(TNS) -- The mass transit arm of San Diego’s Cubic Corp. said Wednesday that it is licensing technology from Transport for London to deliver more flexible, tap-to-pay fare collection for passengers via credit cards and smartphones.
Cubic Transportation Systems will pay about $20 million for access to technology in London’s system – which ranks among the world leaders for contactless payments.
Cubic will adapt London’s contactless ticketing system, combined with other Cubic technologies, for use in cities worldwide.
"In London, if you have a contactless enabled credit card, you can just walk up to the turnstile, present that and go through," said Matt Cole, president of Cubic Transportation. "If you have Apple Pay on your phone, you can use that. If you have a wearable device with a payment instrument on it, you can just present that."
Contactless payment systems are credit cards, debit cards, smart cards and smart devices that have embedded radio-frequency identification or near-field communications technology for making secure payments. A chip and antenna let consumers tap their card or smartphone on a reader to pay.
Tap-to-pay systems haven’t caught in the U.S. – despite the roll out of NFC-based Apple Pay two years ago. They are more common in Europe, Australia and Canada.
Based on what happened in these countries, industry experts think contactless payments eventually will take hold in the U.S., with mass transit potentially giving consumers a reason to adopt the technology.
Cubic is a top provider of smart cards for mass transit providers globally, including operators in London, Chicago, San Francisco, Los Angeles, Sydney, New York and several other cities. It provides the Compass Card for San Diego’s Metropolitan Transit District.
Mass transit agencies worldwide are beginning to move to next-generation fare collection, which allows more diverse payment options for passengers.
Cubic submitted a bid to upgrade New York City’s public transit fare collection system this week, Cole said. Transport for London teamed exclusively with Cubic for the New York bid.
San Diego’s Metropolitan Transit District offers mobile ticketing for special events such as Comic-Con through its smartphone app. The agency has hired GlobeSherpa of Portland to build a daily mobile ticketing app. It isn’t tap-to-pay. But it will allow passengers to show inspectors a virtual ticket that they’ve purchased in advance of boarding. It’s expected to be ready by March 2017.
Cubic has worked on two next-generation fare collection/traffic management systems deployed in Chicago and London.
In Chicago, Cubic built the entire system. But in London, it only developed part of the operation. Transport for London built the risk management, customer management and other back-office technology on its own, which is what Cubic licensed.
"We are in a fairly unique position because our competitors have not developed any of these system yet, and we have developed two," said Cole. "That allows us to take the best of both worlds, the London solution and the Chicago solution, and combine them into a system that we can offer to customers.”
Transport for London rolled out contactless payments on buses in 2012 and its Tube subway system in 2014. Since then, it has become one of the world’s largest tap-to-pay merchants, with more than 12 million unique transactions using credit cards, debit cards and mobile devices.
"Contactless payments have completely transformed the way people pay for travel in London, and this deal will allow other world cities to benefit from the hard work we put into making the system work for our customers," said Shashi Verma, chief technology officer for Transport for London, in a statement.
Cubic’s shares ended trading Wednesday down 39 cents at $40.34 on the New York Stock Exchange.
©2016 The San Diego Union-Tribune Distributed by Tribune Content Agency, LLC.