

Contactless EMV – how can it make public transit better? 

We have gone a long way from paper tickets to account-based fare collection. Every step along the way has been guided by two things: optimization of the flow for the agency to maximize revenues, and convenience for the riders to achieve an increase in ridership. With account-based fare collection, we have managed to bring both to the table, but there was always room for improvement. Since contactless technologies are becoming an everyday necessity, engineers have started looking for ways to incorporate them in public transit.  

The Modecast Podcast

Currently, we have several options for contactless ticketing: smart cards, mobile ticketing, smart wearables, cEMV. In all these instances, (almost) no cash is involved in the transaction and the validation. What sets them apart is the validation media.  

While smart cards, mobile ticketing and smart wearables are all incredibly convenient and riders can validate on board with a simple tap in less than a second, they all need one thing – to be recharged. Different people prefer different ways to do this, from connecting their e-wallet (like Apple Pay and Google Pay) to connecting their bank card to their account, or even cash.  

With EMV payments, this is a step that can be forgotten. Riders can use their contactless bank card directly – saving time and money. With validations in half a second and options such as fare capping, agencies can significantly improve their service.  

Benefits of cEMV for public transit 

  • Cash handling operations decrease with the adoption of contactless payments 

Drivers no longer need to handle cash which reduces boarding times, improves fraud detection, and minimizes the cost per transaction (with cash, it is at least 15c/dollar).  What’s more, cashless payments are more hygienic which was a crucial aspect during the COVID-19 pandemic push towards contactless.

  • Immediate adoption 

Riders no longer need to buy or top up smart cards or their mobile ticketing application’s wallet. They do not have to buy any kind of ticket in advance. People already use contactless payments as part of their everyday life – at the grocery, at the pharmacy, at the gas station. Bringing this familiar type of payment to public transit means that riders can adopt it right away as they already know how to use it – even the elderly who might feel intimidated by smartphone apps, for example. 

  • Reduced operational costs 

Transit agencies can reduce the expensive process of issuing and managing smart cards or tickets, reduce the number of TVMs that are notoriously costly to buy and maintain, even reallocate staff from service windows.  

  • Decreased boarding time 

The process of cEMV validation takes less than half a second. This means that boarding times can be reduced and as a consequence, on-time performance can be improved. A more reliable service is a sure way to bring in new riders, isn’t it? 

  • Mobile phones and smart watches with Apple Pay and Google Pay are also available as cEMV payment options 

Connecting a mobile ticketing app with a contactless bank card and enabling cEMV payments is another level of convenience for people who already use their smartphone for payments instead of their bank card. As for the tech savvy, new generation of riders, smart wearables are a natural part of their everyday attire.  

cEMV and fare policies 

If the benefits mentioned are not enough to convince you of the need to adopt cEMV, this part will most probably do the trick. With cEMV, agencies can incorporate in their fare policies the much-coveted fare capping. A pricing model enabled by account-based fare collection, fare capping provides the best price per ride for every rider, every time they use the public transit system. With fare capping, riders pay as they go and enjoy the benefits of period passes such as weekly or monthly passes, without the need to pay upfront. Fare capping can also be set to work in specific distance- or time-based fare scenarios, making it a flexible option to deliver the best price. 

Fare capping also allows low-income groups who cannot afford an upfront payment for a weekly or monthly card to enjoy the benefits of the better price even if they pay one ride at a time. In this way, agencies can improve the accessibility of the service and bring in new riders. 

But is it secure? 

While there is no unhackable technology (yet), EMV has succeeded to reduce the number of fraudulent card transactions significantly. Historically, the EMV technology almost eliminated card-present fraud when it was adopted in France and the UK, while in the US fraud was slashed in half in just one year. cEMV payments use a secure infrastructure with offline transactions which further brings down the chances for fraud. In the past two years, many banks increased the transaction limit requiring authentication for their contactless products which brought about a spike in cEMV fraud, but people are continuously learning to protect themselves against card skimming.  

The future is contactless 

And it is almost certainly cashless. As agencies push forward their modernized public transit infrastructure, cEMV payments have the potential to quickly become the standard, obliterating smart cards in the process. This is a future we cannot wait to become a part of – Modeshift is currently working on the integration of cEMV for several of its clients, so stay tuned for updates!