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Transport for London ticketing chief dubious about mobile NFC

Sophie Curtis | Feb. 18, 2013
The mobile contactless payments industry is struggling to take off because there are too many stakeholders

The head of business development at Transport for London (TfL), whose Oyster card system is one of the most successful contactless ticketing programmes in the world, claims he is "not convinced" about mobile payments using NFC.

The Oyster card is often held up as an example of how contactless payments are the future of high street retail. There are currently 52 million Oyster cards in circulation, compared to 26 million contactless Visa cards, making TfL the largest contactless card issuer in the UK.

Oyster cards work using NFC (Near-Field Communication) -- a set of standards that allow devices to establish radio communication with each other by touching them together. TfL passengers touch their Oyster card to an electronic reader when entering and leaving the transport system in order to validate it or deduct funds.

NFC technology is increasingly being integrated into bank cards, to allow people to carry out low-value transactions without having to enter their PIN number. UK food chains such as McDonald's, Subway, and Eat accept contactless payments, as well as retailers such as Boots and Marks & Spencer.

At the end of last year, TfL started allowing customers to pay their fare using contactless bank cards on 8,500 London buses, and from November 2013 passengers will also be able to use their payment cards for travel on the Tube or the Dockland Light Railway (DLR).

"This is quite a revolution. Whether you're a visitor from abroad or in the UK, whoever you are, get the card out of your pocket and tap it on the reader and travel. So TfL becomes like every other merchant, charging at the end of the day for how much travel you've made," said Matthew Hudson, head of business development for fares and ticketing at TfL.

The obvious next step would be to enable mobile contactless payments on buses and the Tube. The majority of smartphones now include NFC capabilities, and there are a number of mobile wallet offerings from the likes of Orange, O2 and Google. US analyst firm the Yankee Group predicts that mobile payments will become a $1 trillion business by 2015.

However, Hudson claims that he is just not convinced about NFC and mobile phones because there are too many stakeholders - with banks, retailers, mobile network operators, device manufacturers and advertisers all fighting for a share of the revenues.

"It's taken ages. How much money is there to make with all these parties trying to get a piece of it?" said Hudson, speaking at a Westminster eForum on the future of digital payments. "We've just sat back and said we're not interested. When you've worked it out come back to us and we'll engage."

 

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