E-payment Solutions

The payment methods can be categorized in conventional and alternative/ emerging methods. Credit Cards, cash, check, electronic funds transfer, and debit cards are the most common payment methods in the travel industry. It seems though that new ways of payment such as account based ticketing, virtual cards, online wallets, mobile payment, NFC based mobile and cash on delivery are emerging, because of the need of making the payment methods as simple as possible for the end- users by simplifying the travel experience. 

Online banking is a very common payment method. The customers of a financial institution are able to conduct financial transactions through the website operated by the financial institution. The customer can execute online a purchase. The payment must be confirmed and after that the amount will be debited from his account. The bank informs the travel agency (in case that the customer bought a ticket) for the payment, and the ticket is sent to the customer. 

Smart cards. In public transport card based systems often use smart cards. Smart cards are devices designed to store and, in most cases, process data. Smart cards can store info such as monthly pass, discount rights and tickets. Tickets can be pre-paid or Pay-As-You-Go. 

Mobile payment and Digital wallet. Mobile payments is a new and rapidly adopting alternative payment method. The digital wallet allows users to store holder’s credentials and payment information within a device such as a mobile device. This can include purchasing items on-line with a computer or using a smartphone to purchase something at a store [1]. The biggest players in the market are Apple and Google. Some of the companies in the travel industry that have already embedded wallet payments in their applications are Priceline, Airbnb, Booking.com, Uber and Expedia [2]. The Apple Pay mobile-payment and digital-wallet system which was announced in September 2014, lets the consumers with NFC-enabled iPhone 6, iPhone 6 Plus, and Apple Watch devices pay in stores at contactless terminals and buy goods using apps that support the service [3]. Moreover, PayPal is investing towards this direction by purchasing Paydiant [4]. 

Towards the same direction, Samsung in February 2015 purchased LoopPay which is a company that provides mobile wallet solutions. Visa Inc. announced in February 2015 that it has partnered with several leading financial institutions around the world to offer new mobile payment services. BBVA and Cuscal launched new issuer-branded mobile payment applications for mobile devices running on the Android operating system. Additionally, Banco do Brazil, PNC Bank, N.A., and U.S. Bank intend to launch similar capabilities in the near future [5]. 

Virtual cards. A digital/virtual card, unlike a plastic card, doesn't require any physical representation in the first place as it is fully virtual and hosted online. Usually a maximum charge for the virtual number is set in order to further protect users’ transactions. 

Cloud Based Ticketing - Acount Based Ticketing 
In the next years it is estimated that the payment methods will move towards the cloud. In the white paper “Cloud based ticketing – Next generation fare collection” [6] published by the university of Limerick, UL presents its vision about the next generation of ticketing. The Acount Based Ticketing means that the customer will be able to use any means of the transport network rail, bus, ferry etc. and pay with any means of payment such as a card, a pre-paid wallet, mobile or a smart wearable. The customer must have a unique id which will be used for his identification. The terminals of the travel providers have their own ID. The payment will link with their account residing out there in the cloud. The cloud which consists of communication networks and server technology will have a big impact in the travel industry. The three areas that are going to be affected by the new technologies and are related to the fare collection are the identification, the fare calculation and the payment. 

The European Travellers Club (ETC) which is an initiative of several European e-Ticketing Schemes in Public Transport, the Open Ticketing Institute and the University of Limerick are working towards the creation of a trusted, easy and seamless Account-Based System across Europe. According to the ETC’s white paper through the account based ticketing the monthly passes, the discount rights are not stored on devices but are stored in a back-office. Moreover, through Account-Based Ticketing new chances for cooperation between authorities, financial institutions, and services providers emerge. As stated in the report travellers in the future will be able to connect their account to cards such as a bankcard, an ID-card or devices such as a mobile phone or a wearable device, which can be used for the payment needs. It will be possible for the travellers to pay before or after their travel. Below are some examples of account based ticketing, based on the white paper of the European Travellers Club project. 

London contactless cards public transportatio
n [7]: In London contactless cards can be used in public transport (bus, Tube, tram, DLR, London Overground, TfL Rail and most National Rail services in London.). The cards are used in the same way as Oyster card, the user must touch the card flat on the yellow card reader when he enters and leaves a station but the way of payment is different. This is because the traveller doesn’t add credit before the travel. Payment is effected afterwards, after the end-of-day closing. The total cost of all the journeys that have been made in one day are calculated. The calculations are done in the back-office and a daily cap is applied to the user’s contactless payment card account. 

OV-Chipkaart, Netherlands, and Mobility Passes: Several mobility providers in the Netherlands such as the Dutch Railways, offer account-based travelling. This may include parking, bike or car rental, etc. An indicator that is an active account based card is contained in the business cards. After end-of-day closing, all transactions are routed through a back-office where also the discount arrangements are applied. Invoices are paid afterwards. 

M-Kaart, Luxemburg, and additional services:
In Luxemburg, the national transport authority, Verkéiersverbond, has launched a new version of its national e-ticket: the M-Kaart. Travelling itself will be predominantly card-centric on the basis of Germany’s VDV-KA standard. But Verkéiersverbond has started a project with OTI and VDV e-Ticket Service, to test whether the integration with travel information and other government (sponsored) services can best be implemented account-based. 

Euregio, Maastricht-Aachen-Liege, and cross-border travelling:
In the Euregio, the introduction of three different national e-Ticketing standards has not made life easier for cross-border travellers. In the Netherlands they need to have an OV-Chipkaart, in Germany a VDV-card and in Belgium a MOBIB card. With the support of the European Union, the partners in the region (led by the Aachener Verkehrsverbund) have started a project with OTI and VDV e-Ticket Service to explore strategies to make travelling easier for cross-border travellers. These include readers that can read several cards, smart cards or mobile phones that can contain the data of several cards, and a single account. 

[1] View at http://propid.ischool.utoronto.ca/digiwallet_overview/ 
[2] View at http://www.tnooz.com/article/mobile-payments-get-serious-on-google-as-wallet-evolves-to-handle-travel/ 
[3] View at http://www.apple.com/apple-pay/ 
[4] View at http://www.cio.com/article/2891733/mobile-wallet-space-heats-up-as-paypal-buys-paydiant.html 
[5] View at http://www.mobilepaymentstoday.com/news/more-banks-to-offer-cloud-based-mobile-payments-with-visa/ 
[6] View at http://newscience.ul.com/wp-content/uploads/2014/04/Cloud-Based-Ticketing-full-styled.pdf 
[7] View at https://tfl.gov.uk/fares-and-payments/contactless/what-are-contactless-payment-cards