Openloop touted as solution to Sydney's Opal woes

Commuters in Sydney can possibly look forward to paying with their own bank account in lieu of Opal, a payments industry veteran has claimed.

Those travelling via public transport in Sydney can look forward to the possibility of being able to pay using their Mastercard and Visa cards next year, instead of their Opal card.

Lance Blockley, managing director of The Initiatives Group, a consultancy firm that provides analysis and guidance for those playing in the payments space, told the WT Wearable Technologies Conference in Sydney on Friday that the "tap on" and "tap off" stations offered by Transport NSW will "in theory" go openloop in 2018.

Blockley, who recently represented the cartel of Australian banks seeking to gain regulatory approval to collectively bargain with Apple for open-access to the NFC antenna on the iPhone, said the openloop initiative will be an extension of the trial currently in place on the Manly ferry services.

The Opal card requires commuters to "tap on" when beginning a trip via bus, train, light rail, and ferry, and "tap off" when they reach their final destination on services operating in Sydney and many of its suburbs.

This process will still be the same with openloop, except that commuters will use their Visa or Mastercard to "tap-on" to the transport service.

The contactless transport payment trial currently underway by Transport for NSW allows commuters to use their Mastercard on Manly to Circular Quay ferry in Sydney, with a spokesperson for the government entity telling ZDNet the trial "continues to be a success".

"Since the technical trial was launched in July, the technology has remained stable and customer feedback has been extremely positive, with users finding the new payment option intuitive and easy to use," the spokesperson said.

"The trial will continue to run through 2018 to allow Transport for NSW to gather data to inform decisions around any further expansion of contactless payments on other services and modes of transport."

Blockley said in Australia, around 80 percent of face-to-face Mastercard transactions are performed using tap-and-go functionality; it's a similar story where Visa is concerned, with 92 percent of face-to-face transactions on the Visa network utilising the PayWave service.

Although the tap-and-go function is heavily utilised in Australia, less than 1 percent of contactless payments are conducted via mobile or wearable means.

Blockley thinks openloop transit could be the catalyst to turn these statistics around.

London was one of the first major cities globally to go openloop, and on Transport for London, just the one merchant accounts for 11 percent of all UK contactless transactions.

"Contactless took a while to take off in the UK, it is still nowhere near as high-frequency as it is in Australia, Australia leads the world in terms of contactless transactions per adult," Blockley said.

"But Transport for London, when they went openloop, have really pushed up the number of transactions. In the total market, it's only 1.7 percent on mobile, but it's 5 percent with Transport for London."

He said that is where the Barclays' wristband has been particularly popular, because as a commuter goes to get on the tube, they just flash their wrist against the touchpad.

"The question for Australia is whether we're going to see a significant pickup in the use of mobile contactless and wearables when Australia goes openloop," he said.

Blockley was part of the evaluation committee that chose Cubic to rollout the Opal functionality for Transport NSW. He said Cubic was chosen as it fulfilled a part of the requirement that asked all of the hardware to be installed from day one with openloop compatibility.

"In the London system they had to rip out all of the touchpads in the tube and reinstall because they weren't EMV [Europay, Mastercard, Visa] capable," he said. "But here, we are fortunate enough to have the right equipment."

Commuters in Melbourne shouldn't hold their breath, however, as Blockley said Myki is a completely different system.

"You'd love the idea of all of the main metro areas in Australia to be openloop because you could go to any city and just tap-on and tap-on," he said. "Melbourne will be a problem."

Similar issues have been seen in both Brisbane and Perth, but Blockley said they are easier to deal with, but the Department of Transport has previously said there is significant development required to get an Australia-wide system.

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