Why debit and credit card payments are preferred by Indian commuters

By Puja Sharma

–Around 76% of total respondents prefer to have multiple payment options for transit fares

–Over 66% of total respondents prefer debit /credit cards as one of the payment options on public transit

Koan Advisory Group, a New Delhi-based public policy consulting firm released a report titled “Transit Payments in India – A Case for Choice and Interoperability”. The study highlights that India’s public transit systems should allow integrated fare payments across different modes of transit, to provide end-to-end payment interoperability for commuters.  It is based on a survey of 1,250 commuters in over 60 different locations across four metro cities. The study is a first-of-its kind report that focuses on the problems commuters face while paying for public transit, and the factors that influence their perceptions of different payment modes.

The report examines recent developments in transit payments in India, highlighting the need for authorities to prioritize account-based ticketing systems over those that solely rely on prepaid card balances. It begins by first identifying the gaps in transit payments based on an analysis of commuters’ responses to an on-ground survey. The study found that 90% commuters use different modes of travel to complete their journey and 76% of them want multiple modes of payment enabled throughout their journey. Interestingly, the survey also found that 66% of the total respondents want to use their bank cards at transit entry or exit points.

The report also claims that 66% of respondents preferred using a debit/credit card in transit systems, and 63% of respondents agreed that it would save them time as they wouldn’t have to purchase and recharge a prepaid transit card.

This trend, in line with India’s evolving demographic landscape, suggests that the preference for debit/credit card usage in public transit is poised to grow over time. Simultaneoulsy, commuters’ reliance on cash and prepaid transit cards is expected to decline. This observation is in sync with the expanding accessibility of digital payment products and FinTech solutions, including virtual cards, in India.

Speaking on the launch of the report, Ateesh Nandi, Koan Advisory Group said, “India’s public transit systems must evolve to provide integrated fare payment options that cater to the diverse needs of commuters. Our study clearly shows that commuters are looking for choice and interoperability in payment methods, with a growing preference for debit/credit cards and digital solutions.

To address the challenges of India’s fragmented transit landscape, it is essential to prioritize account-based ticketing systems that connect seamlessly with users’ bank accounts. This approach will not only enhance convenience for commuters but also pave the way for a more inclusive and modernized public transit system in India.”

The report also discusses how the Union government’s One-Nation, One Card initiative does not address the needs of commuters for inclusive and interoperable transit payment systems. Specifically, since the One-Nation, One Card initiative prioritizes offline payments at transit turnstiles, it does not solve the legacy problems with closed-loop prepaid transit cards. In other words, those cards that only work within a circumscribed network of transit turnstiles and require users to re-load stored balances.

The Koan study emphasizes the importance of account-based ticketing systems, which connect with users’ bank accounts through methods like mobile ticketing or debit/credit cards for public transportation. These systems enable the development of unified fare management solutions for various modes of transportation, a crucial factor in India’s diverse and fragmented public transit system.