Budapest public transit operator BKK will launch a pilot of open-loop payments on its airport shuttle bus line early next year, a project that involves Mastercard. The payments scheme would like to seed open-loop payments in Hungary, among other Central and Eastern European countries, probably with sponsorship money, along with other assistance.
Mastercard gave significant funds to PTOs in both Milan and Rome, which launched open loop in 2018 and 2019, respectively. The funds were believed to amount to around €5 million (US$5.1 million) for Milan operator ATM and roughly €4 million for ATAC in Rome.
• BKK (Budapest)
• K & H Bank
Budapest public transit operator BKK will launch a pilot of open-loop payments on its airport shuttle bus line early next year, a project that involves Mastercard.
BKK in a recent announcement of the planned test did not say exactly what Mastercard would provide for the project, but it likely includes sponsorship or marketing money. That is perhaps in exchange for placement of Mastercard’s logos on validators, along with other marketing consideration. Neither BKK nor Mastercard has responded to requests for comment from Mobility Payments.
Mastercard, like Visa, has provided sponsorship money in the past to transit agencies that launch open-loop payments. For example, Mastercard gave significant funds to PTOs in both Milan and Rome, which launched open loop in 2018 and 2019, respectively. The funds were believed to amount to around €5 million (US$5.1 million) for Milan operator ATM and roughly €4 million for ATAC in Rome.
In addition to the money, the payments schemes often provide technical assistance, such as help with certification, as well as aid in lining up technology suppliers and acquirers for the projects. The ultimate goal for the schemes, of course, is to encourage transit agencies to roll out open-loop payments to accept their brands.
Mastercard, in particular, would like to see more transit agencies in its strongholds in Central and Eastern Europe to accept cards and card credentials in NFC wallets bearing its brand.
BKK in Budapest is expected to get much less than ATM or ATAC received, at least for now. Mastercard is believed to also be providing some technical assistance to BKK and is likely bringing one or more technology suppliers into the project.
Update: A spokeswoman in Mastercard Europe’s Budapest office confirmed to Mobility Payments Nov. 21 that the payments scheme will provide “financial support” for the project, as well as “professional advice, marketing services and certain project management tasks.” In addition, it will conduct certification of the “solution,” she said. The spokeswoman did not say how much of the project funding Mastercard would provide.
In a statement Nov. 22 to Mobility Payments, BKK said it would assume part of the project costs, with the “partners bearing the major part of the costs.” The partners are Mastercard, along with acquirer K&H bank and Czech Republic-based open-loop technology suppler Monet +. But BKK did not say how much the project would cost. End update.
The BKK pilot or proof-of-concept has a very low budget from the agency itself, and any marketing funds from Mastercard could supplement that, Mobility Payments has learned from a source. It’s not clear whether there will be an exclusivity period during which readers in validators would only accept Mastercard’s brands, not Visa’s. Update: A spokesperson from BKK said the service would also accept Visa-branded cards and card credentials in wallets. End update.
According to BKK’s announcement of the planned pilot, the agency awarded a contract to a “consortium” led by Mastercard and Monet+. This group will be responsible for “construction and operation of the system,” according to the release. Monet+, with its Switchio platform, is a payments gateway, or payments service provider. It connects open-loop terminals with acquirers, while often calculating fares, including fare capping.
K&H, one of Hungary’s largest banks, will serve as the acquirer for the pilot, and Czech Republic-based Mikroelektronika will supply validators on board the buses. Switchio’s platform is already integrated with Mikroelektronika’s validators and has had level-3 EMVCo certification in the past from EMVCo, although this certification would also have to include the new acquirer K&H for the BKK project.
The validators will go on BKK’s 100E airport shuttle buses, accepting contactless debit and credit cards and credentials on smartphones and smartwatches, like those supporting Apple Pay. If the pilot is successful, the operator said it would expand open loop to other bus routes. BKK also runs trams and the Budapest Metro, and open-loop service could eventually be launched on these modes, as well.
BKK offers single tickets and passes, but at present a large share of them are printed on paper. A reloadable closed-loop contactless card and e-ticketing system implemented by Germany-based Scheidt & Bachmann has reportedly been beset by delays and cost overruns.
BKK launched a well-regarded mobile-ticketing app, BudapestGO, earlier this year. The app provides trip-planning and sales of tickets and passes, which users scan on QR-code readers, then show to drivers or conductors.
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