Oyster Shows How Digital Wallets Can Work

steve mccaskill

Oyster has a genuine purpose, is easy to use and familiar to customers says Steve McCaskill

It’s no surprise that  mobile operators are talking to TfL about letting customers use their smartphone as a mobile wallet to to pay for tube, bus and rail journeys. The Oyster Card scheme has millions of users, all of whom already pay for their transport digitally.

The digital payment space is becoming an increasingly competitive market: both EE and Vodafone believe the ability to pay for travel quickly and easily would give them a commercial advantage.

Meanwhile, however, Transport for London (TfL) has operated Oyster since July 2003 and the system is  one of the world’s most successful ticketless transport initiatives, with 43 million cards issued and 80 percent of all journeys on public transport in the capital now paid for using Oyster.

Oyster is also expensive to run, which is why TfL has been so keen to open up its network to third party providers, but while operators and card providers are scrambling to create a successful digital payment platform, is TfL already sitting on the UK’s most successful digital wallet?

Oyster popularity

Underground tubeEven allowing for the fact that a significant number of Oyster cards have been lost or are not in use, TfL not only use a huge active user base, but also a significant amount of customer data from registered cards and payment information from those with auto-top-up enabled.

Passengers recognise that travel is cheaper and easier with Oyster – there have been steep discounts to encourage users to switch to the system- and are comfortable with not only topping up online or at a ticket machine, but also with storing varying amounts of money in their accounts.

TfL, like Apple with iTunes, appears to have inadvertantly created a widely used digital wallet that customers are familiar and comfortable with using, and also accumulated a vast database of customer payment information.

So why has TfL never explored the possibility of expanding the Oyster platform as a commercial venture so that Oyster cards could be used to pay for other goods and services? This could offset the cost of operating the service for public transport and aid investment.

Oyster for shopping

Although much of Oyster’s infrastructure is obviously in London, the cards use the same NFC technology as contactless debit and credit cards, meaning they could be used at any number of retailers, restaurants and pubs (Wetherspoons, anyone?). The same newsagents that offer top-ups could benefit from customers buying the odd chocolate bar or newspaper.

The most obvious reason is that TfL is a public body responsible for managing the capital’s transport network – not solving wider payment issues – but there are also probably a myriad of security, privacy and technical issues that have prevented such a venture.

Not to mention the fact that TfL would prefer not to operate the system at all – hence why it is allowing contactless payments by third parties in the first place.

However what Oyster has done is shown how a digital wallet can be trusted and widely used, when it has a genuine reason to exist. Third party payments are not only a good thing for mobile wallet providers, who will finally have a decent use case, but are also a positive for passengers who will no longer be limited to one provider and can consign ticket machine queues to a thing of the past.

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