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Home / Technology / News /  How digital payments can be a catalyst for smart mobility solutions in India

About 34% of India’s population lives in urban areas, according to a 2017 World Bank estimate and if this trend continues, the UN predicts that the country’s urban population will be more than the rural population by the end of 2050. This is largely on the back of industrial growth and labour migration from villages, continuing the trend of cities being engines of economic growth and opportunity.

Given this, the launch of the 100 Smart Cities Mission, which relies heavily on a strong transportation infrastructure enabled by a stronger technology framework, seems to be a step in the right direction. As cities continue to expand with the influx of people from smaller towns and rural areas, more people will live further away from the business districts and have to travel to work, putting a burden on the transport infrastructure and causing traffic congestions, overcrowding, and increase in travel time. Increased efficiencies in transportation systems across the country for public buses, metros, monorails, and railways, as well as toll booths, will be needed. Part of this is support from efficient, secure, and customer-friendly transit payment systems.

Mobility and efficient payments

The idea of integrating technology into mobility isn’t entirely new in India. Mobile applications for route mapping and services such as ride sharing cabs that allow 24x7 connectivity, higher accessibility, and portability, have existed for the better part of a decade now. Public transportation systems have also evolved, from cash and paper-based transactions to electronic modes of payment transaction.

The transition from a closed looped system to an open loop system using electronic payment instruments such as smart cards, QR codes, radio frequency identification tags and other technology is gaining momentum. With the rise in innovative technologies, we have already begun to witness how digital payments can redefine city transit payment systems. In London, commuters have been using wristbands with preloaded money from their bank accounts that can be used as ‘payments on the go’ on the city’s bus network. Singapore has enabled near field communication (NFC) fitness trackers for commuters to use transit cards to pay for public transport.

In India, car aggregators and ride-hailing companies already allow customers to make payments through debit cards, credit cards, eWallets, and Unified Payments Interface (UPI) for their ancillary in-transit services. Since 2017, transport authorities in Ahmedabad and Bengaluru have implemented the Intelligent Transport Management System, which allows travellers quick and secure cashless payment via prepaid RuPay cards or smartphones. In 2014, the ministry of road transport and highways and the National Payments Corporation of India introduced FASTag for enabling electronic toll collection mechanism for vehicles. The ministry waived the FASTag cost of Rs100 for from 15 February to 29 February to promote electronic toll collection.

What lies ahead for digital payments in transit?

All in all, the prospects of digital payments enabling smarter and more efficient mobility in India looks promising. However, for this promise to hold true, policymakers, industry bodies, and companies in the larger ecosystem need to take a strategic view of digitization. They must ensure interoperable payment technologies are implemented as a part of the broader vision, not limited to the introduction of new solutions but scaling the existing infrastructure and looking at wide use cases online and offline.

In this context, the recent National Common Mobility Card (NCMC) initiative by the government is encouraging as it touts the idea of ‘one nation, one card’ to create a seamless travel experience across all public transit modes. NCMC is also expected to be used for paying for fuel, toll tax, parking, groceries, retail shopping, and withdrawing cash. As urban centres expand, wider adoption of NCMC could end up creating a ripple effect, including a boost to Digital India and new transport businesses helping environmental and carbon emission concerns.

For the new-age consumer, who lives in a digital world, the lines between offline and online experiences are often blurred by a demand for intuitive user interfaces and convenience. In such a scenario, multimodal, interoperable, and secure payment mechanisms, not only promise to reduce cash dependency, but also provide an enhanced and seamless transit experience. As customers start seeing value in this, the transit sector, coupled with strong incentives to accelerate social change, will in turn drive a more bottom-up embrace of digital payments in India.

Somya Patnaik is senior product manager, real-time payments, ACI Worldwide.

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