Everything You Need to Know About Contactless Payments 

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Contactless payments are here to stay. Here’s your introduction to the how to and why, for contactless payments in public transport. 

 Until quite recently, the words cashless and contactless were slowly but surely making their way into the mainstream of the payments world. With COVID-19, that steady shift turned into an unexpected sprint. 

As the world—public transit included—rushed to adjust to the new reality, there was an almost overnight need to eliminate unnecessary physical contact between people to increase public safety and protect public health.  

Now that contactless bank card payments are becoming the new industry standard in public transport, we take a closer look at how they work and why they’re not going anywhere.  

 What are contactless payments and how do they work? 

 Like the name suggests, contactless payments do not require physical contact between a payment device or point of sale (PoS) terminal. An enabled card or mobile device held close to the payment terminal is all it takes to pay for a ticket. The passenger’s contactless EMV bank card talks to the PoS unit using NFC (ISO 14443) short-range radio, and payment account information is encrypted and exchanged securely. 

 EMV (which stands for Europay, Mastercard, and Visa) is a technical payments standard ensuring that chip-based and contactless cards and terminals are compatible worldwide. EMV cards use an embedded microprocessor that connects with an EMV PoS device. This connection between card and payment device happens by either inserting or tapping the card. While EMV cards have been used in retail environments for years, it’s the option to tap and go that makes EMV a particularly good match for public transport, where the speed and simplicity of a contactless payment contribute significantly to the overall passenger experience. 

 What are the benefits of contactless? 

 During the COVID-19 crisis, reducing passenger and staff contact became an immediate concern. As a near-universal payment medium, contactless bank cards stepped in to make access to public transport safe and convenient for all passengers, regardless of their travel frequency.  

 Improved boarding efficiency, safety (for both passengers and drivers), and reduced costs are some of the biggest benefits, making contactless by far the most convenient payment option available today. COVID-19 may have accelerated widespread adoption of contactless solutions, but there is no reason to believe contactless will slow down or go anywhere once the pandemic subsides. 


What are the drawbacks of adopting contactless payments? 

 Implementing contactless payments does come with its own set of challenges. A considerable hurdle preventing widespread implementation is the complexity of coordinating efforts between transit authorities, municipalities, financial institutions, and technology suppliers. Establishing pricing and policies can also be a challenge. Add to this the initial implementation costs—such as purchasing and installing new equipment—and the barrier to entry may seem daunting. 

 In an atmosphere of tight budgets and intense competition, public transit authorities are trying to find ways of reducing expenses while improving customer experiences. As much as contactless payments contribute to both of these goals, cost is often still a major consideration.  

 What tips the balance in the budgetary limitations department is one simple fact: the cost of maintaining and replacing technically outdated and obsolete equipment is increasing. Over time, bulky old systems swallow more money than they may seem to be saving, while contactless solutions are designed to help reduce costs over the long term, placing the switch firmly in the “worth it” column. 

Why contactless payments are the future of public transport ticketing? 

 The need for safe, simple, and quick ticket purchasing without the need to queue or buy a ticket from the driver was already becoming evident before the pandemic. One of the first European capitals to introduce contactless payments with bank cards in public transport was Tallinn, Estonia. The city’s new solution was created through collaboration between Ridango, the Tallinn Transport Department, LHV, and Mastercard. 

 Ridango’s ticketing solutions support contactless payments, allowing passengers to simply tap open-loop contactless bank cards directly at validators. Thanks to this innovation, occasional users of Tallinn’s public transport system no longer need to buy a single ticket from the driver or have a pre-paid Public Transport Card. 

 Ridango’s experience implementing a pioneering solution in Tallinn has demonstrated that contactless payments offer the best of both worlds: the most streamlined experience for passengers, as well as an added layer of public safety in the face of a pandemic. And while we hope to leave COVID-19 in the past far behind us, contactless payments are definitely coming with us into the future.