What if “smart cards got even smarter”?
“I knew, with close to a million passengers a day, there had to be something for investors,” says Sujith. “It got me thinking about what might happen if smart cards got smarter.”
What EY pioneered in the Indian transport system, along with the government, was a new smart card – a digital wallet that could be used not only across a wide range of public transport systems, from metro lines to buses, but also at retail outlets like shops and restaurants. This card is a contactless-EMV (Europay, Mastercard and Visa, i.e. the three companies who developed it). This is the technology used in most credit cards outside the US.
Innovation, however, just didn’t stop there. Private investors were attracted by an entirely new business model that the Kochi Metro System presented: access to a shared digital platform and a captive consumer-base.
“We approached a number of banks for investment and were blown away by their offers. While most offered capex and percentage of non-transit revenue, some banks even offered royalties, which we hadn’t expected,” says Sujith. “And it’s a great deal for the bank. Besides receiving a return on their investment, the banks get transaction fees from a huge commuter base and branding rights.”
“The government’s happy too, as it got to reduce its spending and is considering setting the national standards for smart cards based on the Kochi model,” says Sujith.
In effect, this model provides a win-win situation for all: government, investors and commuters.
Based on the success of the Kochi metro model, three other Indian cities – Hyderabad, Noida and Nagpur – are now attracting investments to develop a similar smart card system for their respective metro rails, with EY as the appointed advisor. Central government has taken the Kochi metro model as a reference and is encouraging upcoming metros to adopt a similar model for smart ticketing.
Global urbanization is on the rise, and cities across the world are all looking for more efficient and creative ways of dealing with the inevitable challenges of more people living and working in finite spaces. By combining public-sector development with private-sector incentives, the Kochi smart card shows how innovative new technology can provide solutions to some of society’s most pressing issues.