Transport for London’s Lucrative Sponsorship Deal with Google Shows Value of ‘Point of Sale’ Real Estate at Fare Gates

_{(This premium article was originally published March 4, 2020 in Mobility Payments’ sister publication NFC Times.)}

 Transport for London’s recent deal with Google to put the Google Pay Logo on more than 5,600 contactless gate readers across the large London Underground network is not the first time that the London transit authority has rented out its prime payments real estate to sponsors. Nor is it the only transit agency that has profited from sponsorship deals tied to its contactless EMV transit payments services. 

The deal is worth more than £1.5 million (US$1.93 million) for the 12-month period–which this month will replace all of the yellow Oyster card sticker pads at gate readers with stickers featuring the Google Pay logo. And its not Google’s first sponsorship deal with Transport for London. 

Google also promoted its mobile payments service with banners on the sides of the turnstiles themselves and on the gate doors in 2018. But the latest deal is believed to be the most lucrative of all.

And the agreement demonstrates the promotional value of the gate reader “point of sale.” That’s especially true in London, where contactless EMV payments have taken off since being introduce across all modes of transport managed by Transport for London in 2014. The authority recently said that customers tap their contactless EMV cards or NFC devices more than 2.7 million times per day, including 1.6 million times per day on the Underground, or “Tube,” London’s massive subway system. Payments from NFC smartphones and wearables make up around 21% of contactless transactions, the authority said in January. 

In addition to the revenue, the Google deal also helps Transport for London meet its goal of more actively promote contactless payments. Contactless EMV payments now make up more than half of all pay-as-you-go transactions on the Underground and London buses, with payments from closed-loop Oyster cards accounting for the rest. And pay-as-you-go transactions, in turn, now account for two-thirds of all transactions on the various modes of transport managed by Transport for London, with season tickets used for the remainder.

Payments with Oyster remain popular, however, and the authority has said it has no plans to retire the closed-loop cards, which it introduced in 2002. Oyster and contactless EMV payments–the latter including credit, debit and prepaid cards and cards on NFC smartphones and smartwatches–share the same readers on the Transport for London system. 

Google Pay to Get Top Billing on New Stickers
Under the contract with Google, signed in late December between Transport Trading Ltd., a subsidiary of Transport for London; and Google Ireland; the search giant will be able to promote its payments service on the gate readers for 12 months, with the round sticker on the readers featuring a large Google Pay logo. These stickers will sit on top of each of the 5,686 Underground turnstile readers. There are 270 stations on the Underground network.

In addition to the Google Pay logo and a generic contactless payments symbol, the new stickers will also show the much smaller logos of the four payments brands accepted for fare payments. These brands– American Express, Maestro, Mastercard and Visa, in that order–will be position toward the bottom of the stickers. Finally, the stickers will show a small Oyster card logo underneath the card brands. But the sticker design, as shown in the Google contract, include no logos for other mobile payments services, such as Apple Pay and Samsung Pay, which are also accepted for fares by Transport for London. 

The rollout of the new stickers promoting Google Pay are scheduled to be completed by the end of this month, according to the contract. 

Google will get other privileges, including a two-week period at the beginning of the sponsorship period, in which it can place a temporary sticker on gate readers with a “call to action” to riders to use Google Pay. Transport for London said these temporary stickers will not feature the network logos, such as Visa or Mastercard. After this two-week period, the stickers with the Google Pay logo featured prominently, but also including smaller logos of the card brands, will be used for the remainder of the 12-month sponsorship period. (See logo design above).  

Google would also get to place advertising on Transport for London’s home page and journey planning pages for up to 1 million impressions under the deal.  

The contract states that Transport for London cannot accept sponsorship from any of 15 other “tap-and-pay” services listed in the document for the first two months after launch for the Google Pay stickers. Those other tap-and-pay services include Apple Pay, Samsung Pay, Barclaycard bPay and Garmin Pay. The contract also mentions Alipay, WeChat Pay and some other wallets which are not tap to pay or NFC. It’s not clear how logos for any of these other wallets would be displayed on the gate readers after the two-month exclusivity period.

Google would pay a total of just under £1.65 million for the sponsorship deal. The search giant would also get right of first refusal to extend the deal past 12 months. 

Other Sponsorship Deals for Contactless Fare Readers
The new Google Pay reader stickers are not the first time that Transport for London has sold sponsorships for its Underground gate readers.  

In 2018, the authority signed an agreement with Visa to allow the payments network to affix stickers on gates at five Underground stations and one Docklands Light Railway, or DLR, station for 18 months starting in July 2018, in exchange for £20,000 from Visa Europe. These stickers featured the Oyster logo most prominently, along with the generic contactless payments symbol. Visa’s was allowed to put its small logo at the bottom on the far left, followed in a horizonal line by the Mastercard Maestro and AmEx card logos. The logos would ordinarily be placed in alphabetical order with the Visa logo positioned last.

Mastercard has been an active sponsor with transit authorities, including in Singapore and Kaohsiung, Taiwan, usually signing 12-month exclusivity deals with authorities that has given it the right to broadly promote the Mastercard brand on and around gate readers. The deals also restricted acceptance of certain other payments brands, usually Visa.  

Visa and JPMorgan Chase had a promotional deal with New York’s Metropolitan Transportation Authority, or MTA, for the launch of contactless payments on the New York City Subway last May, though that did not include putting their logos on the MTA gate readers.

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