One Nation, One Card doesn’t address commuter needs of interoperable transit payment systems: Report

While commuting from one place to another via cab, bus, local, or metro, people find it too difficult to make payments across different transit modes. From using UPIs to banks’ debit and credit cards, the transit process is becoming challenging. 

In a report, titled “Transit Payments in India - A Case for Choice and Interoperability”, New Delhi-based public policy consulting firm Koan Advisory Group highlights that India’s public transit systems should allow integrated fare payments across different transit modes to provide end-to-end payment interoperability for commuters. The report is based on responses from 1,250 commuters across 60 locations in four metro cities. This is a first-of-its-kind report focusing on the problems commuters face while paying for public transit and the factors influencing their perceptions of different payment modes. 

The report highlights the need to prioritise account-based ticketing systems over those relying solely on prepaid card balances. The study found that 90 per cent of commuters use different modes of travel to complete their journey, and 76 per cent want multiple modes of payment throughout their journey. Interestingly, the survey also found that 66 per cent of respondents want to use their bank cards at transit entry or exit points. 

The survey also found that the Union government’s One Nation, One Card initiative might not address commuters’ need for inclusive and interoperable transit payment systems. Specifically, since the initiative prioritises offline payments at transit turnstiles, it does not solve the legacy problems with closed-loop prepaid transit cards. In other words, those cards only work within a circumscribed network of transit turnstiles and require users to re-load stored balances. 

The survey found that 66 per cent of respondents preferred using a debit/credit card in transit systems, and 63 per cent of respondents agreed that it would save them time as they wouldn’t have to purchase and recharge a prepaid transit card. 

In line with India’s evolving demographic landscape, this trend suggests that the preference for debit/credit card usage in public transit will grow over time. Simultaneously, commuters’ reliance on cash and prepaid transit cards is expected to decline. This observation is in sync with the expanding accessibility of digital payment products and fintech solutions, including virtual cards, in India. 

Key findings of the survey: 

• Over 90 per cent of respondents use several modes of transit (such as autos and buses, along with metros) in their journey’s first and last miles. Over 60 per cent want to choose the fare medium in transit payments. 
• Two in three respondents (including 70 per cent of millennials and GenZers and 87 per cent of international and interstate travellers) want to use their debit/credit cards as a payment option on public transit. 
• Two in three commuters say incentives such as cashback offers, discounts and brand rewards will influence them towards a particular mode of payment. 
• Three in four prefer multiple payment options for transit fares. Commuters prefer interoperability in payment modes for the ability to choose the most convenient payment option for their needs. 

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Ateesh Nandi of Koan Advisory Group, says, “India’s public transit systems must evolve to provide integrated fare payment options that cater to the diverse needs of commuters. Our study shows that commuters are looking for choice and interoperability in payment methods, with a growing preference for debit/credit cards and digital solutions. To address the challenges of India's fragmented transit landscape, it is essential to prioritise account-based ticketing systems that connect seamlessly with users’ bank accounts. This approach will not only enhance convenience for commuters but also pave the way for a more inclusive and modernised public transit system in India.” 

The Koan study emphasises the importance of account-based ticketing systems, which connect with users' bank accounts through methods like mobile ticketing or debit/credit cards for public transportation. These systems enable the development of unified fare management solutions for various modes of transportation, a crucial factor in India's diverse and fragmented public transit system. 

Takeaways   

As commuters depend on more than one mode of transit, there is a need for end-to-end fare rationalisation and integrated ticketing across different modes. Further, payment infrastructure on public transit should be agnostic of the payment option used. 

A choice of payment options across bank cards, prepaid transit cards, and QR-based tickets would create an inclusive public transit system for tourists and locals. Transit payments in India need to be modernised beyond payment instruments that have in-built prepaid balances. 

Their preference reflects a larger shift toward cashless payments and indicates the potential value-addition from data-driven integrated fare management systems.