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Mobile ticketing in the Middle East: Cash culture limits growth [free access]

August 1, 2018

The transit fare collection industry in the Middle East is primarily dominated by contactless smartcards and paper/magnetic-stripe tickets. Not many transit agencies in the region have deployed mobile ticketing for fare collection, despite Middle Eastern countries having 86 per cent subscriber penetration and 55 per cent mobile internet penetration rate.

 

Current scenario

 

Majority of the transit agencies in the Middle Eastern countries use contactless smartcards and paper/magnetic-stripe tickets for fare collection. Bank cards and mobile ticketing have been deployed by only two cities, namely Dubai and Tel Aviv, for fare collection.

 

Table 1 provides details of the fare systems deployed on the key transit systems in the Middle East.

 

Table 1: Existing fare systems on key transit systems 

Country

City

Transport mode

Contactless smartcards

Paper/Magnetic-stripe tickets

Bank cards

Mobile ticketing

Iran

Isfahan

Metro

   Y

N

N

N

Bus

Y

N

N

N

Mashhad

Metro

Y

Y

N

N

Tehran

Metro

Y

Y

N

N

Bus

Y

Y

N

N

Israel

Jerusalem

LRT

Y

Y

N

N

Bus

Y

N

N

N

Tel Aviv

Bus

Y

N

N

Y

Kuwait

Kuwait City

Bus

Y

Y

N

N

Qatar

Doha

Bus

Y

Y

N

N

Saudi Arabia

Riyadh, Mecca, Medina, Dammam, Jeddah

Bus

Y

Y

N

N

UAE

Abu Dhabi

Bus

Y

Y

N

N

Dubai

Bus and Metro

Y

Y

Y

Y

Sharjah

Bus

Y

Y

N

N

 Source: Global Mass Transit Research

 

Tel Aviv, Israel

 

Israel-based HopOn has provided its mobile ticketing application (app) for Dan Public Transportation Limited, which is responsible for bus operations in Tel Aviv. The app uses ultrasonic technology to validate passenger’s ticket upon boarding and the fare is deducted from the passenger’s credit card linked with the app. Further, HopOn has placed validators at the bus entrance that show the validation message to the driver after the passenger has paid for the ticket.

 

Dubai, UAE

 

Dubai’s Road and Transport Authority (RTA), the agency responsible for public transportation in Dubai, has deployed near field technology (NFC)-based mobile ticketing in association with two mobile network operators namely Etisalat and Du. The smartphones embedded with NFC-enabled SIM cards can be tapped at the fare gates to pay fares in the same way as NoI smartcards.

 

RTA in association with UAE-based Emirates Islamic launched dual chip RTA credit cards in 2010. The card can be used for fare payment on public transportation as well as for retail payments.

 

Current scenario of telecom market in the Middle East

 

Mobile ticketing for transit has not been experimented much in the region, despite the fact that the telecom market of the Middle Eastern countries is among the most highly penetrated markets in the world. The telecom market of the Middle East (UAE, Bahrain, Kuwait, Qatar, Iran and Israel and Saudi Arabia) has penetration rate of around 86 per cent, which is well above the global average of 67 per cent. Figure 1 provides information about mobile network penetration in the Middle East.

 

Figure 1: Mobile network penetration in the Middle East 

 

 image001_400_03

Source: GSMA’s Middle East and North Africa Mobile Economy 2017

 

The gulf countries are among the most highly penetrated countries, with some countries having SIM ratio (SIMs per unique subscriber) of over two.

 

 Growing adoption of mobile internet

 

The number of smartphone connections in MENA has doubled in three years to reach 319 million by July 2017, accounting for around 50 per cent of the total connections in the region. Although the smartphone penetration rate is below the global average of 53 per cent, MENA is projected to add 144 million new smartphone connections by 2020 and achieve smartphone penetration rate of 65 per cent. Figure 2 provides information about current and projected mobile internet penetration in the Middle East.

 

Figure 2: Current and projected mobile internet penetration in the Middle East 

 

 image003_400

Note: GCC refers to gulf countries including UAE, Bahrain, Kuwait, Qatar, and Saudi Arabia

Source: GSMA’s Middle East and North Africa Mobile Economy 2017

 

Figure 3 provides information about current and projected smartphone penetration in the Middle East.

 

Figure 3: Current and projected smartphone penetration in the Middle East 

 

 image005_400

 

Note: GCC refers to gulf countries including UAE, Bahrain, Kuwait, Qatar, and Saudi Arabia

Source: GSMA’s Middle East and North Africa Mobile Economy 2017

 

Absence of mobile ticketing in transit

 

Despite having such robust telecom infrastructure in place, no major development has been recorded yet for digital payments in the Middle East. The key reasons for the absence of mobile ticketing in transit are:

 

Cash reliance: The Middle Eastern countries have smartphone penetration of around 70 per cent and highest share of young people in the population, posing ideal conditions for the uptake of digital payments. However, 80 per cent of the retail payments and 65 per cent of the e-commerce payments are still made in cash. The long-standing cultural factors driving the preference for cash payment is a major obstacle in the growth of digital payments.

 

Risk of fraud: Around 40 per cent of the online shoppers have been victims of cybercrimes and 71 per cent have observed cyberattacks. The risk of fraud is therefore a major factor in the slow growth of online payment methods.

 

Future plans

 

Majority of the upcoming transit systems such as metro, light rail and BRT are focusing on the deployment of contactless smartcards only. Table 2 provides details of the future plans to deploy contactless ticketing.

 

Table 2: Future plans for deployment of contactless smartcards

Country

City

Transit system

Agency

Contract awarded

Company

Iraq

Baghdad

Metro

Mayoralty of Baghdad

No

Not applicable

Israel

Tel Aviv

LRT

NTA Metropolitan Mass Transit System Limited

Yes

Consortium of China Railway Tunnel Group and China Railway Electrification Bureau Group

Jordan

Ammam

BRT

Greater Amman Municipality

No

Not applicable

Qatar

Doha

Metro

Qatar Railways

Yes

Thales

 

Lusail

LRT

Qatar Railways

Yes

Thales

Saudi Arabia

Riyadh

Metro

Arriyadh Development Authority

Yes

Indra Sistemas

Source: Global Mass Transit Research

 

Currently, only Arriyadh Development Authority has announced plans to deploy NFC-based mobile ticketing for fare collection on Riyadh Metro and awarded the contract of same to Spain-based Indra Sistemas.

 

Conclusion

 

The transit systems in the Middle East are all relatively new than in any other region, and have deployed contactless smartcards for fare collection. Mobile ticketing is currently not present in many cities, but the increased usage of smartphones and mobile internet shows the potential of mobile ticketing in public transport. The primary reasons for the slow rate of adoption of mobile ticketing are the low preference of passengers to use mobile phones for payment and availability of alternative fare payment methods. Collective efforts are required from governments, bus operators, and financial industry to spread awareness about the inherent security in mobile phone payments and promote the usage of mobile ticketing in the Middle East.