Contactless Ticketing Card Shipments Jump 33% for 2023, but How Best to Tackle Ridership Shortfalls?

The chipset shortage has now been largely resolved as 2023 came to a close and a concentrated effort toward education and allocation for chip supply has driven good recovery in the ticketing market through 2023, landing at 415 million shipments, which is a significant increase of 33% from the previous year. Ticketing smart card shipments have experienced a good level of recovery in 2023, but this may not apply to ridership patterns. They may not experience the same recovery, as many regions have reached a plateau of around 80% to 85% ridership.

This means a lower usage rate of the current installed base of ticketing smart cards, as travelers’ habits have changed around Work from Home (WFH) policies and the use of alternative modes of transit. While this will be resolved over a longer time frame, Public Transport Operators (PTOs) and Transit Authorities (TAs) are currently employing a range of strategies to entice riders back to their networks.

European Union (EU) countries have undergone a number of schemes over the last few years to drive an increase in ridership in the post-pandemic ecosystem. In particular, there has also been cooperation between countries, with France and Germany collaborating to incentivize travel for adolescents by offering 60,000 free tickets for people aged under 27. In Belgium, there have been measures to support railway companies with decreasing prices for users by subsidizing night trains.

Alongside this, Spain extended its free train travel scheme through December 2023, with the 2022 scheme having been launched to introduce free train tickets for short and medium-distance journeys. Montpellier also launched such a solution, deploying a free public transport scheme through the Christmas period.

Finally, the French region of Occitania, encompassing Toulouse and Montpellier, deployed a program permitting travel on regional trains for €1 every first weekend of the month, with a limited number of the tickets available every day during the summer.

There is then a clear trend in Europe around free or reduced-cost transit schemes, with France, Spain, and Germany all deploying strategies through 2022 and 2023, and showing a strong commitment to bring travelers back to transit ecosystems. The year 2023 also proved to be a great one for the European microcontroller ticketing card market, as shipment volumes increase by 57% Year-over-Year (YoY).

Contactless payments and the convergence between mass transit and contactless are certainly here to stay and are accelerating quickly, particularly in areas that are still maturing in contactless adoption. Around 80% of U.S. cities are readying to adopt contactless payments in public transport, so it is clear that contactless and open-loop payments are being considered as the prime strategy to develop an ecosystem that simplifies the payment process for passengers and reduces the need for personal interactions, which are two lynchpins for bringing travelers back to the ecosystem in the post-pandemic years. Now, cashless payment technologies that leverage the tap and pay functionality of payment cards are being championed.

This has given rise to the transit ecosystem concept of “tap and cap,” assuring riders that they will only be charged for the best value fare based on their destinations and travel patterns. Launched by the United Kingdom, this has since been rolled out across multiple operators, enabling travelers to combine trips on different modes of transport, and on those run by different operators. The future of urban mobility lies in the ability of industry players to shift seamlessly to this digitalized and more flexible system to match travelers’ ever-changing requirements.

The expansion of digitized payments was clearly visible over the last few years, with contactless-mature areas such as the Nordic region making digital payments nearly universal. A clear growth area for smarter payments is that of public transit, with many operators and businesses in this space widening their portfolios to capitalize on the convergence between payments and ticketing.