How prepaid cards in Transportation can drive Financial Inclusion

Municipalities and banks strive to extend financial services to underserved populations, the digitalisation of public transportation and the introduction of prepaid cards have emerged as powerful tools for driving financial inclusion. Prepaid instruments present banks with innovative pathways for revenue generation in automated fare collection. By integrating prepaid cards into public transit systems, cities can enhance accessibility to transportation services while simultaneously providing unbanked individuals with a gateway to financial inclusion.

The success stories of partnerships between private companies, public transport, and tech players highlight how prepaid cards are helping digital payments in urban mobility. Moving away from traditional methods like debit and credit cards, prepaid solutions not only make fare collection smoother but also enhance the journeys of millions of commuters.

Serving the unbanked

Before delving into the benefits of prepaid cards in public transportation, it's crucial to understand the scale of the unbanked population globally. According to recent data, approximately 1.7 billion adults worldwide remain unbanked, lacking access to basic financial services such as savings accounts, credit, and insurance. 

Bank cards, serving as versatile prepaid instruments, play an important role in driving financial inclusion, modernising transportation operations and enhancing the overall customer experience, through easy enrolment process. According to Congnetic global market of prepaid cards is expected to grow over 6.7 trn USD by 2030 with many bank players already enrolled onto it.

Prepaid cards have emerged as a viable solution for expanding financial inclusion, particularly in urban settings with public transit systems. They offer a convenient and secure alternative to cash for purchasing transportation tickets and accessing transit services. Unlike traditional bank accounts, prepaid cards do not require a credit check or minimum balance, making them accessible to individuals without a banking history or credit history, which lowers the barriers for entry and makes it easier for commuters to enroll on public operation route. Prepaid cards, serving as versatile instruments, streamline transportation operations and offer real-time transaction tracking. This eliminates the hassle of managing multiple tickets or passes and simplifies the entire travel process within the city.

Who are the Stakeholders Involved in the Automated Transportation System?

Introduction of prepaid cards for transportation beneficially serves many stakeholders, such as municipalities, banks, transport operators and commuters. Generally, it can be said, it serves the whole ecosystem which transits from cash to pure open-loop. 

For banks, the integration of prepaid cards into public transportation systems presents an opportunity to tap into new markets and expand their customer base. By offering prepaid transportation cards, banks can establish relationships with previously underserved populations and introduce them to a range of financial products and services. Moreover, the data generated from prepaid card transactions provides banks with valuable insights into commuter behavior and spending patterns, enabling them to tailor their offerings to meet the evolving needs of their customers. 

What are the Benefits of a Prepaid Transportation Network?

A research paper titled Evolution of benefits and effectiveness of smart cards for public transport mentions that the implementation of a prepaid transportation network offers a multitude of benefits, creating a seamless experience for cities, governments, transport operators, and, most importantly, customers.

1. City. Prepaid systems significantly contribute to reducing traffic congestion and lessening environmental impact in cities by encouraging greater utilisation of public transportation. According to Visa's data, cities utilising prepaid solutions have witnessed a reduction in the cost of ticketing, contributing to more sustainable and efficient urban environments.
2. Government. Enhanced data analytics provide governments with valuable insights, empowering them to make well-informed decisions regarding transportation infrastructure. With prepaid systems, there's a considerable reduction in the administrative burden of managing traditional ticketing methods, leading to increased operational efficiency. For instance, there has been a reported daily journey increase in cities employing prepaid solutions.
3. Transport Operator. Transport operators enjoy streamlined operations and a reduction in ticketing overhead. According to Visa, these operators have witnessed boosted ridership and improved passenger experiences. Moreover, prepaid solutions provide an avenue for additional revenue streams beyond fare collection. More than 500 urban mobility projects globally actively involve transport operators benefiting from the adoption of prepaid instruments.
4. Commuters. Commuters are at the forefront of the advantages provided by a prepaid transportation network. Simplifying the payment process, prepaid solutions eliminate the need for multiple tickets or passes. A report by The Centre for Regional Economic and Social Research mentions that prepaid cards foster financial independence, providing enhanced control and convenience. This convenience has contributed to a significant increase in contactless transactions, which now account for over a third of all Visa transactions globally.

In Conclusion

The strategic adoption of prepaid solutions in automated fare collection systems has showcased benefits across various stakeholders, from cities and governments to transport operators and, importantly, the end-users. By providing unbanked individuals with access to transportation services and financial tools, cities and banks can break down barriers to economic participation and empower communities. 

Cities, facing the challenges of escalating urbanisation, find prepaid instruments a useful tool. The adaptability of these solutions addresses the varied requirements of commuters, driving sustainable and interconnected mobility. Governments experience operational efficiency, improved data analysis, and favourable environmental effects, aligning with the fundamental principles of sustainability.

For banks, the integration of prepaid instruments into the transportation sector represents more than just a financial transaction. It is a strategic partnership that not only facilitates seamless digital payments but also opens doors to additional revenue streams. For more on facilitating potential e-ticketing investments, contact O-CITY today.