While Singapore expands the adoption of open-loop ticketing, Hong Kong reconsiders the fate of the once ubiquitous Octopus card. Payments in transit ticketing is going to look a whole lot different.

Read the full article by PCN associate, David Lunt, our resident transit ticketing expert. David attended the Money20/20 Asia in Singapore and interviewed some of the key players in transit ticketing.

In Singapore, early April 19, the Land Transport Authority (LTA) formally launched its SimplyGo contactless bank card payment system. This replaces their previous open-loop solution known as Account-Based Ticketing which has been in a pilot / trial for more than two years, it will be a great step forward for open-loop ticketing.
The launch was with Mastercard first, followed by Visa later that year. Mastercard bank cards stored within digital wallets, such as Apple Pay, Fitbit Pay, Google Pay and Samsung Pay will also be accepted.

Open-loop ticketing is where a contactless bank card is used to tap in and out of a mass transit system. This is live in cities such as in London and more recently Sydney. The physical contactless card can be stored on a mobile phones in a digital wallet and is used for both recording journeys made, and to pay the resulting fares.

Meanwhile in Hong Kong the king of closed-loop cards Octopus is being pushed from its throne by QR and mobile NFC solutions.

Octopus started as a closed-loop transit card and expanded to be accepted at kiosks and in retail stores and restaurants. Being a closed-loop system, means that the balance of funds is controlled and held by the card, not by a central back-office, such as in open-loop ticketing and traditional banking. This design makes Octopus very good at making fast payments in the face-to-face environment, it is however not suitable for online purchases.

With the advent of the Pays and QR codes, disrupters such as Alipay are entering the market and eroding the Octopus spend in their retail environments. People in Hong Kong are more attracted to the innovative mobile based solutions than a physical card they need to preload with funds.

Last year Alipay won a contract to provide MRT with a fare collection system and will roll out a QR code-based transit ticketing system next year. This eats deep into the traditional Oyster transit market and starts to push them out totally.

But it is not all over for Octopus, they are pushing back and earlier this week launched a virtual prepaid Mastercard in a mobile wallet. This virtual Mastercard allows cardholders to purchase goods online when they could not traditionally do so with the closed-loop Octopus card.

It remains to be seen how Hong Kong transit ticketing evolves, it does seem there are difficult times ahead for Octopus.

Author David Lunt, our resident transit ticketing expert, represented Payments Consulting Network at Money20/20 Asia in Singapore. David interviewed some of the key players in transit ticketing and will be pleased to meet for an informal chat. Payments Consulting Network have partnered with Money20/20 and are able to offer you US$250 off the price of the participants’ ticket by using the unique code MASPCN2 #M2020Asia #money2020 #fintech #payments

Author: David Lunt, Associate, Payments Consulting Network.